sustainability
Article
Evaluating and Prioritizing the Green Infrastructure Finance
Risks for Sustainable Development in China
Yan Dai 1, * and Yasir Ahmed Solangi 2, *
Citation: Dai, Y.; Solangi, Y.A.
Evaluating and Prioritizing the Green
Infrastructure Finance Risks for
Sustainable Development in China.
Sustainability 2023, 15, 7068.
https://doi.org/10.3390/su15097068
Academic Editors: Michael C S Wong
and Kaiguo Zhou
Received: 13 March 2023
Revised: 18 April 2023
Accepted: 19 April 2023
Published: 23 April 2023
Copyright: © 2023 by the authors.
Licensee MDPI, Basel, Switzerland.
This article is an open access article
distributed under the terms and
conditions of the Creative Commons
Attribution (CC BY) license (https://
creativecommons.org/licenses/by/
4.0/).
Sustainability 2023, 15, 7068. https://doi.org/10.3390/su15097068
1 School of Economics and Management, Chengdu Normal University, Chengdu 611130, China
2 School of Management, Jiangsu University, Zhenjiang 212013, China
* Correspondence: 123048@cdnu.edu.cn (Y.D.); yasir.solangi@nuaa.edu.cn (Y.A.S.)
Abstract: China has become a global leader in green infrastructure finance, investing heavily in
renewable energy, sustainable transportation, and green buildings. However, there are multiple
risks and challenges that impede the development of green infrastructure finance. Thus, this study
analyzes and prioritizes the risks associated with green infrastructure finance in China and proposes
policy plans to mitigate these risks. A Fuzzy analytical hierarchy process (AHP) is used to identify the
main risks associated with green infrastructure finance. The main risks are further decomposed into
sub-risks. After, the Fuzzy VlseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR) method
is used to prioritize the key policy plans to mitigate risks and sub-risks. The results of Fuzzy AHP
show that policy and regulations are the most significant risk associated with green infrastructure
finance in China, followed by financial risks, and technical risks. The results of Fuzzy VIKOR reveal
that increasing the availability of financing options is the most crucial policy plan to mitigate the risks
and sub-risks for green infrastructure finance. The developed standardized technical guidelines and
procedures and a legal and regulatory framework are ranked second and third are the most effective
and feasible policy plans.
Keywords: green infrastructure; green finance; sustainable development; risks; policy plans; Fuzzy
AHP; Fuzzy VIKOR
1. Introduction
In 2015, China launched the “Green Belt and Road” initiative which aims to pro-
mote sustainable infrastructure development in countries participating in the Belt and
Road Initiative [1,2]. China has established a number of regulations to encourage green
investment, including carbon trading, green bonds, renewable energy subsidies, and green
investment funds [3]. However, there are uncertainties and obstacles in the country’s green
infrastructure financing sector. The cost of financing green infrastructure projects is high,
and there is a chance that some of them will not accomplish their environmental goals
or the promised returns. China, the top producer of greenhouse gases in the world, has
acknowledged the urgent need to move towards a low-carbon economy and deal with
environmental issues [4,5]. In order to direct investment choices and guarantee that green
infrastructure projects are successfully realized, there is also a need for clear policies and
regulations. As a result, the country has established challenging goals for lowering carbon
emissions, boosting the production of renewable energy, and encouraging sustainable
development [6].
The need to solve environmental issues is one of the main forces for green infrastruc-
ture financing in China. Numerous Chinese cities have suffered from severe air pollution
which has an adverse effect on health and has a financial impact [7]. With rising temper-
atures and an increase in extreme weather occurrences, climate change poses a serious
threat to China [8,9]. China has established challenging goals for cutting carbon emissions
and expanding the use of renewable energy sources in order to address these issues. The
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Sustainability 2023, 15, 7068 2 of 18

country wants to increase the share of non-fossil fuels in primary energy consumption to
about 20% and reduce carbon emissions per unit of GDP by 60–65% from 2005 levels by
2030 [10]. In addition, China has established goals for increasing forest cover, enhancing
water quality, and lowering the use of single-use plastics. Finance for green infrastructure
is a crucial element for accomplishing these goals. China has made significant investments
in renewable energy, especially solar and wind power, and has emerged as a world leader
in these fields [11,12]. Additionally, the country has supported environmentally friendly
transportation, such as public transportation and electric vehicles, and has also created
green building guidelines and rewards to encourage energy efficiency and lower waste [13].
There is a chance that some green projects may not generate the anticipated returns
because they sometimes demand a sizable initial investment [14]. Additionally, green
projects could be hampered by legislative ambiguity or other issues, such as land-use
constraints or technology difficulties [15]. A further factor that can frighten away investors
and delay the development of green infrastructure projects is the absence of defined laws
and regulations to direct investment choices. Prioritizing risks and policy plans are a must
for policymakers and investors in the green infrastructure finance industry to successfully
handle these issues. This calls for a thorough comprehension of both the risks associated
with financing green infrastructure projects and the many policy alternatives available to
encourage sustainable development and economic growth [16].
To overcome these challenges, decisionmakers and investors in green infrastructure
financing must give priority to risks and strategic objectives. This necessitates a thorough
understanding of both the risks associated with financing green infrastructure projects and
the many policy options available to encourage sustainable investment. In order to analyze
and rank risks and policy plans in China’s financing of green infrastructure, we used the
Fuzzy multi-criteria decisionmaking (MCDM) technique based on the Fuzzy Analytical
Hierarchy Process (AHP) and Fuzzy VlseKriterijumska Optimizacija I Kompromisno Re-
senje (VIKOR) for evaluating and ranking risks and strategic goals in green infrastructure
financing. To address uncertainties and imprecise information in decisionmaking, this
strategy uses fuzzy logic [17]. Policymakers and investors can rate each risk or policy plan
based on how well it satisfies each criterion by utilizing a set of criteria to evaluate each
risk or policy plan. Each criterion can be given a weight based on its significance.

