Why It's Been So Lucrative to Destroy the Amazon Rainforest

G7 countries offered $20 million to combat fires in the Amazon. But it’s nowhere near enough to stop the deforestation.

The recent alarming fires in the Amazon rainforest raised the perennial concern of how to protect something that has value to the whole world but is contained within the borders of a few countries.

It's a discussion that's now been bogged down with petty squabbles. Brazilian President Jair Bolsonaro initially said on Tuesday he would reject a roughly $20 million aid package from G7 countries intended to help fight a surge of fires across the Amazon rainforest. He later said that we would accept the offer if French President Emmanuel Macron apologized for criticizing his handling of the fires.

Macron for his part demanded an apology for a comment Bolsonaro made on a Facebook post mocking Macron's wife. "He said very disrespectful things about my wife," Macron said in a press conference. "I have great respect for the Brazilian people and can only hope they soon have a president who is up to the job."

Bolsonaro then said he would accept the aid if Brazil can decide how it will be spent. He has already deployed the military to help combat the blazes.

This clash of egos over a relatively paltry amount of money from some of the wealthiest countries in the world is silly, especially given the stakes.

The arguing over aid also obscures an important point: Despite international concern and pressure, the fate of the Amazon rests mainly on the political and economic forces on the ground. Though farmers, ranchers, miners, and loggers have extracted tremendous value from clearing the rainforest, Brazil does have laws on the books to preserve the jungle. The government has used them to curb deforestation in the Amazon before. It will take renewed public pressure from Brazilians to do it again.

Exploiting the Amazon has proven immensely profitable

The Amazon is the largest tropical rainforest in the world, and about 60 percent of its 2.1 million square-mile area is in Brazil. It is a massive reservoir of carbon, and it is home to the largest concentration of biodiversity on the planet. It plays a major role in the region's climate, and scientists are still learning how it affects the global climate system.

Yet in the past year, deforestation and fires have surged, reversing years of decline. Several scientists are now raising the alarm that the Amazon is moving closer toward a dieback scenario, where enough of the forest is lost that the ecosystem as a whole could collapse.

Despite these risks, there are tremendous economic pressures behind the blazes. The vast majority of the fires burning in the Amazon right now were started by humans in service of mining, logging, and agriculture. After clearing an area of forest, fires are ignited by farmers using slash-and-burn techniques to help put nutrients in the soil for crops. Others use fires to clear low-level vegetation to more easily access trees and the soil. Fires are also used by illegal loggers and miners to drive indigenous people off their lands.

One of the biggest drivers of deforestation is cattle ranching. Brazil is now the world's largest beef exporter. In 2018, these exports generated $6.7 billion for the country's economy. Brazil is also the second-largest producer of soybeans in the world, and about 80 percent of the soy grown in the Amazon is used for animal feed. With China's recent tariffs on US soybeans, China has increased its appetite for soybeans from Brazil.

There are also gold, aluminum, and oil deposits in the Amazon. Illegal mining has surged to unprecedented levels, according to the Amazon Georeferenced Socio-Environmental Information Network (RAISG), an environmental watchdog group. Timber demand has also spurred illegal logging.

And the rate of forest destruction in the Amazon has surged since Bolsonaro took office last year. He campaigned on exploiting the rainforest and won the endorsement of the country's agricultural lobby. His government has drastically reduced its enforcement of environmental laws. According to the BBC, the Brazilian environment ministry's enforcement arm issued nearly 30 percent fewer fines this year compared to the same period last year.

Bolsonaro's pick for environment minister, Ricardo Salles, was found guilty late last year of altering maps in an environmental protection program to benefit mining companies during his tenure running the environment agency of São Paulo state.

Prosecutors in Brazil are now investigating a drop-off in enforcement of environmental protections for the rainforest. Just his week, hundreds of government workers signed a public letter Bolsonaro saying their work protecting the Amazon has been undermined by his policies.

Bolsonaro has also worked to strip protections for indigenous peoples that live in the rainforest. "More than 15% of the national territory is demarcated as indigenous land and quilombolas [remote settlements founded by escaped slaves]. Less than a million people live in these truly isolated places of Brazil, exploited and manipulated by NGOs," he tweeted in January. "Together we will integrate these citizens and value all Brazilians."

Leaked documents obtained by activists this month have shown that Bolsonaro's government is pursuing a campaign to weaken indigenous rights and block environmental protection programs. The aim is to facilitate construction projects like dams, bridges, and roads in the Amazon. Environmental campaigners worry these developments will further degrade the natural functions of the forest and make it easier for illegal logging and mining operations to clear the forest.

Together, these changes have signaled to would-be ranchers and farmers that it's open season for the rainforest.

The deforestation rate has increased 88 percent over the past year, while the number of fires has increased 84 percent compared to the same time in 2018, according to Brazil's National Institute for Space Research (INPE). Since January, the Brazilian Amazon has seen a 39 percent surge in lost forested area compared to the same period last year. The dry season has just begun, so the fires can still get much worse.

So while $20 million in aid may help put out the current spate of fires, it's just a rounding error in the business case for destroying the rainforest.

The Amazon rainforest provides tremendous value when intact, and its destruction has tremendous costs

What happens in the Amazon rainforest has global implications, which is why some countries have taken a keen interest in preserving it. It absorbs carbon dioxide, but could become an emitter if it degrades too much. That makes preserving the Amazon a crucial tactic in combatting global climate change.

But there is only so much the forest can give before it collapses. About 17 percent of the Amazon has been lost, and if that rises to 20 to 25 percent, some scientists warn the forest will cross a tipping point and enter a dieback scenario. There won't be enough vegetation to move moisture through the ecosystem, causing it to degrade into savanna.

