Timber being transported in Gabon. (Photo by R. Butler)
|
|
DEBT AND DEFORESTATION
By Rhett Butler | Last updated July 31, 2012
In the 1980s, 1990s, and early 2000s, debt was driving commercial deforestation in some developing tropical countries, especially those classified as Heavily Indebted Poor Countries (HIPCs). Strapped for cash, these countries turned toward their natural resources as the fastest and easiest way to service debt and interest payments. Readily available without capital investment or skilled labor, often non-renewable, forest products like mineral wealth, timber, oil, and hydroelectric power were liquidated in an effort to raise much-needed funds.
While efforts in the last decade have sought to reduce or eliminate debts of the world's poorest countries (World Bank / IMF), debt payments still are an important factor in the need for governments to pursue and exploit natural resources an unsustainable manner.
The origin of international debt varies from country to country, but many borrowed heavily during the 1970s in an attempt to offset the rising price of oil and to keep their economies growing. Other debts were initiated by struggles for independence and civil wars that followed. Debt increased with the reign by corrupt, heavy-handed governments, which at times used loans to purchase weapons or to finance wasteful or ill-conceived projects that neither benefited the majority of the population, the economy, nor the environment. High interest rates coupled with the global recession made it harder for developing countries to pay off debt.
Historically, much of the foreign aid flowing into such countries from multilateral lending organizations like the World Bank and the International Monetary Fund (IMF) financed projects that result in the destruction of the rainforests and thus further ensured future impoverishment and dependence on aid. These organizations funded such projects because they were best suited to large development projects.
However since the mid-2000s, drivers of debt having been changing. Today it is private sector investment that has been pushing commercial exploitation of forests. In some countries like Brazil, state-run banks and development institutions play an important role in financing activities that have a major impact on forests. Accordingly, NGOs and environmentalists have been targeting these entities in an effort to push them to adopt lending safeguards. For example, BNDES, Brazil's massive development bank, and the state-run Banco du Brasil now offer reduced interest loans for farmers and ranchers who prove compliance with national environmental laws.
The financial sector — whether it is state-run banks, multilateral development banks, of private financiers — play a fundamental role role in funding projects that drive deforestation and forest conversion.
Review questions:
- How does international debt impact deforestation in the tropics?
Other versions of this page
print version | spanish | french | portuguese
| chinese | japanese
Continued / Next:
Other pages in this section:
|
|
| |
CONTENTS
Other languages
WEEKLY NEWSLETTER
INTERACT
|
Recent news
Top Indonesian official calls out misinformation in environmental campaign
(05/20/2013) Indonesia's top REDD+ official confirmed there is no plan to open 1.2 million hectares of forest in Sumatra's Aceh Province, calling into question numbers used by environmentalists in their bid to stop reclassification of the province's forest land.
Deforestation in the Brazilian Amazon pacing 88% higher than last year's rate
(05/18/2013) Satellite analysis by a Brazil-based NGO indicates that deforestation in the Brazilian Amazon continues to pace well ahead of last year, when the government passed a weakened version of its law governing use of forest lands.
In landmark ruling, Indonesia's indigenous people win right to millions of hectares of forest
(05/17/2013) In a landmark ruling, Indonesia's Constitutional Court has invalidated the Indonesian government's claim to millions of hectares of forest land, potentially giving indigenous and local communities the right to manage their customary forests, reports Mongabay-Indonesia. In a review of a 1999 forestry law, the court ruled that customary forests should not be classified as "State Forest Areas". The move is significant because Indonesia's central government has control over the country's vast forest estate, effectively enabling agencies like the Ministry of Forestry to grant large concessions to companies for logging and plantations even if the area has been managed for generations by local people.
NGO: conflict of interests behind Peruvian highway proposal in the Amazon
(05/16/2013) As Peru's legislature debates the merits of building the Purús highway through the Amazon rainforest, a new report by Global Witness alleges that the project has been aggressively pushed by those with a financial stake in opening up the remote area to logging and mining. Roads built in the Amazon lead to spikes in deforestation, mining, poaching and other extractive activities as remote areas become suddenly accessible. The road in question would cut through parts of the Peruvian Amazon rich in biodiversity and home to indigenous tribes who have chosen to live in "voluntary isolation."
Gabon convicts environmentalist of defamation in palm oil case
(05/15/2013) An environmental activist in Gabon is facing jail time and a $10,000 fine over his campaign against a Singaporean agroindustrial giant's plan to develop tens of thousands of hectares in oil palm, timber, and rubber plantations in the Central African nation.
More news on deforestation
More rainforest news
|
|
|