2. Literature Review
Due to the urgent need to address environmental issues and advance sustainable
development, the topic of green infrastructure finance is one that is rapidly gaining at-
tention [15,18]. There is a growing body of research on financing green infrastructure
projects that focuses on a variety of factors, such as risks, regulatory frameworks, and
funding methods [19,20]. Several studies investigated risk factors related to financing
green infrastructure and suggested strategies to control and reduce these risks. In order
to identify and assess the main risks associated with investments in renewable energy
in Greece, the authors found that capital, high investment, and financing costs are key
risks for the development of renewable energy projects [21]. Policy frameworks play a
crucial role in shaping the environment for green infrastructure finance by providing in-
centives and regulations that encourage sustainable investments. Several studies have
examined the policy frameworks for green infrastructure finance in different countries
and regions, including China, Japan, Europe, and the United States [22–26]. In China, the
government has implemented various policy frameworks to support green infrastructure
finance, including renewable energy subsidies, green bonds, and carbon trading. In a recent
study [27], authors applied the Fuzzy MCDM approach to evaluate the environmental
performance of green infrastructure projects in China and found that this approach can
effectively prioritize sustainable investments based on multiple criteria. Similarly, another
study [28] used the Fuzzy MCDM methodology to analyze the risks in renewable energy
investments in China and found that this approach can effectively identify and manage the
Sustainability 2023, 15, 7068 3 of 18

risks involved in green infrastructure finance. Table 1 presents several recent studies on
green infrastructure finance.

Table 1. Some previous studies on green infrastructure finance.

Study Objective Findings Ref.

Green infrastructure planning principles:
Literature review
Financing barriers and strategies for urban
nature-based solutions
Green finance impact on the upgrading of
China’s regional industrial structure
Public awareness towards India’s innovation
lab for green finance
Selecting green aviation fleet program
management strategies
Ranking of green materials based on
sustainable development goals
Factors influencing the development of green
bond market
The findings demonstrated that there is substantial increase in the
studies on green infrastructure with American and European [29]
countries leading green infrastructure.
The study identified two main barriers, first, coordination between
private and public financiers and, second, integration of urban
[19]
nature-based solutions benefits into valuation and
accounting methods.
The findings revealed that the correlation between green finance and
output value is top in the tertiary industry followed by the primary [15]
and secondary industries.
The results of the study show that green growth is the top priority
factor with respect to awareness level of respondents. Whereas, the [30]
idea generation and submission is considered as least importance.
The main findings indicated that a mixed strategy portfolio for green
[31]
aviation fleet management is best for using limited resources.
The results revealed that natural renewable and affordability from
cradle to gate, and affordability during operation are the highest [32]
important selection criteria for green materials.
The results demonstrated that legal infrastructure is the most
important factor, following official interest rate of green bonds and
[33]
economic stability which directly affecting green bond
market expansion.

The literature review presented in this study highlights the key issues and challenges
in green infrastructure finance and provides a foundation for further research and analysis.
By examining the risks, policy frameworks, and financing mechanisms in different contexts,
we can identify best practices and lessons learned that can inform the development of
effective strategies and policies for promoting sustainable investments. Ultimately, by
prioritizing green infrastructure finance and investing in sustainable development, we can
build a more resilient and sustainable future for all. Thus, green infrastructure finance
is a complex and rapidly evolving field that requires a comprehensive understanding of
the risks, policy frameworks, and financing mechanisms involved. A useful method for
evaluating and ranking these criteria and spotting opportunities for sustainable investment
is the fuzzy MCDM approach. As a result, in this study, we evaluated and ranked China’s
green infrastructure financing risks and policy plans for sustainable development using
fuzzy AHP and fuzzy VIKOR methodologies. Policymakers and investors may support
sustainable development and solve numerous environmental and social issues at once by
combining green infrastructure finance with other policy sectors.

3. Green Infrastructure Finance Risks and Policy Plans for Sustainable Development
3.1. Identified Green Infrastructure Finance Risks
There are certain potential risks and sub-risks associated with financing green in-
frastructure projects that have been highlighted in the literature. Risks associated with
green infrastructure finance range from financial to policy and regulatory, to technical to
environmental to social, and community to legal and contractual. The major risks and
minor risks associated with financing green infrastructure are shown in Table 2.
Sustainability 2023, 15, 7068 4 of 18

Table 2. Identified green infrastructure finance risks and sub-risks.

Main Risk Sub-Risk Ref.

Policy and regulatory risks (PR)
Environmental risks (ER)
Technical risks (TR)
Financial risks (FR)
Legal and contractual risks (LR)
Social and community risks (SR)
Changes in government policies and regulations (PR1) [19,20]
Changes in tax incentives and subsidy programs (PR2) [20,34]
Uncertainty in policy implementation and enforcement (PR3) [35,36]
Political instability and changes in government leadership (PR4) [33,37]
Environmental impacts and damage caused by green infrastructure
[22,36]
projects (ER1)
Climate change and natural disasters affecting the viability of green
[22,31]
infrastructure projects (ER2)
Uncertainty in the long-term environmental benefits and performance of
[38,39]
green infrastructure projects (ER3)
Inadequate environmental assessments and monitoring of green
[40,41]
infrastructure projects (ER4)
Technical failures and defects in green infrastructure projects (TR1) [40,42]
Inadequate project planning and design (TR2) [36,43]
Lack of skilled labor and expertise for green infrastructure projects (TR3) [44,45]
Complexity and scale of green infrastructure projects (TR4) [29]
Uncertainty in the financial returns of green infrastructure investments (FR1) [46,47]
Market volatility and fluctuations in demand for green infrastructure
[48,49]
projects (FR2)
Lack of financing options and investment capital for green infrastructure
[15,18]
projects (FR3)
Difficulty in estimating the long-term financial benefits of green
[19]
infrastructure projects (FR4)
Contractual breaches and legal challenges involving investments in green
[33,50]
infrastructure (LR1)
Inadequate legal structures and rules guiding investments in green
[50,51]
infrastructure (LR2)
Insufficient legal and contractual risk assessment and due diligence (LR3) [52,53]
Projects involving green infrastructure are notoriously complex and large in
[33]
size (LR4)
Local stakeholder’s and community’s opposition and resistance (SR1) [54,55]
Negative social effects and community displacement (SR2) [33,44]
Insufficient community participation and engagement in green infrastructure
[56,57]
projects (SR3)
Monitoring and social effect evaluations of green infrastructure initiatives
[33,56]
are inadequate (SR4)

