This chapter explores the tension between environmental and investment protection in international investment arbitration, particularly in resource-rich Latin America. While no normative conflict exists between environmental and investment treaties, de facto conflicts arise: states risk large compensation when environmental measures breach investment agreements, deterring regulation. Treaty exceptions fail to shield states because tribunals impose additional criteria—good faith, proportionality, non-arbitrariness—whose meanings remain ambiguous and inconsistently applied. Two solutions are proposed: (1) clarifying treaty provisions with detailed criteria to guide states and tribunals; (2) allowing state counterclaims against investors to offset compensation and balance obligations. Clearer rules and counterclaims could reconcile regulatory autonomy with investment protection and reduce geopolitical risks.