Political instability.
Environment-related political instability can erupt for many reasons and put multinationals at risk. Residents may, for example, seek to close down enterprises that are protected by corrupt local authorities who allow them to pollute water resources so much that crop yields drop, “cancer villages” arise, and the quality of life declines sharply. In January 2006, hundreds of farmers protested the air pollution from a steel plant in Guizhou. They released the water from the factory’s cistern, and several farmers were arrested. In Zhejiang province in 2005, tens of thousands of villagers violently protested the pollution from 13 chemical factories. The factories were finally closed, and the leader of a local NGO that was established to monitor environmental compliance was arrested.