To assess their relative importance and prioritize them for efficient risk management
and decisionmaking in green infrastructure finance, each of these risks and sub-risks
will be examined using the Fuzzy AHP technique. Therefore, encouraging sustainable
investments and achieving the potential advantages of green infrastructure finance depend
on an understanding of and skillful management of these risks.

3.2. Policy Plans to Mitigate Green Infrastructure Risks

To mitigate the risks associated with green infrastructure finance in China, several pol-
icy plans can be implemented. These policy plans are based on the risks identified through
the literature review and are aimed at managing the risks and promoting sustainable green
Sustainability 2023, 15, 7068 5 of 18

infrastructure investments [58]. Therefore, this research identified six important policy
plans to mitigate green infrastructure risks in China as follows.

3.2.1. Develop a Stable and Consistent Policy Framework (PP1)

It is important to develop a stable and consistent policy framework for green in-
frastructure investments that provides clear guidelines and incentives for investors [15].
Moreover, establish a regulatory framework that ensures compliance with environmen-
tal standards and regulations. Moreover, it increases transparency and communication
between the government and investors to promote predictability and stability in green
infrastructure investments.

3.2.2. Increase the Availability of Financing Options (PP2)

This is one of the important policy plans for enhancing the availability of financing
options for green infrastructure projects, including government-backed loans and private
investments and provides guarantees and risk-sharing mechanisms for investors to mitigate
the risk of financial losses [59]. Additionally, to develop financial models that consider the
long-term nature of green infrastructure investments to promote their sustainable economic
viability [60,61].

3.2.3. Develop Standardized Technical Guidelines and Procedures (PP3)

To mitigate the risks, it is crucial to develop standardized technical guidelines and pro-
cedures for green infrastructure projects to ensure that they are designed and implemented
effectively. Likewise, increase the availability of skilled labor and technical expertise to
support the planning and implementation of green infrastructure projects [31]. Further, to
conduct regular technical assessments and audits of green infrastructure projects to identify
and address any technical issues.

3.2.4. Conduct Comprehensive Environmental Assessments and Monitoring (PP4)

It is vital to conduct comprehensive environmental assessments and monitoring of
green infrastructure projects to identify and mitigate any potential environmental risks and
develop guidelines and standards for environmental management and restoration of green
infrastructure projects [62]. Moreover, it is crucial to develop emergency response plans to
address potential environmental risks and ensure that they are effectively communicated
to all stakeholders.

3.2.5. Establish a Participatory Approach (PP5)

This policy plan establishes a community- and stakeholder-involved participatory
planning and implementation process for green infrastructure. In order to identify and
mitigate any potential negative social impacts and to adequately compensate and support
any communities that are adversely impacted by green infrastructure projects, comprehen-
sive social impact assessments, and monitoring of green infrastructure projects are also
necessary [63].

3.2.6. Develop a Legal and Regulatory Framework (PP6)

It is essential to create a legal and regulatory framework that offers investors and
stakeholders in green infrastructure initiatives with clear rules and protection. So, it is
necessary to conduct due diligence and risk assessments of potential legal and contractual
risks before investing in green infrastructure projects [53]. Moreover, establishing dispute
resolution mechanisms can address any legal and contractual issues that may arise during
green infrastructure investments.
Implementing these policy plans can help to mitigate the risks associated with green
infrastructure investments in China and promote sustainable green infrastructure develop-
ment. However, it is essential to continue monitoring and evaluating these policy plans to
ensure their effectiveness and adapt them to any changing circumstances.
 green infrastructure investments.
Implementing these policy plans can help to mitigate the risks associated with gre
infrastructure investments in China and promote sustainable green infrastructure dev
opment. However, it is essential to continue monitoring and evaluating these policy pla
Sustainability 2023, 15, 7068 6 of 18
to ensure their effectiveness and adapt them to any changing circumstances.

4. Methodology
4. Methodology
Themethodology
The methodology used
used in study
in this this study is based
is based on theAHP
on the Fuzzy FuzzyandAHPFuzzy and Fuzzy VIKO
VIKOR
techniques. The Fuzzy AHP method is used to assess and prioritize the
techniques. The Fuzzy AHP method is used to assess and prioritize the main risks associ-main risks asso
atedwith
ated with green
green infrastructure
infrastructure finance.
finance. The Fuzzy
The Fuzzy VIKORVIKOR
approachapproach
is utilizedistoutilized
evaluateto evalua
and
andrank
rankthe policy
the plans
policy to mitigate
plans the risks
to mitigate the associated with green
risks associated withinfrastructure finance finan
green infrastructure
in China. Figure 1 provides the decision methodology of the study.
in China. Figure 1 provides the decision methodology of the study.

