Economic Policy Behind the Amazon Rainforest Fires

Written by Johanna Dong

In August 2019, news coverage of massive wildfires in the Amazon rainforest exploded worldwide. Deforestation of the Amazon has been a major concern for years, and historically has led to fires during drier seasons due to the common deforestation method of slash-and-burn, a human activity. Towards the end of August, the crisis came to international attention when reports of smoke-darkened skies in São Paulo were shared via social media and news outlets. Brazilian president Bolsonaro came under heavy criticism soon after—first for denying the urgency of the situation, then for accepting only a relatively small amount of aid from other countries. While Bolsonaro’s actions regarding the imminent state of the Amazon have been widely covered, it was the Brazilian government’s economic policies over the past years that set the stage for the 2019 fires. 

The Amazon has long been a target for various industries such as mining, logging, and—most prominently—agriculture. As of 2019, Brazil reigns as the world’s top exporter of beef, an industry known for its environmentally destructive practices. Small farmers and large corporations alike often use slash-and-burn techniques to clear vegetation, revive nutrients in the soil, or drive away indigenous people. Since Bolsonaro was elected president in 2018, his encouragement of rainforest exploitation on the grounds of economic development has only increased the frequency of these practices. 

To that end, over the past year, Brazilian law enforcement rates and financial punishments for illegal deforestation have plunged, while the deforestation rate has increased by 88%. The reasoning behind the amplified destruction included land development for both agriculture and infrastructure projects, despite (and, likely, because of) the fact that a portion of the targeted land belongs to indigenous people. 

Yet numerous research organizations estimate the economic and ecological benefits of preserving the Amazon to be significantly greater than the short-term financial gains of exploiting it. In monetary terms, preserving the Amazon in its current state—that is, stalling any further deforestation—would allow the land to continue generating over $8 billion a year from sustainable agricultural practices, in addition to long-term economic gains from positive environmental effects such as reducing carbon dioxide. At the current rate of increasing destruction, however, the long-term consequences will be disastrous. Given a dieback scenario (if more than 20% of the Amazon is lost, the environmental impact to the rainforest as a whole will cause it to never recover), the economic impact from lost agricultural output, decreased rainfall, increased air pollution, and numerous other environmental externalities, could measure into the trillions over the next few decades. 

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