TED Case Studies

Brazil Deforestation and Logging

IDENTIFICATION
LEGAL CLUSTERS
GEOGRAPHIC CLUSTERS
TRADE CLUSTERS
ENVIRONMENT CLUSTERS
OTHER FACTORS

I. Identification

1. The Issue

Although the primary cause for deforestation in the Amazon Basin lies in domestic forces -- agricultural production, cattle ranching, commercial logging and local demand for fuelwood -- trade does play an important marginal role both in destroying the rain forests and possibly saving them. Exports of non-raw wood products are permitted in Brazil and is a widely traded commodity.

International demand for forestry products also plays a large role in the process of deforestation. Beginning in 1990, Brazil has tried to eliminate all non-tariff barriers and reduction of tariffs on exports of wood and wood products. On the other hand, other tradeable products taken from the rain forest, such as nuts, can provide important economic benefits to indigenous peoples and encourage the saving of trees.

2. Description

The main sources of deforestation in the Amazon Basin are agricultural production, cattle ranching, commercial logging and demand for fuelwood. Amazon logging and wood processing operations have been able to benefit from government incentives and outright subsidies (see CHILE and USWOOD cases). SUDAM (Superintendency for Development of Amazonia) was established to help subsidize industrial and agricultural development in many sectors, including the wood forestry industries. Subsidies coupled with tax breaks allowed Brazilian firms to reduce their income tax payments by one half if the savings were directed to industrial investments in the Amazon Basin. However, many of these incentives have been eliminated over the past two years. Since 1969 Brazil has maintained a raw log export ban for unprocessed tropical wood; therefore the exports have been dominated by processed products (see INDONES case). However, it is often the case were that the actual processing of wood is minimal; done merely to meet the export requirements.

The five million square kilometers of Amazon tree cover make up the largest continuous expanse of tropical rain forest remaining in the world. Although such forests cover only 7 percent of the planet's land surface, they are inhabited by some 50 percent of the plants and animals found on the globe (estimates of which range from a total of two million to 30 million species). Most disturbing of all is the fact that the total is unknown. As many as 27,000 species may be consigned to extinction every year, calculates Harvard University biologist Edward O. Wilson.

The impact of these extinctions is multifold: the rain forests have profound philosophical, spiritual, cultural, scientific and economic significance. Because Brazil is considered to have the highest species diversity on the earth, it is the epicenter of efforts to stem deforestation.

One alternative to harvesting wood is harvesting products of the tropical rain forest. The principal harvest product in Brazil is nuts. A well-known product derived from Brazil nuts is a candy bar called "Rainforest Crunch." The candy was originally sold with the following claim on its packet: "The nuts used in Rainforest Crunch are purchased directly, with the aid of Cultural Survival, from forest peoples." Stephen Corry, however, states that this claim is not true, because "for two years or so, all of them [nuts] were bought on the normal commercial market." In 1989, the nut industry had a turnover of $20 million. Additionally, harvest advocates argue that the labels on their goods are an important educational tool. They say that they "use product packages to educate consumers about both rain forest and the peoples who live in them. In 1991, some 30 million Americans bought products that explained the importance of the rain forests, how consumers could help local groups protect their resources..."

3. Related Cases

AFRICA case
MALAY case
INDONES case
TIMOWL case
TEAK case
COLDEFOR case
ECUADOR case
CHILE case
CAMWOOD case
BRAGOLD case

4. Draft Author: Ruth Ferszt and Sabrina Franzheim

II. Legal Clusters

5. Discourse and Status: DISagreement and INPROGress

6. Forum and Scope:BRAZIL and UNIlateral

7. Decision Breadth: 1 (Brazil)

8. Legal Standing: LAW

The case revolves around Brazilian domestic law on forest areas.

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: South America [SAMER]

b. Geographic Site: AMAZON

c. Geographic Impact: BRAZIL

10. Sub-National Factors: YES

The Amazon includes the northern region of Brazil and constitutes 39 percent of the countries' territory. The states in Brazil include Acre, Ampa, Amazonas, Para, Rondonia, Mato Grosso, Tocantins and Maranhao.

11. Type of Habitat: TROPical

The Amazon is the largest tropical forest in the world.

IV. Trade Clusters

12. Type of Measure: Export Ban [EXBAN]

13. Direct v. Indirect Impacts: DIRect

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES WOOD

b. Indirectly Related to Product: YES NUTS

c. Not Related to Product: NO

d. Related to Process: YES DEFORestation

15. Trade Product Identification: NUTS

The product is tropical logs that are banned for export and must be processed before being exported. The leading exporters of raw wood are Malaysia, Indonesia, Singapore (usually trans- shipments), Philippines, Ivory Coast, Brazil, and Gabon (see MALAY, THAILOG, and AFRICA cases). The leading importers are Japan, China, Hong Kong, the United States, Singapore (usually trans- shipments), South Korea, and the United Kingdom.

16. Economic Data

Brazil's lumber exports are currently under 5 percent of the world total but the potential in the Amazon has been valued at $600 billion. The United States and Europe are the largest importers not only of wood, but also nut and latex products from Brazil.

The theory behind the rain forest harvest is that forests are of more value when left standing than when they are felled. This value can be expressed in the monetary price of products which can be extracted from forests, mainly fruits, nuts, and cosmetic oils.