Assessing the green infrastructure finance risks and policy plans for
sustainable development in China

Determine risks, sub-risks and policy plans for the assessment

Apply Fuzzy AHP method to obtain weights of risks and

sub-risks

Assign weights to risks and sub-risks

Approve weights

Obtained risks and sub-risks weights

Combine Fuzzy VIKOR method to rank policy plans

Construct decision matrix

Normalize decision matrix

Weighted normalize decision matrix

Compute the S, R and Q values

Prioritize the policy plans based on lowest value of Q

Rank Policy plans to overcome the green infrastructure

finance

Figure1.1.Decision
Figure Decisionmethodology of theofstudy.
methodology the study.
4.1. The Fuzzy AHP Method
4.1. The Fuzzy AHP Method
The Fuzzy AHP approach allows for the consideration of uncertain and imprecise
The Fuzzy
information AHP approach
by assigning allows
fuzzy numbers for criteria
to the the consideration of uncertain and
used in the decisionmaking pro- imprec
cess [64]. This allows
information for a more
by assigning realistic
fuzzy representation
numbers of the decisionmaking
to the criteria problem,
used in the decisionmaking p
particularly when dealing with complex and uncertain situations [11]. Table 3 presents
cess [64]. This allows for a more realistic representation of the decisionmaking proble the
Triangular Fuzzy Numbers scale.
Sustainability 2023, 15, 7068 7 of 18

Table 3. TFNs Scale [65].

Code Linguistic Variable TFNs

1 Equally preference (1,1,3)
2 Weak preference (1,3,5)
3 Strong preference (3,5,7)
4 Very strong preference (5,7,9)
5 Extremely strong preference (7,9,11)

The Fuzzy AHP process involves several steps [66], including:

Step 1. Triangular fuzzy matrix (TFM):

Xi = ( l i , m i , u i ) (1)

After, the first TFM is created with the middle TFM:

 
Xm = xijm (2)

Next, the second TFM is established for the upper and lower bounds of TFN using a
geometric mean approach:
p
Xg = [ xiju xijl ] (3)
Step 2. Create and compute the weight vector and lambda max based on the Saaty method.
Step 3. Create consistency index (CI):

λm
max − n
CI m = (4)
n−1

g
λmax − n
CI g = (5)
n−1
Step 4: Create the consistency ratio (CR):

CI m
CRm = (6)
RI m

CI m
CRm = (7)
RI m
If the consistency ratio is below a certain threshold, i.e., less than 0.10, the pairwise
comparisons are considered consistent. Table 4 shows the RI scale [66].

Table 4. RI scale.

n RIm RIg
1 0 1
2 0 2
3 0.48 0.17
4 0.79 0.26
5 1.07 0.35
6 1.19 0.38
7 1.28 0.40
Sustainability 2023, 15, 7068 8 of 18

Table 4. Cont.

n RIm RIg
8 1.34 0.41
9 1.37 0.43
10 1.40 0.44

4.2. The Fuzzy VIKOR Method

The Fuzzy VIKOR approach helps to identify the best compromise solution among
a set of alternatives. This approach is particularly useful when dealing with conflicting
criteria and objectives and reaching a final decision [67]. The several steps of Fuzzy VIKOR
are as follows [2]:
Step 1. Establish the fuzzy performance matrix and the weight vector.

···
 
C1 C2 Cn
∼ ∼ ∼ 
O1  11
 p p 12 ··· p 1n 
∼ ∼ ∼ ∼ 
D = ...  p
 21
p 22 ··· p 2n  (8)
 .. .. .. .. 

On  . . . . 
∼ ∼ ∼
p m1 p m2 ··· p mn

∼ n
W = ( w1 , w2 , w3 ) , ∑ j =1 w j = 1

Step 2. Determine the benefit and the cost criteria values.

∼+ ∼ ∼− ∼
pi = max j p ij , p i = min j p ij for i ∈ l b (benefit criteria),
∼+ ∼ ∼− ∼ (9)
pi = min j p ij , p i = max j p ij for i ∈ l c (cost criteria).

∼
Step 3. Calculate the normalized fuzzy decision matrix Dij :
∼+ ∼
∼ p i (−) p ij
Dij = zi+ −li−
for i ∈ l b
∼ ∼+ (10)
∼ p ij (−) p i
Dij = zi− −li+
for i ∈ l c

∼ ∼ x ∼y ∼z ∼ ∼x ∼y ∼z
   
Step 4. Calculate the values S j = Sj , Sj , Sj and R j = Rj , Rj , Rj :

∼ n ∼ ∼
Sj = ∑i=1 W i (×) Dij (11)

∼ ∼ ∼
R j = maxi W i (×) Dij (12)
 x y z
∼ ∼ ∼ ∼
Step 5. Calculate the values Q j = Q j , Q j , Q j :

∼ ∼+ ∼ ∼+
∼ S j (−) S R j (−) R
Q j = v −z (+)(1 − v) −z (13)
S − S+ x R − R+ x
∼+ ∼ ∼+ ∼
here S = min j S j ; S−z = max j Szj ; R = min j R j ; R−z = max j R xj
∼ ∼ ∼
Step 6 and 7. Defuzzify S j , R j and Q j values.
Sustainability 2023, 15, 7068 9 of 18

Step 8. Propose a solution to the alternative which is the optimal solution of the
∼
measure Q j .
Overall, the Fuzzy AHP and Fuzzy VIKOR approaches provide a systematic and
comprehensive framework for identifying and prioritizing the risks associated with green
infrastructure finance in China and identifying the best policy plans to mitigate these
risks. In the study, we consulted with five experts to assign the weights to risks, sub-risks,
and policy plans based on their importance to one and each other. All the experts were
experienced and professional from the field of academia, government, and green industry.

5. Results
5.1. Results of Main Risks Using Fuzzy AHP
In the study, we analyzed the main risk weights using a pairwise comparison matrix of
the Fuzzy AHP method. The pairwise comparison matrix is presented in Table 5. Moreover,
the weights and ranking of the main risks associated with green infrastructure finance in
China are presented in Table 6.

Table 5. Pairwise comparison matrix of main-risks using Fuzzy AHP.

