Latin America

A New Commodities Boom Doesn't Mean Ecological Doom

The world's renewed appetite for natural riches once again tests Latin America.

Don't bungle the jungle this time.

Photographer: Ricardo Funari/Brazil Photos/LightRocket via Getty Images

Demand is surging again for oil, minerals and grains -- the basic goods to which Latin America's fortunes have long been tethered. After a year of graft scandals and political whiplash, you can just about hear the sighs of collective relief.

Or is that just a giant sucking sound?

Since the voyages of discovery, raw materials and farm goods have been Latin America's blessing and its trap, filling official coffers but too often despoiling the environment and condemning economies to boom and bust. Through last decade's swoon, hopes ran high that China's demand would help clients climb the value chain and become developed nations. Yet Latin America still relies on grains, minerals and raw energy for half its export revenues, the same share as three decades ago.

Will a new spike in foreign appetites portend anything different? Quite possibly yes, but not in a good way: think falling forests, strained watersheds and more climate-cooking carbon gas.

True, Latin Americans are more zealous about their environment than ever, and less inclined to swallow the official cant that smog and charred stumps are just the collateral damage of progress.

Yet those who want to avoid the commodities curse have their work cut out for them, especially as demand for agricultural commodities collides with the impact of climate change. Hotter climates and erratic rainfalls are punishing developing nations and proscribing the output of tropical farmland. “Rising commodities prices mean the trend for reliance on agriculture will continue,” Walter Vergara, a forests and climate specialist at the World Resources Institute, told me. “With increasing temperatures and more erratic weather, business as usual will put even more pressure on natural capital, such as water, topsoils and vegetation, and eventually affect the productivity of these areas.”

Consider coffee, the most popular drink in rich countries and the most traded commodity after oil. With consumption expected to rise steadily worldwide, pressure on growing areas will increase, even as climate change is taking prime land out of production. Latin American agriculture and food industries “consume double or triple the water volumes that their counterparts in the United States and China do,” the McKinsey Global Institute recently reported.

The problem is especially dramatic in Brazil, home to the world's largest tropical rainforest, where logging, settlements, highways, mining and cattle ranching have leveled about 18 percent of the Brazilian rainforest in just the last four decades.

Even if big-ticket developments tread lightly on the land, breaking ground on a highway or a mine looses what James Cook University biologist William Laurance called the Pandora's box effect, hastening a devastating wave of migrants and opportunity-seekers to the frontier. Scientists from the University of Vermont's Gund Institute for the Environment recently calculated that the knock-on effects of Amazonian mining extend well beyond the pits, claiming some 11,670 square kilometers of rainforest -- an area larger than Jamaica -- in the decade to 2015. That's 12 times the damage wreaked within the mining leases themselves.

Brazil is no stranger to the rewards, and the perils, of the gung-ho frontier spirit. The country's enterprising farmers have turned vast tracts of weak, acidic soils under a punishing sun into a breadbasket, whose protein, grains, coffee and sugar can feed a hungry world.

Its policymakers also have spent the last two decades designing a system to punish scofflaws while encouraging farmers and ranchers to increase their yields without trashing the environment. By requiring rural landowners to register their properties on a satellite grid, authorities can track forest cutting and swoop in to fine violators. More than 90 percent of Amazonian farms are now listed.

In addition, tighter restrictions and private-sector agreements to boycott beef and soybeans from illegally cleared land have slowed the expansion of pastures and reduced sale of beef from hotspots. Policy carrots also have helped, including incentives for restoring degraded land and promoting advanced technology -- such as no-till planting, mixing forests with crops, and rotating herds to preserve pastures -- so that farmers can boost yield without gobbling up new land and spewing yet more carbon into the atmosphere.

“If farmers and ranchers have access to credit and technology, and Brazil improves environmental governance, you can conciliate higher productivity with reduced deforestation,” Judson Valentim, a tropical agriculture expert at Brazil's research center Embrapa, explained. Valentim noted that while the rate of clear-cutting is still alarming, the amount of recovering forest in the Amazon is already more than 30 times greater than the annual total of newly felled forests.

Such advances are crucial and, along with cutting-edge research, have helped bust some environmental myths, starting with the trope that economic growth is the death knell for forest. “The market is not the enemy of the Amazon. Companies will generally be good stewards of the environment,” Adalberto Verissimo, a tropical forest expert at the Amazon Institute of People and the Environment, explained.

What’s worrying, Verissimo added, are outlaws who invade unpoliced public land ahead of development projects, like paved highways, grain ports and riverways. “There’s a Texas-sized tract of government land with little oversight. If Brazil relaxes enforcement, rising property values will be an incentive to more forest cutting,” he said. In that light, President Michel Temer's moves to sack the country’s top deforestation expert and roll back protections on wilderness preserves (scrapped after a celebrity-studded public outcry), were less than auspicious.

The world's renewed appetite for natural riches will put Latin America once more to the test. Brazil, for one, has shown it can help to feed and fuel the world. But only zealous governance, a guiding hand for struggling farmers, and citizens willing to hold officials to account can stop the next boom from becoming an ecological bonfire.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Mac Margolis at mmargolis14@bloomberg.net

    To contact the editor responsible for this story:
    James Gibney at jgibney5@bloomberg.net

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