The Amazon on Life Support?

Deforestation in the Amazon as seen by satellite (by NASA, via Wikimedia Commons).

Every minute, an area the size of 50 soccer fields is destroyed in the Amazon Rainforest.  Over the past 40 years, nearly 20% of the forest has been destroyed – an area roughly the size of Alaska. Simply put, in less than half of a century more of the rainforest was destroyed than in the previous 450 years – combined.  High-resolution satellite images tell a story of devastating deforestation in the planet’s largest and most diverse rainforest. Many areas that were once a sea of lush greenery have been transformed into a barren, muddy landscape.

The Amazon represents more than half the remaining rainforest on the planet.  Humans depend on these ecosystems as a source for the planet’s carbon, water, and climate systems. Thus, it isn’t surprising that losing 2.3 million square kilometers of forest in a mere 13 years, as new research indicates, is of great concern to both environmental groups and national governments. While the majority of the Amazon is located in Brazil, the forest expands across nine countries making deforestation an international crisis.

With 20% of the forest already cut down and another 20%, as expected by scientists, to be on the chopping block over the next two decades, it is only a matter of time until the Amazon’s ecology will begin to collapse. Adding global warming to the mix makes the outlook seem worse. Over 100,000 miles of illegal roads, forged by loggers who aim to reach the prime hardwood trees deep in the forest, snake through the labyrinth of vegetation. Consequences of these new roads turn out to be equally as destructive as the actual logging. Land sharks slide in unnoticed and claim the land making land thievery a common crime. As is the case with many lucrative businesses, with high profits comes violence and corruption. Armed guards, hired gunmen, and corrupt government officials all help to facilitate these illegal activities.

It isn’t all bad news for the Amazon, however. Since the devastating revelation in the early 2000s, Brazil and other South American countries have committed to reversing the damage. New data shows that while Brazil still suffers from very high rates of forest clearing, the country has cut the annual rate of forest loss to half of what it once was. In turn, many of the strategies that Brazil has implemented as a deterrent to deforestation will help policymakers in other countries respond to the troubling rates of forest decline.

Nonetheless, the deforestation rates of 2013 were far from encouraging. It is clear that changes have to be made, as deforestation is threatening the local populations’ basic needs. In the most recent Amazonia Security Agenda, it was reported  “compromising Amazonia’s ecosystems, deforestation is now threatening not only the wellbeing and rights of the region’s people, but also the economic sustainability of the very industries that it has enabled.” Scarcity of food, water, and even energy are all threatened by exploitation of the Amazon.

Escalations in forest clearing are primarily being blamed on the weakening of legal protections in the Brazilian Forest Code that were passed under Brazilian President Dilma Rousseff. The reform was riddled with controversy, and was heavily supported by members of the farmer’s lobby known as the ruralists. In Brazil, where agriculture accounts for 5% of the country’s GDP, lobbyist influence has indirectly led to increased deforestation by loggers and farmers. At the United Nation’s Summit on Climate Change, the environment minister, Izabella Teixeira, chose to focus on Brazil’s triumphs, noting the overall trend was has been positive. She attributed the elevation in deforestation to organized crime and acknowledged that the government had taken steps to fight back, saying: “What is happening are crimes, we have 3,921 police investigations, some of them involving civil servants. We are cutting into our own flesh.” Teixeira strongly emphasized that eliminating illegal deforestation remained the goal in the eyes of the government and the crimes of loggers would not be tolerated. Going forward, it is up to the Brazilian government and their counterparts, as well as the global community, to secure the future of the world’s most important forest.

What’s Eating Brazil’s Rapid Growth Rates?

A demonstrator tries to stop the riot police during one of many protests around Brazil's major cities in Rio de Janeiro June 20, 2013. Tens of thousands of demonstrators marched through the streets of Brazil's biggest cities on Thursday in a growing protest that is tapping into widespread anger at poor public services, police violence and government corruption. REUTERS/Sergio Moraes

A demonstrator tries to stop the riot police during one of many protests around Brazil’s major cities in Rio de Janeiro June 20, 2013. Tens of thousands of demonstrators marched through the streets of Brazil’s biggest cities on Thursday in a growing protest that is tapping into widespread anger at poor public services, police violence and government corruption. REUTERS/Sergio Moraes

Only a few years ago Brazil was on the rise. Both a BRIC country and economic the superstar of Latin America, Brazil enjoyed fantastic growth rates as it rode the wave of a commodity boom. With a young population and many untapped growth opportunities, Brazil seemed poised for continued growth and prosperity.

Unfortunately, even the commodity king of Latin America is not immune to an economic malaise. In contrast to its impressive 7.5% growth rate in 2010, Brazil puttered along at a meager 0.9% in 2012. While growth rates are forecast to rise in 2014, social unrest abounds. Just last year, protesters took to the streets in response to hikes on bus fares and corruption scandals in addition to a general outrage for exuberant government spending on stadiums for the upcoming World Cup and Summer Olympics.

The protestors’ indignation is understandable but would be better directed at failed policies and excessive government spending than at publicized scandals. A whopping 11.3% of Brazil’s GDP is spent on public pension plans, comparable to OECD European nations with much older populations. Its public spending, which amounts to 38.5% of GDP, rivals that of many developed countries.

Opponents of austerity will counter that the anti-poverty policies embraced by former President Luiz Inácio Lula da Silva, or “Lula” for short, lifted nearly 25 million Brazilians out of poverty. Now close to half of Brazil’s population lives in the middle class, and while real income has increased by only 20% for the 10% wealthiest Brazilians, its poorest 10% have seen their real wages double in the last decade. So long as Brazil finds other paths to economic growth, such expensive state intervention can be sustained.

Brazil’s best shot at stimulating growth rates lies in meaningful reform. A disproportionate amount of Brazil’s education spending is lavished upon institutions of higher learning. More of this money should be spent on primary and secondary schooling, and less of it should go to teacher’s pensions, which are unsustainably high.

Reallocation of money from its inflated pension system to investments in infrastructure could pay enormous dividends to Brazil’s economy. While Brazil’s agricultural and commodity production is globally competitive, it is stymied by exorbitant transportation costs that eat up as much as 22% of the costs of production. Improved roads and developed transportation systems could work to alleviate this inefficiency.

Policy makers should also work to streamline its onerous tax code and customs procedures. Doing so would sharply curtail exportation and production costs, in turn bringing Brazilian products to a higher echelon of competitiveness. At the moment, manufacturing costs are continuing to rise while technological advances in production are stagnant. A concerted effort by policy makers to cut manufacturing costs does not need to be a priority, but should be on the backburner as a way of diversifying Brazil’s national income.

These barriers to economic growth are easily remedied. If President Dilma Rousseff or her successors adequately respond with sound economic policies in the coming decade, Brazil will be well on its way to solidifying its place as a world economic power. With a high national birth rate, copious amounts of land and resources, and countless opportunities for reform and infrastructure development, Brazil’s prospects are excellent. In the end, it is not a question of whether Brazil’s economy will continue to grow, but whether its government will allow it to.