Policy and Legal and Social and

Environmental Technical Financial
Main-Risk Regulatory Contractual Community
Risks (ER) Risks (TR) Risks (FR)
Risks (PR) Risks (LR) Risks (SR)
Policy and regulatory
(1,1,1) (1,1.542,2.5) (1,1.375,2.5) (1,1.225,2) (1,1.311,2) (1,2.422,3.5)
risks (PR)
Environmental
(0.400,0.649,1) (1,1,1) (0.500,0.874,1) (0.400,0.728,1) (0.400,0.794,1) (1,1.697,2.5)
risks (ER)
Technical risks (TR) (0.400,0.727,1) (1,1.144,2) (1,1,1) (0.500,0.874,2) (1,1.285,2.5) (1,1.815,2.5)
Financial risks (FR) (0.500,0.816,1) (1,1.374,2.5) (0.500,1.144,2) (1,1,1) (1,1.225,2) (1,1.848,3)
Legal and contractual
(0.500,0.763,1) (1,1.259,2.5) (0.400,0.778,1) (0.500,0.816,1) (1,1,1) (1,1.602,3)
risks (LR)
Social and
(0.286,0.413,1) (0.400,0.589,1) (0.400,0.551,1) (0.333,0.541,1) (0.333,0.624,1) (1,1,1)
community risks (SR)

Table 6. The ranking of main risks associated with green infrastructure finance.

Main Risk Weight Rank

Policy and regulatory risks (PR) 0.212 1
Environmental risks (ER) 0.146 5
Technical risks (TR) 0.182 3
Financial risks (FR) 0.190 2
Legal and contractual risks (LR) 0.167 4
Social and community risks (SR) 0.102 6

The above results suggest that policy and regulatory risks (PR) are the most signif-
icant risks associated with green infrastructure finance in China with a weight of 0.212.
This shows that the success of green infrastructure projects in China may be significantly
impacted by uncertainties and prospective changes in rules and regulations regulating
green infrastructure investment and development. With a weight of 0.190, financial risks
(FR) were ranked as the second-most important risk. This shows that concerns about the
sustainability of green infrastructure projects financially and economically could have a
limited effect on their success. With a weight of 0.182, technical risks (TR) were ranked as
the third most important risk. This suggests that implementing cutting-edge technologies
Sustainability 2023, 15, 7068 10 of 18

into green infrastructure projects could come with possible risks and uncertainties, such as
technical setbacks, delays, and cost overruns.

5.2. Results of Sub Risks Using Fuzzy AHP

The results of the Fuzzy AHP analysis for the sub-risks associated with the PR are
presented in Figure 2, along with their corresponding weights. The results suggest that
the most significant sub-risks associated with PR are changes in government policies and
regulations (PR1) with a weight of 0.277, followed by changes in tax incentives and subsidy
programs (PR2), political instability, and changes in government leadership (PR4), and
Sustainability 2023, 15, x FOR PEER REVIEW
uncertainty in policy implementation and enforcement (PR3). These sub-risks of PR 10 of
can18
hinder and delay the development of green infrastructure finance projects.

PR4 0.252

PR3 0.204

PR2 0.267

PR1 0.277

0 0.05 0.1 0.15 0.2 0.25 0.3

Figure
Figure 2.
2. The
The weights
weights and
and ranking
ranking of
of sub-risks
sub-risks associated with PR.
associated with PR.

For environmental risks (ER), the environmental impacts and damage caused by
infrastructure projects
green infrastructure projects (ER1)
(ER1)were
wereidentified
identifiedas
asthe
themost
mostsignificant
significantsub-risk
sub-riskwith
witha
a weightofof0.285,
weight 0.285,followed
followedby byinadequate
inadequateenvironmental
environmentalassessments
assessments and
and monitoring
monitoring of
green infrastructure projects (ER4), uncertainty in the long-term
long-term environmental benefits
and performance of green infrastructure projects (ER3), and climate change and natural
disasters affecting the viability of green infrastructure projects
projects (ER2).
(ER2). Figure 3 displays the
weights and rankings of sub-risks
sub-risks from
from ER
ER perspectives.
perspectives.

ER4 0.245

ER3 0.239

ER2 0.230

ER1 0.285

0.000 0.050 0.100 0.150 0.200 0.250 0.300

Figure 3. The weights and ranking of sub-risks associated with ER.

Figure 3. The weights and ranking of sub-risks associated with ER.

For technical
technicalrisks
risks(TR),
(TR),the technical
the failures
technical andand
failures defects in green
defects infrastructure
in green pro-
infrastructure
jects (TR1) were determined as the most important sub-risk with a weight of
projects (TR1) were determined as the most important sub-risk with a weight of 0.324, 0.324, fol-
lowed by inadequate project planning and design (TR2), complexity and scale of green
infrastructure projects (TR4), and lack of skilled labor and expertise for green infrastruc-
ture projects (TR3). Figure 4 presents the weights and rankings of sub-risks from TR per-
spectives.
Sustainability 2023, 15, 7068 11 of 18

followed by inadequate project planning and design (TR2), complexity and scale of green
infrastructure projects (TR4), and lack of skilled labor and expertise for green infras-
Sustainability 2023, 15, x FOR PEER REVIEW
tructure projects (TR3). Figure 4 presents the weights and rankings of sub-risks11 of 18
from
Sustainability 2023, 15, x FOR PEER REVIEW 11 of 18
TR perspectives.

TR4 0.219
TR4 0.219

TR3 0.211
TR3 0.211

TR2 0.246
TR2 0.246

TR1 0.324
TR1 0.324

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

Figure 4. The weights and ranking of sub-risks associated with TR.

Figure 4. The weights and ranking of sub-risks
Figure 4. sub-risks associated
associated with
with TR.
TR.

For financial
For financial risks (FR),
(FR), the uncertainty in the financial
financial returns of green
green infrastructure
For financial risks
risks (FR), the
the uncertainty
uncertainty in in the
the financial returns
returns of
of green infrastructure
infrastructure
investments
investments (FR1)
(FR1) was
was recognized
recognized asasthe
themost
most crucial
crucialsub-risk
sub-riskwith a
with weight
a of 0.295,
weight fol-
of 0.295,
investments (FR1) was recognized as the most crucial sub-risk with a weight of 0.295, fol-
lowed byby
followed market
market volatility and
volatility andfluctuations
fluctuationsin demand
demandfor forgreen
green infrastructure
infrastructure projects
lowed by market volatility and fluctuations inindemand for green infrastructure projects
projects
(FR2), lack
(FR2), lack of financing
financing options and and investment capital capital for green
green infrastructure projects
projects
(FR2), lack ofof financing options
options and investment
investment capital for for green infrastructure
infrastructure projects
(FR3), and
(FR3), andlack
lackofoffinancing
financingoptions
optionsand and investment
investment capital
capital forfor green
green infrastructure
infrastructure pro-
projects
(FR3), and lack of financing options and investment capital for green infrastructure pro-
jects
(FR3).(FR3). Figure
Figure 5 illustrates
5 illustrates the
the rankingranking of sub-risks
of sub-risks relating
relating to FR.
to FR.to FR.
jects (FR3). Figure 5 illustrates the ranking of sub-risks relating

FR4 0.193
FR4 0.193

FR3 0.236
FR3 0.236

FR2 0.276
FR2 0.276

FR1 0.295
FR1 0.295

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

Figure 5. The weights and ranking of sub-risks associated with FR.

Figure 5. The weights and ranking of sub-risks associated with FR.
Figure 5. The weights and ranking of sub-risks associated with FR.
For legal and contractual risks (LR), the contractual breaches and legal challenges
For legal and
and contractual
contractual risks
risks (LR),
(LR), the
the contractual
contractual breaches
breaches andand legal challenges
challenges
involvinglegal
For investments in green infrastructure (LR1) were ranked first as legal
major risks with
involving
involving investments in green infrastructure (LR1) were ranked first as major risks with
a weight ofinvestments in green infrastructure
0.289. The insufficient (LR1) wererisk
legal and contractual ranked first as major
assessment and duerisks with a
diligence
a weight
weight of of 0.289.
0.289. The
The insufficient
insufficient legal
legal and
and contractual
contractual risk
risk assessment
assessment and
and due
due diligence
diligence
(LR3) was identified as the second important sub-risks, following inadequate legal struc-
(LR3) was
(LR3) was identified as the second important sub-risks, following inadequate legal struc-
tures and rules guiding investments in green infrastructure (LR2) as projects involving
and rules
tures and rules guiding
guiding investments
investments in green
green infrastructure
infrastructure (LR2)
(LR2) asas projects
projects involving
involving
green infrastructure are notoriously complex and large in size (LR4) and are considered
infrastructure are notoriously complex and large in size
green infrastructure size (LR4)
(LR4) andand are
are considered
considered
as lowest ranked sub-risks for the development of green infrastructure projects in China.
as lowest ranked sub-risks for the development of green infrastructure projects in China.
Figure 6 shows the ranking of sub-risks from the LR perspective.
Figure 66 shows
Figure shows thethe ranking
ranking ofof sub-risks
sub-risks from
from the
the LR
LRperspective.
perspective.
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LR4 0.184
LR4 0.184

LR3 0.265
LR3 0.265

LR2 0.262
LR2 0.262

LR1 0.289
LR1 0.289

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

Figure
Figure 6.
6. The weights and ranking of sub-risks associated with LR.
The weights and ranking of sub-risks associated with LR.

For
For social and
social and community
and community
communityrisksrisks (SR),
risks(SR), the
(SR),the local
thelocal stakeholder’s
localstakeholder’s
stakeholder’sand and community’s
andcommunity’s
community’sopposi- oppo-
oppo-
sition
tion
sitionandand
and resistance
resistance
resistance (SR1)
(SR1) obtained
obtained
(SR1) obtainedthethe highest
highest
the weight
weight
highest of
of 0.288,
of 0.288,
weight so itso
0.288, is it
so is
is considered
itconsidered
considered as
as the the
asfirst
the
first
rankedranked sub-risk
sub-risk whichwhich impedes
impedes the the projects’
projects’ development
development related
related to to
green
first ranked sub-risk which impedes the projects’ development related to green infrastruc- green infrastruc-
infrastructure
ture
ture finance.
finance. The
The insufficient
The insufficient
finance. community
community
insufficient participation
participation
community and
and engagement
and engagement
participation in greenin
engagement green
green infra-
ininfrastructure
infra-
structure
structure projects (SR3) is considered as the second-ranked sub-risks, following monitor-
projects projects
(SR3) is (SR3) is
considered considered
as the as the second-ranked
second-ranked sub-risks, sub-risks,
following following
monitoring and so-
monitor-
ing
ing and
cial and social
effect effect
effect evaluations
evaluations
social of
of green
green infrastructure
of green infrastructure
evaluations initiatives areinitiatives
infrastructure inadequate
initiatives are inadequate
are(SR4) (SR4)
and negative
inadequate (SR4)
and
and negative
socialnegative social
effects and effects
effects and
community
social and community
displacement displacement
community (SR2). Figure 7(SR2).
displacement Figure
displays
(SR2). 77 displays
the ranking
Figure displaysof the rank-
sub-risks
the rank-
ing
ing of
of sub-risks
relating to SR. relating
sub-risks relating to
to SR.
SR.

SR4 0.232
SR4 0.232

SR3 0.251
SR3 0.251

SR2 0.229
SR2 0.229

SR1 0.288
SR1 0.288

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

Figure 7. The weights and ranking of sub-risks associated with SR.

