Policy Affect on the Deforestation in the Brazilian Amazon

Abstract:

In recent decades, deforestation has been addressed as one of the most serious issues in the international forest debate, especially in the tropical region. The Brazilian Amazon is a critical case because it is globally important for biodiversity, climate, and geochemical cycles. Since the ecosystem and biodiversity in this region is highly important, it is essential to better understand the drivers of deforestation and challenges we are facing. In particular, this paper will explore the effects of economic background, land-use policy and agricultural policy in Brazil on deforestation. By summarizing Brazilian historical policies which have influenced deforestation, it is found that implementation of appropriate policy can reduce the rate of deforestation efficiently while bad policy will exacerbate deforestation. Moreover, it is important to allocate public and private land equally for avoiding conflict and abuse of forest land. In conclusion, policy plays an important role in reducing deforestation not only in Brazilian Amazon, but also in all over the world.

Keywords: Deforestation, Brazilian Amazon, Policy, Property Right, Land Tenure, Agriculture.

Introduction

Brazilian Amazon is one of the largest continuous area of tropical rainforest with large amount of carbon storage and biodiversity. Deforestation in the Brazilian Amazon region has raised global awareness since it plays a key role in the global carbon budget, greenhouse gases emissions mitigation, biodiversity and climate change ((Ometto& Martinelli, 2011). Brazilian Amazon has a long history of human civilization since indigenous people settled in this region in the thousands of years ago. Deforestation rate in Brazilian Amazon is highly influenced by human activities and political environment. In the last 40 years, the region has experienced grammatic change in land use and forest cover since large-scale transformation of agriculture land for cattle ranching and soybean farming. The pursuit of commercial interests and land-use conflict have caused severe ecological and economical consequences to Brazilian Amazon. According to the data, it is estimated that there was a reduction of more than 600,000,000 trees in the Amazon region. Bird and mammal species have been reducing as well in population size due to habitat fragmentation and edge effects (Ometto& Martinelli, 2011). Additionally, deforestation can cause negative impact on the bare soil and microclimate on this site because the sensitive soil layer in tropical region. The changing vegetation composition has changed regional temperature and humidity and further influenced regional precipitation pattern which lead to negative feedback to agricultural production. In order to decrease the rate of deforestation, Brazilian government has proposed a plan as part of the country's voluntary commitments to the UN framework Convention on Climate Change carbon emission reduction. Expressed in numbers, the plan had achieved a reduction of 75% deforestation rate from 2004 to 2009 (Ometto& Martinelli, 2011). However, deforestation is still a severe issue in Brazilian Amazon.

Based on the current studies, the majority of scholars have stated that the key drivers of changing land use and deforestation in the Brazilian Amazon are mostly related to economic opportunities and indigenous activities (Margulis, 2003;2004). Effects of political environment and land allocation issue has usually been neglected, not only for Brazilian Amazon, but also in solving international deforestation issues. To fill this gap, this article tends to address the political issues that worsen deforestation and try to figure out how to utilize political instrument to solve those problems. Start with analyzing Brazil's historical forest management policies, this article will address the current policy issues in Brazil, which include insecure property right, land conflicts, tenure allocation and agricultural policies. Furthermore, potential methods to reduce deforestation by using policy effectively will be discussed.

Literature Review

Historical Analysis of Brazil's Forest Management Policy

Since forest land in Brazil was settled and exploited by human, it has been highly influenced by forest policy development. In order to evaluate the effectiveness of policy implementation of Brazil, it is essential to analyze forest policies and impact in the past. Historically, Brazil has experienced many phases of policy changes that challenged national economy and environment. According to the article of Alexander, he has divided Brazilian historical forest policy as three sections, which include settlement and exploitation (2889 to 1974), protectionist approach to natural forests (1965 to 2000) and constitutions and international agreements in the 1990s (Banerjee, Macpherson, &Alavalapati, 2009).

At the beginning, the initial Brazilian forest legislation on forest sector focused on regulating the harvest of valuable species and harvest of areas adjacent to water. In the 1920s, with declining timber stocks and drastic transformation of forest land in countryside, government had recognized that it is necessary to regulate forest use. Thus, the first Forest Code was passed in 1934 which regulated that private property rights over natural resources were subordinated to collective interest of society. Implementation of the law has resulted some potential changes in forest practices and clarified government priorities in industrialization. A fundamental framework for the future forest policy in Brazil was provided by this law. In 1960s, a transition to a paradigm of forest protection occurred due to unrestricted exploitation of forest resources thus unable to sustain forest industry capacity. At this protectionist period, it is believed that legislative command and control mechanisms are required to renew and protect natural resources. