Worldwatch Paper #139: Investing in the Future: Harnessing Private Capital Flows for Environmentally Sustainable Development

February 1998
Hilary F. French
ISBN: 1-878071-41-6
68 pages

Private investors have poured hundreds of billions of dollars into the developing world since 1990, overtaking public aid agencies as the principal source of development finance. This unprecedented flow of private funds increasingly has the power to make or break efforts to build an environmentally sustainable global economy.

As investors search the world for the highest return, they are often drawn to countries endowed with bountiful natural resources but handicapped by weak environmental laws, causing natural resource destruction and industrial pollution. But private investment can also bring environmental benefits, such as access to cutting-edge technologies that minimize energy use and waste generation.

In this paper, Hilary French shows how private capital is shaping environmental trends in developing countries. She recommends strategies for shifting money out of ecologically damaging activities and into the technologies and enterprises of tomorrow. Asia's economic and environmental crises of 1997 offer timely warnings of the current system's fragility, as well as an opportunity to put in place the reforms needed to channel international investment capital into sustainable development.