Author: Megan Ryan
January 14, 2025
Introduction
Brazil has a poverty rate of about 30%, and around 33 million Brazilians experience some sort of food insecurity. Some Brazilians are even required to rely on animal bones or beef scraps as a source of nutrition in their diet.
From 2000 to 2020, the Amazon Rainforest lost 9% of its total area, equaling 54.2 million hectares. In just five years, the Amazon conceded 23.7 million hectares of land, which is adjacent to the size of the entire United Kingdom.
While these issues may seem quite independent of each other, they are instead very intertwined. The destruction of the Amazon can appear to be centralized to the species residing there, but this is certainly not the case. Deforestation in the Amazon presents many issues that expand beyond obvious environmental consequences or adversities for the indigenous people native to the region. In this article, I intend to demonstrate the economic repercussions resulting from the continued export of natural resources from the Amazon.
The Amazon Rainforest
The Amazon is the largest rainforest in the world, stretching through the countries of Peru, Bolivia, Ecuador, Colombia, Venezuela, French Guiana, Guyana, Suriname, Venezuela, and Brazil, and contains 10% of global biodiversity. A wide variety of species, including jaguars, manatees, deer, capybaras, and monkeys, to name a few, inhabit this vegetative area. The rainforest is an important carbon sink and would cause disastrous consequences to the ecosystem if it ceased to exist.
The Amazon is paramount in regulating the climate on a regional and international scale, as it stores between 90-140 billion metric tons of carbon. Because of photosynthesis and the ability of plants to absorb carbon dioxide from the atmosphere, the Amazon’s vegetation maintains the Earth’s optimal temperature. However, when vegetation is promptly removed, greater amounts of carbon dioxide are emitted into the environment. This is problematic as greenhouse gases trap heat from the sun and release it into the atmosphere, which causes the planet’s temperature to increase. Because deforestation in the Amazon has progressed so extensively, the global community is grappling with the effects of dispossessing this incredible carbon sink.
Deforestation occurs when vegetative environments are intentionally cleared or depleted for man-made projects, such as raising cattle, mining, and producing soybeans. Currently, the Amazon is falling victim to deforestation; the forest has been deprived of a fifth of its forest cover (about 300,000 square miles) in the last fifty years. In addition, over 10,000 Amazon species are at risk of extinction as a result of diminished natural habitats in the region. Specifically, 8,000 endemic plants and 2,300 animals could face extinction with further destruction of the forest area. As Brazil is home to 62% of the Amazon, the country is largely responsible for the governance and corresponding deforestation occurring in the region.
Brazilian Policies that have led to Deforestation
In 1960, President Juscelino Kubitschek decided to replace the then-Brazilian capital of Rio de Janeiro with Brasilia, leading to events that allowed the country to abuse the Amazon’s natural resources further. The Brazília-Belém highway connected Brazil’s new capital with the Amazon’s grandiose rainforest, causing greater civilian migration to the area, and soon, more than two million individuals resided along the highway.
Brazil then dissolved into military rule in 1964, and the government began encouraging civilians to relocate to regions in the Amazon due to fear that unpopulated areas within the Amazon could be used for foreign invasions or domestic uprisings. In 1971, the Brazilian government planned to build the Trans-Amazonian Highway. This 3,400-mile roadway was intended to extract natural resources to improve the nation's wealth and alleviate the condensed northeast. The proposition was riddled with issues throughout its construction, but the highway has continued to expand since its conception and has accelerated deforestation in the Amazon, resulting in devastating environmental consequences.
The breadth of cleared rainforest continued to worsen in the 1970s and 80s until it was revealed in 1988 by satellite imaging that the Amazon was depleted of 10% of its original cover. As a result, the Brazilian government decided to pass legislation proposing to protect the native environment of the Amazon and the Indigenous civilians who resided there.
While the extensive efforts to preserve the environment curbed the destruction of the Amazon, deforestation continued to escalate with a new President. Jair Bolsonaro was elected president of Brazil in 2018 and served in government from 2019 to 2023. Bolsonaro introduced a variety of austerity measures into Brazilian governance, which reduced the funding for federal programs. The Brazilian Institute of Environmental and Renewable Natural Resources (IBAMA), an environmental protection agency, experienced a 30% budget reduction. The Environment Department, under Bolsonaro’s jurisdiction, obtained its lowest budget since 2010. Bolsonaro’s policies regarding deforestation were certainly reflected in the Amazon’s remaining cover, as Brazil lost about 21,000 miles of cover in the rainforest. While Bolsanro’s role in government has been replaced by the current president, Luiz Inácio Lula da Silva, who is more amiable to forest preservation, deforestation in the Amazon still affects Brazilian society greatly.
