Environmental Destruction in the New Economy: Offshore Finance and Mangrove Forest Clearance in Grand Cayman

Abstract

Mangrove wetlands provide crucial protection against extreme weather events like hurricanes as well as a host of other critical ecological functions including absorbing excess carbon, filtering pollution, and providing habitats for many species. However, global mangrove areas are shrinking rapidly. Such destruction is usually attributed to the development of the tourist industry and aquaculture. In this paper, Katrina Jurn, Joseph Lavallee and Lawrence King provide an analysis of mangrove deforestation in Grand Cayman that challenges this understanding. They show that mangrove destruction is driven by the consumption generated by Grand Cayman’s offshore financial sector. People who work in this sector or hold major assets there seek to diversify their financial holdings by buying waterfront property, which necessitates the canalization of the wetlands. The government allows this destruction because the offshore financial sector requires low taxes, making them dependent on fees for real estate development.