Foreign direct investment exerts heterogeneous impacts on the global ecosystem services values: Evidence from 62 countries globally

Abstract

The global flow of foreign direct investment (FDI) has an impact on the ecosystem services value (ESV) of the host country. However, current research has paid insufficient attention to the mediating role of land use cover change (LUCC) in this process. This study combines all currently available sectoral FDI data to quantify the impact of 6 types of FDI on LUCC and ESV and discusses the potential causes. The study found that 1) FDI_total will have a heterogeneous impact on LUCC, among which it will have a negative impact on forests, wetlands, shrublands, and water bodies, and a positive impact on impervious surfaces and cropland. Affected by sectoral attributes, FDI_sector will have further heterogeneous impacts on LUCC. 2) FDI has country-specific heterogeneous impact characteristics. The lower the income/urbanization rate of a country, the greater the impact of FDI on natural land. The host country's governance capacity, technological level, and policy regulations also directly affect the degree of environmental impact brought by FDI. 3) In the scenario simulation, the country with the most significant change in ESV quantity is Canada, and the countries with significant changes in proportion include Mongolia, Morocco, Switzerland, etc. We provide corresponding measures and policy references on how to alleviate the negative environmental impacts brought by FDI in different sectors. The study provides a new perspective for understanding the environmental impact brought by FDI and provides a scientific basis for governments to optimize foreign investment policies and promote sustainable development.