Deforestation and Brazil

Brazil and the Amazon have had a love-hate relationship for most of its life. When we see economic growth we usually see an increase in deforestation. When the growth starts slowing down or even reversing, we see a slowdown in cultivation of the Amazon. Let us look at the reasons these seem to have a similar supply and demand flow. Let us exam the question: Is Brazil able to keep economic growth while maintaining a reduction in deforestation?

First lets explore how these two are linked. Multiple policies surround the Amazon and it’s land. When we see an increase in deforestation for roads or graze land or agriculture, we can trace this back to an upswing in the economy. We see that the government has money to spend on policies to increase infrastructure and money to lend; Companies and farmers have the liquid capital to continue expanding their lands. Here we see that when the economy is booming, deforestation is in its prime. However, what happens when the economy takes a detour south or environmental policies are enforced?

Over the past few years, Brazil has been trying to reduce their deforestation radically. They have passed laws that make it illegal to buy farm products grown on illegal deforested parts of the Amazon, restrictions on companies that have broken the countries environmental laws, and a crackdown on people that cannot prove they own the land. We can follow this more closely by examining what the land turns into after it is destroyed. Over 60% of it is used as cattle grazing land followed by another 30% used for either big or small agriculture farming. With the large economic crisis that hit the world markets hard, we can follow the sharp decline in the purchase of meat and agriculture products affecting further deforestation. There is no more money coming in to continually employ those needed to help raze the Amazon. This also affects the government in enforcing their policies and lending to potential “green” companies that could help make a difference.

Brazil has a high percentage of their GDP in manufacturing goods. Parts of these goods are produced with materials from the deforested area. The logging industry is used for multiple types of materials, from steel to soy production. Any lasting effect that would put a damper on these markets would in turn help drop GDP. Brazil is heavily dependant on their export market, and if the companies you export to be against using products from illegal deforested areas, we see another area where the two are linked.

Throughout the upward and downward swing of Brazils economy in the 80’s and 90’s is the same image in the mirror. In the late 80’s, Brazil’s economy was in a slowdown motion. Guess what? So was the farming of the Amazonian Rainforests. Then throughout the 90’s we see an increase in deforestation and a rapid growth of the Brazilian economy. We see that even during the hard times, the use of deforestation is used as a band-aid. Large tracts of the forest are cleared and simply used for future investment.

One bonus to deforestation is the “slaves” freed when the government enforcers come through the illegal farms and ranches. Many of those still living in the forested areas about to become a farm or ranch are forced into servitude in helping these companies clear the forests.

Deforestation is still happening for the same reasons today as it was yesterday. The top main reasons being:

1. Cattle grazing land

2. Small and Large agriculture

3. Infrastructure and Colonization

4. Logging

And, if you follow the market swings for these products and the Brazilian economy, an easy line is drawn matching the ups and downs. And so, the answer to the question asked must be no, Brazils economy is closely mirrored by its deforestation. One cannot happen without the other.