Trade Between Brazil and China
The Brazilian economy is incredibly dependent on industries that exploit natural resources, including farming, mining, and fishing. Because of this, deforestation persists at an exponential rate. This does not necessarily bode well for the Brazilian economy. The South American country is over-reliant on exporting its commodities to the Amazon and has neglected the more valuable practice of developing urban areas and financial structures.
Brazil, because of its economic reliance upon the natural resources of the Amazon, is a victim of the ever-changing prices of commodities. Brazil and China began to develop financial ties in the 1970s and 80s. This relationship only strengthened as the East Asian nation became an international superpower in the early 2000s. The China-Brazil High-Level Coordination and Cooperation Commission (COSBAN), established in 2004 and elevated to a global strategic partnership in 2012, outlines bilateral trade agreements between the two nations. In 2009, China became the largest avenue of trade for Brazil, even more so than the United States. This has persisted for 14 consecutive years, and Brazil is in the incredibly rare position of importing more goods into China than it exports.
China heavily relies upon Brazilian goods in the agricultural, mineral, and energy sectors, deriving the majority of its agricultural imports from Brazil. The Brazilian products of soybeans, corn, beef, meat products, sugar, and coffee beans account for 24.85 percent of Chinese agricultural imports. These agricultural items, especially soybeans, require the clearing of Amazon land for their production. Additionally, Brazil exports many minerals, including bauxite, cassiterite, tin, niobium, tantalum, and coltan, which are extracted from the Amazon for Chinese benefit. In turn, China dominates Brazil’s manufacturing industry, as it is primarily responsible for the increased appearance of industrial goods in the country. Chinese exports range from machinery and transportation equipment to innovative technology, like electric vehicles, and accounted for 36.2% of Brazil’s aggregate amount of electric vehicles in 2023.
Potential Issues with Brazilian Over-Reliance on Exports to China
While establishing mutually beneficial trade agreements with China has presented several benefits for Brazil, it might also significantly contribute to the nation’s stifled economy.
In specializing in exporting natural goods to China, Brazil has placed its economy in a precarious position. Brazil’s exports are vulnerable to the volatile prices of commodities and the welfare of the Chinese economy. When the prices for such goods increase, Brazil benefits from these trade agreements. However, the South American nation will be in a very adverse situation if the Chinese economy contracts and commodity prices fall.
The rapid and intense development of Chinese industries and financial situations during the early 2000s is now contrasted with an economy recovering from a post-COVID world. For instance, China experienced a 7-8% growth in GDP through the 2010s but only saw an increase of 4.75% in the second quarter of 2024. Additionally, the Chinese GDP is expected to decrease to 3% by 2027. This new reality for China, where growth has slowed significantly, could pose great consequences to Brazil’s export of natural resources. With a stalled economy, Chinese demand for Brazilian commodities would decrease, and in the most severe instance, the GDP of Brazil could potentially decrease by 0.5%.
During the 20th century, Brazil was a haven for manufacturing. São Bernardo do Campo, a city close to São Paulo, Brazil, was previously the largest industrial area in 1950. However, this soon altered when the Brazilian economy shifted away from manufacturing and placed greater importance on their natural commodities. In 1980, manufacturing comprised 34% of the Brazilian GDP; however, this fell to 11% in 2020. Additionally, the output of manufactured goods only grew 24% from 1980 to 2017 in Brazil, while Argentina experienced a growth of 69% during the same period.
Many may argue that the reliance on the exportation of commodities and disassociation from domestic manufacturing is optimal for Brazil. However, the Brazilian economy has compromised productivity by relying heavily on Chinese manufacturing. In São Bernardo, which was previously an industrial epicenter, wages have fallen annually since 2017, and the highest salaries still exist in car production. Furthermore, most jobs demand low-skilled work instead of high-skilled. As stated by Rafael Cagnin, an economist with the Institute of Industrial Development Studies, “Brazil is the worst example of premature deindustrialization in the world.”