Marketing of forest harvest products by indigenous groups often involves outside intermediaries; for example, practically all Roman Catholic missions in rainforest areas encourage indigenous people to market their products. According to Stephen Corry, however, only a few of these intermediaries act honestly and fairly.

The harvest involves producing for a foreign buyer who controls the project and will often use the raw material (rubber vines, hornbill ivory, bear paws, bezoar stones, gaharu incense, birds' nests, pulp, paper, lumber products, etc.) as input products in final demand goods such as candy bars, hair conditioner or even dog food (which is now marketed in the United States under a rain forest label). Moreover, such small scale regional markets may provide some cash for indigenous peoples, but it does not solve their most pressing problem: the invasion and expropriation of their lands.

17. Impact of Trade Restriction:BAN

18. Industry Sector:WOOD and NUTS

19. Exporters and Importers: BRAZIL and MANY

Brazil bans the export of raw logs which means that some type of wood processing must take place in Brazil prior to export. The sawdust from processing tropical hardwoods is collected and exported to Scandinavia for use in the pulp and paper industry, displacing the need for native Scandinavian pines.

V. Environment Clusters

20. Environmental Problem Type:DEFORestation

Deforestation is the major problem at hand but other problems are related as well, including global warming, reduction in bio- diversity and species loss.

(a) Global Warming: Deforestation in developing countries accounts for between 7 and 31 percent of global carbon dioxide emissions which cause climate change.
(b) Bio-diversity: Northern Brazil is losing natural forests with the substitution of fast-growing eucalyptus and pine trees, cattle ranching and commercial logging.
(c) Species Loss: Much of Brazil's native flora, fauna and animal species are being lost with the harvesting of tropical forests. The ban does not affect the amount of trees being felled because the ban is only for wood in raw form. A study done on the value of the fruits, latex, medicinal herbs, essences and oil discovered that in the long run investment in these products were more profitable than either logging or cattle ranching.

21. Name, Type, and Diversity of Species

Name: Tropical Hardwoods

Type: Plant/Angiospermae/Dicot

Diversity:6,607 higher plants per 10,000 km/sq (Brazil) Two million to 30 million species exist in the Amazon and 27,000 species may be consigned to extinction every year. This destruction is the result of forests being felled at a rate of 1,800 hectares (about 4,500 acres) every hour.

22. Resource Impact and Effect: HIGH and Structural [STRCT]

23. Urgency of Problem: MEDium and 100s years

Brazil's rain forests are quickly disappearing under a variety of stresses and replacing the eco-system may well take a millennia.

24. Substitutes: RECYCling

VI. Other Factors

25. Culture: YES

There are hundreds of ethnographies of Indian tribes in the Amazon. Darcy Ribeiro reported that between 1900 and 1957 some eighty Indian tribes had been destroyed. During this same period the number of indigenous peoples dropped from one million to two hundred thousand. The Amazon basin held most of the remaining Indians (some 140 tribes) and Ribeiro said these too would be extinct unless the Indian Protection Service managed to insulate the tribes from encroachment.

26. Trans-Boundary Issues: NO

Although the Amazon area covers several countries, it is not an issue in the cases.

27. Rights: YES

Certain products such as Brazil nuts are now being marketed supposedly as a way to save the rainforest and to protect indigenous populations. However, most of these products are commercialized in the open market, often by unscrupulous dealers. Consequently, even when indigenous peoples are directly involved in the transactions, they become victims of economic forces. In fact, the movement to defend the harvest is deflecting the real problem: land-tenure. Perhaps support for indigenous peoples should come not from purchasing forest products, but from respecting their rights.

28. Relevant Literature

Braga, Carlos Alberto Primo.  "Tropical Forests and Trade Policy: 
    The Cases of Indonesia and Brazil" (World Bank 1992).
"Brazil's Logging 'Free-for-all' Compounds Threat to Amazon Rain  
   Forest," The Washington Post (February 25, 1992), A2.
"Can Scientists Reconcile the Inevitability of Economic 
     Development with the Preservation of Rain Forest?". 
     Scientific American (July 1993). 
Cleary, David.  Anatomy of the Amazon Gold Rush.  University of   
  Iowa Press, 1990.
Corry, Stephen.  "The Rainforest Harvest: Who Reaps the Benefit?" 
    The Ecologist 23/4 (July/August 1993).
Gilbert, D. and Colchester, M.  "Indigenous Peoples and the
   International Biodiversity Programme: Some Implications".      
Survival International (London, 1989).
Hecht, Susanna and Cockburn, Alexander. The Fate of the 
     Forest, Developers, Destroyers and Defenders of the
     Amazon.  New York, Harper Perennial, 1990.
Holloway, Marquerite.  "Can Scientists Reconcile the
     Inevitability of Economic Development with the
     Preservation of Rain Forests?," Scientific American (July
     1993).
Low, Patrick, ed.  International Trade and the Environment.
       World Bank, 1992.
Monastersky, Richard.  "The Deforestation Debate."  Science News  
   144 (July 10, 1993).
Moran, Emilio F.  "Deforestation and Land Use in the Brazilian
       Amazon."  Human Ecology 21 (March, 1993).
Narendra p. Sharma, ed.  Managing the World's Forests: Looking
     for a Balance between Conservation and Development. 
     World Bank, 1992
Shoumatoff, Alex.  The World is Burning.  Boston: Little Brown,   
  1990.