Figure 7. The weights and ranking of sub-risks associated with SR.
Figure 7. The weights and ranking of sub-risks associated with SR.
5.3. Overall Sub Risks Results Using Fuzzy AHP
5.3. Overall Sub Risks Results Using Fuzzy AHP
The results of the Fuzzy AHP analysis for the overall sub-risks associated with green
The results of the Fuzzy AHP analysis for the overall sub-risks associated with green
infrastructure
infrastructure finance
financeinin
infrastructure finance China
inChina indicate
Chinaindicate
indicate that
thethe
that
that the most
most
most significant
significant
significant sub-risk
sub-risk
sub-risk acrossacross
across all
all sub-
sub-
all sub-risks
risks
risks
is is technical
is technical
technical failures
failures
failures and defects
and defects
and defects in greenin green infrastructure
ininfrastructure
green infrastructure projects
projectsprojects
(TR1) with (TR1)
(TR1) with a
with aof
a weight weight
weight
0.590.
of
of 0.590.
The second
0.590. The second
Themost
second most
most significant
significant sub-risk sub-risk
significant is changes
sub-risk is
is changes in
in government
in government
changes policiespolicies
government and
and reg-
and regulations
policies reg-
ulations
(PR1)
ulations (PR1)
with with
with aaofweight
a weight
(PR1) of
of 0.587.
0.587. The
weight thirdThe
0.587. mostthird
The most
most significant
significant
third sub-risk issub-risk
significant changesis
sub-risk isinchanges in
in tax
tax incentives
changes tax
incentives
and subsidy
incentives and
and subsidy
programs programs
subsidy (PR2) with(PR2)
programs with
withofaa0.566.
a weight
(PR2) weight of
of 0.566.
weightOverall, Overall,
0.566.the resultsthe
Overall, results
indicate
the indicate
resultsthat these
indicate
that
that these
sub-risks
theseposesub-risks pose
pose the
the greatest
sub-risks greatest
greatesttochallenge
challenge
the the success
challenge to the
to of success
thegreen
success of
of green
green infrastructure
infrastructure pro-
projects in China.
infrastructure pro-
jects
Figure in China.
jects in 8China. Figure
presents 8 presents
the8ranking
Figure the
presentsofthe ranking
overall
ranking of overall
sub-risks sub-risks
in the
of overall context
sub-risks in the
in of context
thethe decision
context of the
goal
of the deci-
of
deci-
sion
the goal
study. of the study.
sion goal of the study.
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SR4 0.0237
SR3 0.0256
SR2 0.0234
SR1 0.0294
LR4 0.0307
LR3 0.0443
LR2 0.0438
LR1 0.0483
FR4 0.0367
FR3 0.0448
FR2 0.0524
FR1 0.0561
TR4 0.0399
TR3 0.0384
TR2 0.0448
TR1 0.0590
ER4 0.0358
ER3 0.0349
ER2 0.0336
ER1 0.0416
PR4 0.0534
PR3 0.0432
PR2 0.0566
PR1 0.0587

Figure
Figure 8.8.The weights and ranking
The weights and of overall of
ranking sub-risks
overallassociated
sub-riskswith the green with
associated infrastructure
the greenfi-
nance.
infrastructure finance.

5.4. Results of Policy Plans Using Fuzzy VIKOR

The results of the Fuzzy VIKOR analysis for the policy plans aimed at mitigating the
risks associated
associated withwith green
green infrastructure
infrastructure finance
finance inin China
China areare presented
presented in in this
this section,
section,
along with their corresponding scores. In this regard, the fuzzy decision
with their corresponding scores. In this regard, the fuzzy decision matrix, normal- matrix, normalized
matrix,
ized and weighted
matrix, and weighted normalized
normalizeddecision
decisionmatrix. In the
matrix. In study,
the study,all theall policy
the policyplans are
plans
taken
are as benefit
taken criteria.
as benefit In the
criteria. In Fuzzy VIKOR,
the Fuzzy VIKOR,we obtained
we obtained the values
the values of S,ofR,S,and Q. The
R, and Q.
best-suited
The policypolicy
best-suited plans plans
rankedranked
on the on
basistheofbasis
the lowest
of thevalue
lowest of Q i . So,of
value 𝑄 . 7So,
Table shows
Tablethe
7
final ranking of policy plans. The findings indicate that increase the availability
shows the final ranking of policy plans. The findings indicate that increase the availability of financing
options
of (PP2)options
financing is the most
(PP2)suitable policy
is the most plan topolicy
suitable mitigate
planthetorisks for green
mitigate infrastructure
the risks for green
finance development in China. The developed standardized
infrastructure finance development in China. The developed standardized technical technical guidelines and
procedures (PP3) has been recognized as the second important policy
guidelines and procedures (PP3) has been recognized as the second important policy plan plan to overcome the
risks.
to Moreover,
overcome the the developed
risks. Moreover, legal
theand regulatory
developed framework
legal (PP6) has
and regulatory achieved(PP6)
framework the third
has
rank. The other policy plans are ranked as follows: develop a stable
achieved the third rank. The other policy plans are ranked as follows: develop a stable andand consistent policy
frameworkpolicy
consistent (PP1),framework
conduct comprehensive
(PP1), conductenvironmental
comprehensiveassessments
environmental andassessments
monitoring
(PP4), and establish a participatory approach (PP5).
and monitoring (PP4), and establish a participatory approach (PP5).

Table 7.
Table The final
7. The final ranking
ranking of
of policy
policy plans
plans based
based on lowest Q
on lowest Q value.
value.
Policy PlanPlan
Policy Qi 𝑸𝒊 Rank
Rank
Increasethe
Increase the availability
availability of financing
of financing options
options (PP2) (PP2) 0.023 0.023 1 1
Develop standardized
Develop standardized technical
technical guidelines
guidelines and procedures
and procedures (PP3) (PP3) 0.047 0.047 2 2
Develop a legal and regulatory framework
Develop a legal and regulatory framework (PP6) (PP6) 0.073 0.073 3 3
Develop a stable and consistent policy framework
Develop a stable and consistent policy framework (PP1)
(PP1) 0.084
0.084 4 4
Conduct comprehensive environmental assessments and monitoring (PP4) 0.097 5
Conduct comprehensive environmental assessments and monitoring (PP4) 0.097 5
Establish a participatory approach (PP5) 0.099 6
Establish a participatory approach (PP5) 0.099 6
Sustainability 2023, 15, 7068 14 of 18