How Urban Areas Are Affected
The over-reliance on resources in the Amazon has certainly presented itself in Brazil’s financial welfare. In 2021, Brazil had the lowest growth in GDP at 4.6% among the BRIC nations, an organization of countries that includes Brazil, Russia, India, and China (the founding nations after which the organization is named), as well as South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. The South American nation is ranked tenth in inequality across the globe and has a 26.5% poverty rate. The income of the wealthiest 10% of Brazilians is 14 times greater than that of the poorest 40%. In addition to this, homelessness has doubled in urban areas in Brazil, increasing from 106,000 in 2014 to 281,000 in 2022.
While the Brazilian economy has progressed and recovered substantially from its peak unemployment rate of 14.9% in 2021, one in three citizens residing in Brazil still experiences food insecurity in 2024. This is certainly evident in the poorest areas of Brazilian cities, as about 16.4 million Brazilians live in favelas. Favelas are impoverished communities in Brazilian cities, especially within Rio de Janeiro and São Paulo, that contain informal housing. They are often incredibly overcrowded, absent of sewage systems, deficient in proper access to potable water, and can be hubs for crime. The issue of overpopulation in favelas presents challenges for the distribution of public services, including access to medical care, police assistance, fire aid, or waste collection. As a result of this, the infant mortality rate is significantly higher than the national average, and the presence of malnutrition, diarrhea, and other diseases are present. In 2011, the life expectancy for Favela residents in Rio de Janeiro was 13 times less than wealthier people native to the same city. Favelas are only continuing to expand in urban environments. In São Paulo, for example, the number of homes in favelas grew from 416,143 in 2000 to 866,177 in 2019. This expansion of favelas and impoverished conditions in cities could certainly be improved with a shift away from Brazil’s Amazon-intensive economic model.
Current Remedies to Manufacturing Issues
There are numerous changes Brazil could implement to salvage its stagnated economy while simultaneously reducing deforestation in the Amazon. Brazil must move away from resource extraction and focus on developing sustainable agriculture and manufacturing that stimulates increased productivity. By developing its tech industry, Brazil could invest further in its urban areas and consequently aid the situations in favelas. Civilians would benefit from an increase in high-skilled occupations and have greater earning potential. On January 29, 2024, the Brazilian government instituted legislation from the Nova Indústria Brazil that promised to deliver an answer to the economic inefficiencies that have plagued the nation for so long. The policy is divided into six measures, intended to be executed by 2026, and long-term goals aimed to be completed by 2033. The legislation plans to transform the technological industry and promises to prioritize a bioeconomy and decarbonization, all of which will improve productivity in the Brazilian economy.
Hopefully, more policies like these will continue to be passed and enforced in Brazil as the welfare of the Amazon and the pockets of Brazilians are heavily dependent on one another. Maintaining a balance between the two is key to ensuring a prosperous future for the Amazon Rainforest and, consequently, the Brazilian people.
Glossary
Bioeconomy: A bioeconomy is the practice of using biological resources and products to create a sustainable economy. It often involves protecting the environment, eliminating natural resource exploitation, and jobs in newer industries.
BRIC Nations: The BRIC Nations is a grouping of countries that includes Brazil, China, India, South Africa, Eygpt, Ethiopia, and the United Arab Emirates
Carbon Sink: A carbon sink is an artificial or natural substance that can store more carbon dioxide than it releases.
Decarbonization: Decarbonization occurs when there is an effort to reduce carbon dioxide emissions into the environment. It often involves transferring to more sustainable sources of energy.
Deforestation: Deforestation occurs when areas of vegetative land are cleared for a specific purpose. This is often done as a result of industrialization.
Exports: An export is a good or service that a country sells to another country.
Favelas: Favelas are Brazilian communities of slums, which are identified as residences in urban environments that are legally insecure, devoid of public services, or containing environmental risks. They are often very dangerous, unsanitary, and overcrowded.
Greenhouse Gases: Greenhouse gases absorb heat from the surface of the earth and trap heat from the earth’s atmosphere. Typical greenhouse gases include carbon dioxide, methane, nitrous oxide, and industrial gases.
Gross Domestic Product (GDP): Gross domestic product is the numerical calculation of the amount of goods produced within a certain nation over a set period. It essentially estimates the welfare and stability of the corresponding country.
Imports: An import is a good or service that one particular country purchases from a different country.
Poverty Rate: The poverty rate is the ratio of individuals in a nation who are considered to be below the poverty line.
Unemployment Rate: The unemployment rate is the calculation of the amount of individuals who are currently jobless in the workforce.
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