The Role of the Public Sector

It is only within the last four decades that governments sharing the Amazon Basin have taken the region seriously. Ignored for centuries as a distant, exotic outpost, Amazonia is now called upon to serve a number of diverse and often contradictory development agendas. These range from economic growth and national integration to biodiversity conservation and the mitigation of global climate change.

Settlement has invariably been accompanied by problems of deforestation, environmental destruction, and land-use conflict. These consequences have been most marked in Brazil, which occupies three-quarters of the Amazon Basin and has the longest history of occupation, but they are becoming increasingly apparent in Bolivia, Peru, Colombia, Ecuador, and Venezuela. Public policy makers thus face major challenges in attempting to protect Amazonia's fragile ecosystems from these pressures while meeting the livelihood needs of its 25 million-plus citizens.


Conservation of natural resources, of which Brazil is a leading proponent, has been the most important official environmental policy pursued in the Amazon Basin. Just under 40 percent of Brazilian Amazonia (over 837,000 square miles) presently enjoys some form of government protection in nearly 300 "conservation units," such as national parks, national forests, biological reserves and extractive reserves, as well as indigenous areas.

When fully implemented, the Amazon Region Protected Areas Program (ARPA), the world's largest tropical conservation program, will increase this by a further 70,000 square miles. Tumucumaque National Park alone covers 15,000 square miles and is the world's largest such protected area, accounting for 1 percent of Brazil's rainforest. Peru has over 60 protected areas, most in the Amazon, making up 15 percent of its national territory, while the figure for Bolivia is over 10 percent. In Brazilian Amazonia, landowners are required to maintain 80 percent of their properties as standing forest or "legal reserve." Brazil's advanced system of satellite surveillance of the Amazon (SIVAM) is designed to support environmental policing operations, among other activities.

Although conservation has proved to be the most effective bulwark against advancing frontier settlement in the Amazon, it is fraught with problems of enforcement. Both the Brazilian federal environmental control agency (IBAMA) and state-level environmental control agencies are generally poorly resourced and understaffed. In 2005, for example, IBAMA allocated 850 officials to police a region of 1.9 million square miles, the equivalent of one staff member for almost 2,300 square miles. Furthermore, only a small proportion of fines (3 percent according to one study) imposed by IBAMA is ever collected. Regular allegations of corruption involving officials and the illegal logging industry have undermined the agency's reputation. IBAMA also routinely comes under strong political pressure to relax regulations—by the logging sector most notoriously—and the powerful pig-iron smelting industry in Pará state, which relies heavily for its profits on charcoal supplies obtained illegally from standing rainforest. The effectiveness of such "command-and-control" tactics is also undermined by the fact that indigenous reserves, national parks, and other protected areas suffer from illegal invasions at the hands of land grabbers, gold miners, and loggers.

Yet despite these problems, policing of the forest can make a difference where resources are applied intensively and backed up by strong measures on the ground.


In parallel with the conservation agenda, and following principles espoused in the Brundtland Report (1987) as well as the Earth Summit (1992) held in Rio de Janeiro, efforts have been made to apply principles of sustainable development in the Amazon—combining conservation with environmentally sound economic activities capable of supporting local populations. The murder in 1988 of Brazilian rubber tappers' leader, Chico Mendes drew international attention not just to the rainforest but to forest-dwelling populations whose survival depends on the nondestructive use of natural resources. Policy making, it was acknowledged for the first time, had to take into account their interests as part of any development or environmental plan for the region.

Some new models of development are adapted from traditional and indigenous land uses, which integrate local economic activities with preservation of the region's natural capital. A sustainable development plan is being implemented along the infamous BR-163 Highway in Brazil, which links soybean production areas in Mato Grosso to grain export terminals on the Amazon River.

These are encouraging ventures, but they demand new skills and support facilities that are often difficult to acquire in the short term. The "Amazon factor," a combination of adverse regional conditions, is often blamed for frustrating such development efforts. These challenging elements include: harsh physical and climatic conditions; poor infrastructure in terms of power supplies, roads, communications, credit and technical assistance; distance from urban markets; lack of organizational and managerial capacity at the grassroots level; the perishable nature of tropical products; low standards of quality control; and, not infrequently, poor planning that takes no account of the economic feasibility of new local enterprises but relies rather on undue optimism sustained by financial aid from well-meaning donors.

