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<p>This study examines how foreign direct investment (FDI) in mining affects forestation levels and how host-country institutions shape this relationship. Drawing on the concept of the social license to operate, we argue that foreign-owned mines face greater scrutiny from both host-country and international stakeholders, thus having stronger incentives to adopt environmentally responsible practices than domestic-owned mines. These incentives are reinforced by foreign firms’ greater capacity to implement globally recognized environmental standards. We therefore posit that foreign-owned mines are associated with higher forestation than domestic-owned mines. We further explore whether this difference is especially pronounced in host countries with strong civil society participation. Using a novel dataset with satellite-based vegetation cover imagery for 1044 mines across 49 countries (2001–2023), we find robust evidence that foreign-owned mines are associated with higher forestation. We also find that foreign-owned mines maintain high forestation regardless of civil society pressure, indicating adherence to global standards. Domestic mines, however, exhibit significantly lower forestation than foreign-owned mines in countries with strong civil society participation, likely indicating limited capacity or motivation to engage in reforestation and ecological restoration to meet high societal expectations. This study advances understanding of FDI’s biodiversity impacts and offers insights for sustainable development policies.</p>

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Does foreign ownership lead to greener mines? Forestation evidence from mining FDI

  • 期刊论文

  • 出版模式：

    开放获取

  • 发表日期：

    2026年6月3日

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  • Jing Li,
  • Evis Sinani,
  • Peng Zhang

摘要

This study examines how foreign direct investment (FDI) in mining affects forestation levels and how host-country institutions shape this relationship. Drawing on the concept of the social license to operate, we argue that foreign-owned mines face greater scrutiny from both host-country and international stakeholders, thus having stronger incentives to adopt environmentally responsible practices than domestic-owned mines. These incentives are reinforced by foreign firms’ greater capacity to implement globally recognized environmental standards. We therefore posit that foreign-owned mines are associated with higher forestation than domestic-owned mines. We further explore whether this difference is especially pronounced in host countries with strong civil society participation. Using a novel dataset with satellite-based vegetation cover imagery for 1044 mines across 49 countries (2001–2023), we find robust evidence that foreign-owned mines are associated with higher forestation. We also find that foreign-owned mines maintain high forestation regardless of civil society pressure, indicating adherence to global standards. Domestic mines, however, exhibit significantly lower forestation than foreign-owned mines in countries with strong civil society participation, likely indicating limited capacity or motivation to engage in reforestation and ecological restoration to meet high societal expectations. This study advances understanding of FDI’s biodiversity impacts and offers insights for sustainable development policies.