Beyond being a global ecological catastrophe, the collapse would have huge economic consequences. The rain the forest generates also helps fill reservoirs for major cities and irrigate crops. It slows soil erosion and mitigates flooding. Products like Brazil nuts are mostly harvested from wild trees. The Amazon rainforest is also an important driver of tourism. And if it releases its carbon, it would exacerbate climate change, which has its own economic impacts ranging from rising sea levels to less nutritious crops.

In a study published last year in the journal Proceedings of the National Academy of Sciences, scientists in Brazil tabulated the costs of a dieback scenario. The social and economic damages from a dieback in the Amazon would cost between $957 billion and $3.59 trillion over 30 years.

The researchers also evaluated mitigation and adaptation tactics to avert such a dire scenario. Mitigation efforts like stopping deforestation and restoring degraded areas added up to $64 billion. Activities to preserve the forest like using more drought-tolerant crops, no-burn farming techniques, and organized water management would cost $122 billion.

Other countries have spent money to preserve the rainforest and pressure the government in Brazil, to limited effect

Some countries and companies are now threatening boycotts of Brazilian goods in light of the government's handling of the recent fires. Finland called on the European Union last week to ban imports of Brazilian beef. VF Corp., the company behind shoe brands like Timberland and Vans said it would no longer buy Brazilian leather.

There are more direct levers as well. Countries like Germany and Norway contribute to the Amazon Fund, an almost $880 million pool to combat deforestation, mainly in Brazil, but also in bordering countries that host sections of the Amazon rainforest. The fund has disbursed $469 million to date.

Germany, however, has recently threatened to pull $39 million in funding for a different set of rainforest conservation projects in Brazil that pay for restoration and support indigenous communities. "The policy of the Brazilian government in the Amazon raises doubts as to whether a consistent reduction of deforestation rates is still being pursued," German Environment Minister Svenja Schulze told Der Tagesspiegel.

Bolsonaro responded that Brazil doesn't need the money. He has long sneered at concerns about the Amazon rainforest from other countries. He claims that they only want to exploit it themselves, saying in July Brazil is "a virgin that every outsider wants."

However, many people around the world are watching the fires in the Amazon with horror and are eager to help fight the fires and stop deforestation.

"One way that the international pressure can work is by bypassing the government and talking directly to people that produce the commodities in Brazil," said Maria Luisa Jorge, an assistant professor of earth and environmental sciences at Vanderbilt University. Showing producers that customers value sustainability and will pay for it is critical.

International reporting standards that verify the provenance of meat, wood, and minerals can help countries outside of the Amazon limit their consumption of goods the are the products of deforestation. Shrinking the market for environmentally destructive practices also creates an incentive to use more sustainable but more costly practices, like switching to less land-intensive crops.

The ultimate solution to protecting the Amazon is political

Economic and political pressure from other countries can certainly help build the case for preserving the rainforest, but the most meaningful measures to protect the Brazilian Amazon will have to come from Brazil's leaders.

Brazil has actually made huge strides in curbing deforestation and fires in the rainforest in the recent past. Between 2005 and 2014, deforestation in the Brazilian Amazon declined by 70 percent due to improved enforcement of environmental protections, international funding mechanisms, pressure from activists, and more efficient farming and ranching. These measures cost the Brazilian government between $308 and $923 per hectare of avoided deforestation. During the same time, Brazil's economy grew, 29 million people were lifted out of poverty, and income inequality decreased.

"I think the main thing to be said is that the [Brazilian] government is pitching it as a win-lose situation – that if we cannot use the forest, we cannot grow economically. That is just not true," Jorge said. "There is a way of getting economic growth without cutting one single tree."

Frances Seymour, a distinguished fellow at the World Resources Institute who studies sustainable development, pointed out that in many instances, conserving the rainforest has a negative cost, i.e. it generates more value than the resources used to keep it whole. The value of the rainforest takes the form of regulating temperature, providing regular rainfall, controlling flooding, and purifying water that feeds municipal supplies. These functions can help Brazil insulate itself from the consequences of climate change.

"Unfortunately the science linking specific deforestation events to impacts in specific geographies – and estimating associated economic costs – is right on the frontier of analysis," Seymour wrote in an email. "But especially if you think about the role of forests in moderating extreme temperatures and extreme weather events – both of which will become more frequent and severe with climate change, keeping forests standing is a good insurance policy for local as well as global economic development."

However, legal protections for the Amazon rainforest started being weakened after then-President Dilma Rousseff, who placed a lower priority on the environment than her predecessor, came to office in 2011. As economic growth began to slow and international demand for beef and soy rose, deforestation increased.

And for the remaining environmental protection laws, the problem is enforcement. Even in the best of circumstances with a government that makes protecting the Amazon a priority, it's difficult and expensive to police vast, remote, sparsely populated areas across difficult, densely forested terrain. That's why the Amazon has become a smuggling route for illegal drugs. With a government in place that wants to harness the rainforest and the resources within it for economic gain, it's not too surprising that deforestation has increased.

On the other hand, we've seen domestic policy changes have major positive impacts on rainforests in other parts of the world. Costa Rica has seen its rainforests double in area since 1996 when it implemented a payment scheme to rural areas to fight poverty and deforestation. The country managed to grow its economy and is now moving toward carbon-neutrality faster than just about any other country.

Brazilians, now confronted with the impacts of the Amazon fires, have started to protest the exploitation of the rainforest, shocked by the blackened skies over the country. Demonstrations took place in major cities across the country this week. Opposition lawmakers have called for investigations of the causes of the fires.

Public pressure for more action to protect the rainforest is mounting. But Bolsonaro has at least another three years in office.

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