Overseas development assistance has been instrumental in supporting the design and implementation of major environmental policies in the Amazon, especially by reconciling more traditional conservation goals with the principles of sustainable development. The $428 million Pilot Program to Conserve the Brazilian Rain Forest (PPG7), launched in 1993 and administered through the World Bank, was funded by the European Union, Germany, France, the United Kingdom, the United States, and Japan. It has supported a range of conservation and sustainable development activities such as extractive reserves, agroforestry, development of science and technology in the Amazon, decentralization of environmental management to the state level, and a highly successful program to demarcate indigenous reserves.

The Global Environment Facility, set up in 1991 as the institutional arm of the Convention on Biological Diversity, whose funds are channeled through the World Bank, United Nations Development Program, and United National Environment Program, has been pivotal in supporting conservation activities to the tune of over $80 million. The Inter-American Development Bank has supported many Amazonian projects in fields as diverse as sustainable furniture manufacture, ecotourism, and the marketing of forest tree products. In addition to these multilateral donors, bilateral support for Amazon development has come directly from U.S., European and other governments.

Yet despite this international commitment to promoting sustainable development in Amazonia, contradictions are sometimes apparent. Within the World Bank Group, for example, environmental standards are not uniformly applied. The International Bank for Reconstruction and Development, which deals with governments, has increased its support for the region and is careful to apply strict environmental safeguard policies. Yet the private sector arm, the International Finance Corporation (IFC), has a less demanding set of rules. Recently, the IFC came under heavy fire for financing major cattle and soybean enterprises in Brazilian Amazonia, activities normally associated with deforestation, without adequate screening against potentially harmful environmental impacts.


In Amazonia governments are faced with competing agendas for the environment and for the economy that must somehow be reconciled, a difficult task even with the best political will in the world. Public policy optimists often assume that the forces driving Amazon deforestation will readily respond to official regulation. Outright conservation and intensive policing can indeed be effective if properly executed and may halt the advance of ranching, farming, and logging. Yet the uncomfortable fact is that such measures are relatively ineffective when viewed within the wider scheme of things. Destructive forms of land use may simply be diverted towards unprotected areas. Policing and law enforcement face formidable logistical challenges. Further-more, the limited scale and as yet unproven long-term viability of most sustainable development projects imposes further limitations. This situation is not helped by the fact that governments themselves tend to invest very little of their own money into these alternative approaches, often relying instead on overseas aid to foot the bill.

This is the crux of the matter. Domestic funds are usually reserved for the more "serious" business of supporting mainstream, export-oriented economic development, such as ranching, logging, mining, or soybean farming. Much evidence suggests that forest loss is influenced not so much by environmental policy per se as by these wider economic activities and the market forces that drive them. Deforestation rates increase during periods of rising commodity prices when investments are profitable. Such trends are reversed when prices fall or when successful economic stabilization takes place, as occurred in Brazil during the mid-1990s, for example, when land speculation became less attractive.

Other adverse ecological impacts are due directly to government action or connivance with private interests. Traditionally, government subsidies in Brazil and neighboring countries have strongly supported cattle ranching, mining, and other commercial enterprises. One example of blatant official disregard for Amazonia's environment is oil production in Ecuador's Oriente province. As the country's major source of export revenue, during the 1970s and 1980s oil production rose rapidly, and foreign companies were granted virtually free license to pollute. Only when the indigenous movement rose up to place a check on exploration and drilling operations, and companies such as Texaco were obliged to respond to legal challenges, was the industry brought under some degree of control.

Brazil's $240 billion Accelerated Development Plan emphasizes investments in the energy and transport sectors for Amazonia, but its proposed hydropower schemes in western Amazonia have been heavily criticized for ignoring environmental safeguards. In response to such objections, President Luiz Inácio Lula da Silva vociferously complained recently that national development was being compromised by catfish—a reference to the dangers posed to migrating fish by dam construction, a phenomenon highlighted by environmentalists. In another sign of governmental frustration with environmental campaigners and regulatory bureaucracy, the federal environmental control agency (IBAMA) was restructured this year to streamline project licensing and facilitate the execution of infrastructure projects.

In view of these competing economic and environmental agendas, it is not clear that public policy as such can ever play a role in seriously shaping Amazonian development along more ecologically friendly lines. Such progress will necessitate a more integrated, cross-sector approach on the part of governments than has been the case so far. Authorities must be capable of coordinating planning and action across a range of ministries in order to encourage harmony and compatibility of development objectives with environmental goals. For this to come about, however, it will also require stronger political and financial commitment on the part of governments working in collaboration with civil society and backed up by clear and consistent policies toward Amazonia on the part of international development organizations.