The Hindu Business Line : Brazil: The challenge of ecological resource use

Brazil's rainforest is considered the earth's most biologically diverse ecosystem. Unfortunately, about 16 per cent of this forest has been denuded in just the last four decades.

ONE of the north-south roads that divides the Amazon in Brazil is BR-163. It is over 1,000 miles long and is half-finished. Recently, the government issued contracts for paving the road to render it passable all year round and thereby cut transit time significantly.

But roads like this bring both prosperity and despair. For logging companies, it would save millions of dollars by making logistics easier. Other small communities close to the road see it as a means of reaching their products to a wider market. On the other hand, for environmentalists it sounds the death knell for the Amazon rain forest. Sociologists worry that diseases will travel further inland and wipe out marginal communities living deep in the forest and who have little resistance to modern ailments.

There are said to be at least 40 village communities withdrawing deeper into the jungles to avoid contact.

Brazil's rainforest is considered the earth's most biologically diverse ecosystem. We value it because the forest helps store the carbon and delay its release into the atmosphere, thereby slowing down further global warming. It is often referred to as the `lungs of the world.' Unfortunately, about 16 per cent of this forest has been denuded in just the last four decades and usually a majority of such deforestation occurs within 30 miles of paved roads.

Brazil has the size to match its importance. It is the fifth largest nation on the planet (twice the size of India). It is highly urbanised, with about 25 per cent of its 180 million people living in the cities. The rainforest is said to house mind-boggling diversity. One estimate places the species of insects as between 10 to 30 million! It has 20 per cent of the world's supply of freshwater.

Why should Brazil not make use of its forest resource for economic purposes? When colonialism was the dominant economic system and ecological concerns were on nobody's radar, European adventurers and merchants took full advantage of the natural resources of Latin America. Now that we are wiser, we are free with advice!

Brazil was one of the early tigers, at a time when that term was not even used. Between 1950 and 1985, Brazil's GDP grew at 7.5 per cent per annum, significantly higher than all the other Latin American economies. But the rapid growth was also interspersed by political instability, and the country suffered military dictatorships.

What hurt the people more was the rampant inflation, estimated at 707 per cent during 1985-1989 and 1,100 per cent during 1990-1994. The result of all the ups and downs is that Brazil still suffers from a Gini coefficient of about 60 per cent, making it one of the countries with a highly skewed income distribution.

When a country is endowed with enormous natural resources, it creates an advantage and causes a burden. Sure, illegal loggers must be stopped but if a poor farmer cuts down a few trees to graze his cattle or plant soya beans and earn a living, shouldn't he be allowed to do so?

Some countries such as Qatar and Dubai have wisely reinvested their gains from oil to build for a future when there is no oil.

But others have been living off their oil profits like there is no tomorrow. Just as the Brazilians are being asked by the rest of the world to protect their rainforest, Saudi Arabia, Iraq and Iran are sitting on vast reserves of oil and are being asked to produce and price it `responsibly.'

Brazil knows first-hand and has experienced the ill effects of deforestation. I visited the National Park of Tijuca, which was created in 1967 and is now unique as an urban forest, situated at the edge of Rio de Janeiro. However, until the mid 19th century, intensive deforestation was undertaken to clear the land for coffee plantation. But over time, soil erosion and reduction in rainfall in the area affected the city's water supply.

King Don Pedro II decided on a plan of reforestation in 1861. Various native species were replanted over a 13-year period and the forest has successfully rejuvenated itself. It is now a Biosphere Reserve on UNESCO's list. This is an example that gives hope, that even if we ruin things, we get another chance to do things right. IBAMA (Brazilian Institute of the Environment and of Natural Recycled Resources) is a government agency that has been created to protect the environment and guarantee use of natural resources to the traditional peoples. The agency also monitors whether the logging is undertaken in accordance with existing rules and permits. The agency has recently begun to use satellite scanning to identify deforestation and bring poachers to justice.

Apart from timber, the forests of Brazil hide enormous mineral wealth and exploiting that resource while maintaining biodiversity is another challenge. Companhia Vale do Rio Doce (CVRD) is a leading mining company in the world in the areas of iron ore and pellet exports, manganese, ferro-alloys and the like. While formerly a public sector corporation, it has been privatised and is now aggressively expanding. Yet, it has been careful to work closely with IBAMA in planning its mining operations and adopting conservation at the same time, and also works with other agencies to help indigenous tribes in the areas where it operates.

The good news is that the results of its efforts are encouraging; the rate of deforestation is lower in 2005 than the previous year. Let us hope Brazil continues to put in place the right policies that allow it to grow rapidly while still protecting its environment. After all, no other country in the world is named after a tree.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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