5.5. Discussion
The results of this study highlight the significant risks associated with green infras-
tructure finance in China and the policy plans that can be implemented to mitigate these
risks. According to the Fuzzy AHP study of the major risks, legislative and regulatory,
financial, and technical risks are the key ones impeding the growth of green infrastructure
financing in China. This emphasizes how crucial it is to have an effective policy, a func-
tioning financing system, and a program that encourages and supports knowledge transfer
and innovation in order to guarantee the success of green infrastructure projects’ technical
aspects. This is in line with the conclusions of earlier research, which also emphasized the
significance of innovation and technology transfer in fostering sustainable development in
China [68]. The conclusions of this study are in accordance with those of earlier studies
that also demonstrated the challenges involved in financing green infrastructure in China.
Previous studies [69,70] have also emphasized the significance of technology transfers
and innovation in fostering sustainable development. These studies stressed the signifi-
cance of China’s indigenous green technology development, promotion, and incorporation
into infrastructure projects. Additionally, a number of studies [71–73] have emphasized
how government policies and regulations can encourage investment in green infrastructure.
These studies stress the significance of formulating rules and policies that are precise and
consistent in order to provide a secure and encouraging environment for green infras-
tructure investment. The findings provide support for government efforts to promote
sustainable development and achieve its environmental objectives. The government has
established guidelines and procedures to encourage green financing, such as the Green
Bond Guidelines, which provide a framework for issuing green bonds. The policy measures
outlined in this report, which include enhancing the policy and regulatory environment
and creating green finance instruments, can support these initiatives and further China’s
commitment to green development.
This study offers insight into future government efforts and contributes to the un-
derstanding of the risks associated with financing green infrastructure. The attainment
of sustainable development goals can be aided by investors and policymakers using the
study’s findings to develop and implement green infrastructure initiatives.

6. Conclusions
China has made significant progress toward promoting green growth and achieving its
environmental objectives. To achieve sustainable development, considerable investments
in green infrastructure projects are required. As a result, it is crucial to assess and reduce
the risks related to financing green infrastructure to draw more investments and advance
sustainable development in China. This study used a Fuzzy AHP and Fuzzy VIKOR
approach, in order to identify and prioritize the major risks, sub-risks, and policy plans
related to financing green infrastructure in the country. The findings of the Fuzzy AHP
method revealed that policy and regulatory risks, financial risks, and technological risks
are the main risks associated with green infrastructure finance in China. These risks are
consistent with previous research which has highlighted the challenges of promoting green
finance and achieving sustainable development in China. The sub-risks identified in this
study included technical failures and defects in green infrastructure projects, changes in
government policies and regulations, and changes in tax incentives and subsidy programs.
To mitigate these risks, the study developed policy plans that can complement the
efforts of the Chinese government to promote green development. Therefore, the Fuzzy
VIKOR method is used to rank these policy plans, so increasing the availability of financing
options is considered as the most vital policy plan following standardized technical guide-
lines and procedures and developing legal regulations. One of the strengths of this study
is the use of a Fuzzy AHP and Fuzzy VIKOR approach which enabled the researchers to
incorporate subjective and ambiguous factors into the analysis. This approach is partic-
ularly useful in complex decisionmaking situations where uncertainty and imprecision
are prevalent. This study contributes to the literature on green finance and sustainable
Sustainability 2023, 15, 7068 15 of 18

development by providing insights into the risks associated with green infrastructure
finance in China and developing policy plans to mitigate these risks. The findings can
provide valuable insights to policymakers and investors in promoting green development
and achieving sustainable development in China.

6.1. Policy Recommendations

The following policy recommendations can be made to promote green infrastructure
finance and mitigate the associated risks in China:
• The government should develop a comprehensive and transparent policy and regu-
latory framework that provides clear guidelines and incentives for promoting green
finance and sustainable development. This framework should address issues, such as
information disclosure, risk assessment, and green bond standards.
• The government must develop a range of green financial products, such as green
bonds, green funds, and green loans. To meet the needs of several stakeholders
and encourage the development of green infrastructure projects, these tools should
be developed.
• The government should boost the capacity of financial institutions by promoting the
development of green financial products, aiding in the establishment of green finance
institutions, and providing staff incentives and training.
• The government should promote innovation and knowledge transfer by providing
funding and incentives for research and development, promoting the establishment of
demonstration projects, and supporting international cooperation.
• By encouraging communication and participation among stakeholders, creating fo-
rums for knowledge and experience sharing, and supporting collaborative projects
and initiatives, the government should promote collaboration and partnership.
These policy recommendations are consistent with the efforts of the government to
promote green finance and achieve sustainable development and can contribute to the
country’s long-term development goals.

6.2. Limitations and Future Research

Despite the valuable insights generated from this study, there are some limitations that
should be addressed in future research. This study only focused on the risks and policy
plans associated with green infrastructure finance in China, and the results may not be
generalizable to other countries. Future research could expand the scope of the study to
include other countries and regions to compare the risks and policy plans associated with
green infrastructure finance. Moreover, this study used a Fuzzy AHP and Fuzzy VIKOR
approach to analyze the risks and policy plans associated with green infrastructure finance.
In future research, some other MCDM methods can be used to analyze and compare the
results with the current study.

Author Contributions: Methodology, Y.D.; Validation, Y.A.S.; Formal Analysis, Y.D.; Investiga-
tion, Y.D. and Y.A.S.; Data Collection, Y.D.; Writing—Original Draft Preparation, Y.D. and Y.A.S.;
Writing—Review and Editing, Y.A.S.; Supervision, Y.D.; Funding Acquisition, Y.D. All authors have
read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The datasets used and/or analyzed during the current study are
available on reasonable request.
Conflicts of Interest: The authors declare no conflict of interest.
Sustainability 2023, 15, 7068 16 of 18

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