Environment: Warnings on Risky Projects in Amazon Region | Amazon Watch
Amazon Watch

Environment: Warnings on Risky Projects in Amazon Region

October 6, 1998 | Danielle Knight | Inter Press Service

Washington, Oct. 1 – Investors from multinational corporations and financial lending institutions are being urged to weigh the potential environmental risks of investing in certain infrastructure projects in the Amazon.

Top business officials and representatives from the World Bank and the International Monteray Fund (IMF) are meeting here at the World Economic Development Congress amid the global financial turmoil that has rocked markets in developing countries. With Brazil particularly hard hit, and with elections looming in that country, corporations like Mobil, Shell and Enron are examining the financial and political risks of various development projects in the Amazon.

But,investors also need to pay attention to environmental and human rights risks, which are often ignored at these conferences, says Atossa Soltani, director of the California-based Amazon Watch, an advocacy organisation.

“Brazil is moving hastily forward with plans for new roads, waterways, power lines and dams which are facing growing challenges by Brazilian civil society and indigenous peoples who are determined to halt the devastation of Brazil’s natural resources,” says Soltani. “Such challenges could translate into financial risk and wise investors should ensure that they are fully aware of the potential risks before committing company resources.”

Brazilian officials, eagerly privatizing state industries to attract foreign investment, have revealed that about 42 foreign companies are now negotiating more than 100 oil and gas exploration and production projects in the country, some in the Amazon region. Accompanying hydroelectric dams, waterways, roads and other infrastructure projects for the rainforest region, are also in the planning stages.

Along with international financial institutions and multinational corporations, officials argue that these plans are necessary to develop regional trade and bring energy and resources to urban centers, such as the Brazilian city of Sao Paulo – one of the biggest in the world.

But, critics say these projects acting as arteries for global trade will have devastating consequences for Amazonia and could cause investors legal and financial risks. Many of the planned or partially completed roads, pipelines and waterways will run through millions of hectares of indigenous territories, dense forests and complex river and wetland ecosystems that would bring far-reaching changes to the region.

“Investors need to be fully aware of all the potential risks,” says Soltani.”If they do not access the environmental and social impact of a project before they commit a company’s resources, they could face possible lawsuits, disputes with indigenous groups and negative publicity.”

The Tocantins-Araguaia Waterway, for example, would affect an enormous area of forest habitat and indigenous territory in the Amazon, says Soltani.

The project, covering 800,000 square kilometers, would allow the transport of minerals, timber and agricultural good from the interior of the country to Atlantic ports. Estimated to cost more than 220 million dollars, the National Development Bank of Brazil plans to help with financing.

Environmentalists and indigenous groups, however, warn that the project is financially and politically risky because of the serious impacts it would have on the environment.

Draining the wetland region to build the waterway would impact Ilha do Banana, a national park containing several animal species threatened with extinction, according to IBAMA, the Brazilian environmental protection agency. About 10,000 indigenous people who depend on the river for survival would also be directly affected.

A court order obtained by the Xavante Indians – who have vowed to stop the project – prohibits construction of the waterway. They say pollution and erosion from the increased traffic on the river would destroy precious habitat that they depend on for food and water.

Soltani says such legal challenges to new investments are to be expected considering the ongoing land conflicts between the government and indigenous groups. While under the 1988 constitution, Brazil must legally recognize and demarcate indigenous territories by 1993, nearly half of all indigenous territories still await full recognition.

“Besides the court order, potential investors should be aware that the Brazilian Congress has officially deemed the Environmental Impact Assessment inadequate,” says Soltani.

Many Amazonian indigenous groups say they do not know what projects are being planned until it is too late. “It’s very hard to get documents about plans for new projects that impact our area,” Ann Paulo of the Brazilian Indigenous Council in the state of Roraima, Brazil, told IPS.

Some hydro-powered electric dam projects also pose a risk to investors, says Soltani. The proposed multi-billion dollar Belo Monte dam on the Xingu River in the Amazon would flood part of the Kayapo indigenous reserve and cause the relocation of several thousand families. In 1989, outcry against the project by environmentalists and indigenous groups led to the World Bank’s cancellation of the financing for dams in the Amazon, she says.

Critics of the dam say it is not economically viable since its electricity production will drop to 50 percent of installed capacity during the dry season.

Other dams that may not seem to have a significant impact on the area must be seen in the context of increased dam construction in the Brazilian Amazon, says Soltani. Although an individual dam could be relatively harmless, intense dam construction in the region has already resulted in the flooding and destruction of more than 5,000 square kilometers of rainforest.

Because of the flat nature of the region, dams tend to lead to the formation of giant reservoirs that flood enormous areas of rainforest and require the relocation of thousands of rural settlers; and, given the intense damming of watersheds within the Amazon, scientists have questioned whether river systems such as the Tocantins-Araguaia and Xingu contain sufficient flows to support so many dams.

“This results in significant impacts on watershed management and project feasibility,” says Soltani. “Before financing an individual dam, or transmission line relying on hydroelectric dams, investors should ensure that the technical feasibility of each dam has been adequately assessed in light of other dams planned for the same watershed.” (END/IPS/dk/98)

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