Finance and Development Trends in Amazonia

Marc J. DourojeanniJune 2015

A brief presentation to the

«Funders of the Amazon Basin»

1.Amazon environmental situation vis a vis

deforestation and forest degradation and causes of the situation1.Direct causes: Agriculture (96% or more)2.Indirect causes: Roads (90% or more)3.Forest exploitation: selective logging,

fisheries, etc.2.Future infrastructure: Business as usual!3.Infrastructure impacting on natural resources:

1.Transportation2.Hydroenergy

4.Exploitation of natural resources1.(Agriculture, Forestry)2.Mining3.Oil & gas

5.Priorities for conservation investments

Contents

Probable current use of the land in the Amazon

Protected areas (minus superpositions) ……………… 20%

Strict protection……………………. 10%Soft protection ……………………… 10%

Indigenous land ……………………………………….. 21%Production, protection and non allocated forests ……. 30% ?Agriculture …………………………….…………….… 17%

Annual…. …………………………. 8%Grassland…………………………. 7%Permanent…………………………. 2%

Secondary forests (partially imbricated with annual agriculture and grassland)……….…..…. 6% ?Other (water bodies, cities, etc.) …………...….…..… 6%TOTAL ……………………………………..………… 100%Deforested……………….…………………………….. 20% ?

Causes of deforestation in Andean countries (Peru)

Over 80% unlawful: No title and unsuitable land

Small scale agriculture: 80% ?Mid size agriculture: 20% ?

Transformed into: Grassland: 16%Agriculture: 10%Fallow: 74%

BRAZILAn area exceeding 76 million ha (larger than all Peruvian Amazon), or about 19% of its total surface, has been cleared in the Amazon since 1970, when only 2.4% of the Amazon's forests had been lost.

Forest degradation

No overall evaluation available !However:

Every year degradation size is equivalent to deforestationConsidering the history of past 50 years of selective logging (moving from one species to another) + hunting + “secondary” products probably more than 50% of remaining forest is degraded.

Foreseen Amazon development is business as usual

Infrastructure with impact on natural

resourcesTransportation• Roads • Formal• Informal

• Railroads• Waterways• AirportsEnergy• Hydro-energyUrbanization

Exploitation of natural resources

Agriculture Annual crops

Formal (commodities)Informal

Cattle ranching Permanent: coffee, cacao, etc. Biofuels (oil palm, sugar cane)Oil and gasMining (Formal/Informal)ForestryFisheries

Infrastructure with impact on natural resourcesTransportation

1990 42,000 km in the Amazon2004-2007 17,000 km/year only in the Brazilian Amazon2012 96,500 km in the Amazon (RASG)2013 178,000 km of roads only in the Brazilian

Amazon (including inminent projects).

Laurance: • Brazil is currently building 7,500 kilometers of

new paved highways that crisscross the Amazon basin.

• By the year 2020, rates of forest destruction would rise by up to 500,000 ha/year, and the area of forest that remained in large, unfragmented tracts -exceeding 100,000 km2 would decline by 36%.

Informality

Most roads in the Amazon are not planned by national/federal or state/regional governments…

They respond to local decisions!

91% of the Brazilian roads are not paved and 80% of non-paved roads is municipal.o i.e. In Para State 72% is not paved and 77%

is municipalo In Peru it is worst. Even international roads

are being built without national approval. Six roads are now being built between the Amazon and Ucayali rivers and the Brazilian frontier all driven by individual or group interests (logging, farming, smuggling, etc.)

RAISG: 64.5% is non paved

International roads, railways and waterways

Peru-Brazil:2 Interoceanic roads (one bimodal) operating1 Interoceanic road in construction (Pucallpa-Cruzeiro do Sul )5 railways planned , 2 highly probable (China financing?)1 waterway operating but to be improved

Bolivia-Brazil:2 Interoceanic roads1 projected railway

Colombia-Brazil1 Interoceanic road + waterway

Venezuela-Brazil1 road operating

Anounced investments in Amazon transportation (billion US$)

Ministry of Transportation of Peru (2010-2021) Roads 3.8 Railways 5.1 Waterways

Government of Loreto (2006-2015) Roads 2.5 Railways 2.0 Waterways 2.6

The «Chinese» railway Brazil-

Peru

US$10 billion

Energy Agreement Brazil-Peru (2010):

7,000 MW in the next 50 years.

butThe Pongo de Manseriche (Marañón) project alone may produce 7,000MW

Brazilian dams in Operation: 74

Total in Brazil(operative, under construction & planned): 258

Total in Amazonia : 414(23 dams with more than 50,000 ha flooded area each)

Finer & Jenkins (Amazon Andes):Today: 41 small/mid size hydro Projects : 151 new hydroelectric projects

Infrastructure impacting on natural resources

Hydro-energy

Exploitation of natural resources

Mining , oil and gas MINING 53,000 permits or concessions covering 21%

of the Amazon…. (80% in Brazil, 11% in Peru)

Unlawful mining (garimpo)… much worst than legal mining (Peru, Brazil, Ecuador, Guyana, etc.)

OIL & GAS Concentrated in the Andean countries: 263

of the 327 petroleum concessions Enormous overlap with indigenous land and

some protected areas Only 25% is currently in the production

phase

Investments in Amazon infrastructure mentioned in official

documents (US$ billion) IIRSA (today’s COSIPLAN-UNASUR)

Agenda of Priority Integration (transport, energy) Projects: 544 projects, estimated at US$130 billion

Peru (Amazon 2010-2021), including natural resources exploitation US$80 billion

Brazilian PACTotal US$313 billion, over 40% in the Amazon NOT TO BE TAKEN VERY

SERIOUSLY… HOWEVER STILL MANY, MANY BILLION DOLLARS !

«Conservation» versus «Development» budgets

Annual budget for conservationGovernments…………………….. US$900

million/year ?Donations (Castro de la Mata)….. 206

million/year ?Carbon related ( REDD, etc.)……..

Future

Annual expenditures for developmentGovernmentsForeign private investmentsNational private investments

What to do with such small moneyfor conservation?

Many, many billion/year !!!

Priorities for conservation investments

Today’s internationally financed activities (Castro de la Mata):Legislation, policy, enforcement ….. 27.4%

PES/RED …………………………. 23.5%Protected areas ………………… 15.8%Local livelihood…………………… 7.5%Indigenous land……………………. 6.3%Others…………………………… 19.5%

Government expenses concentrates in enforcement but spend % less for protected areas.

These expenditures have no correlation with current and projected land use

situation !

Priorities for international conservation investments

% more investments are needed in the Andes.

Governments usually do not apply recommendation on legislation, policy or enforcement. Even less coming from abroad: A lot of paper and little results.

PES/RED is also much money wasted in paper. Governments are interested… they may pay for.

The only real significant success until now are the strictly protected areas. Every day more abandoned !

The main additional option for the future are the indigenous territories.

Poor results of expensive “community based conservation” … very long support for any success.

It is necessary to avoid dispersion of investments.

Best opportunities for conservation are (in priority order):

1. Strictly protected areas1. Better management, more areas2. Ecotourism & raising public

awareness3. Intensify sustainability in buffer

zones2. Indigenous territories

1. Profitability with sustainability2. Conservation practices (protected

areas inside)3. Soft protected areas

1. Profitability with sustainability4. Forest concessions and non allocated

forests1. Water conservation for cities

Priorities for international conservation investments

Temporal

gains that

must be consolid

ated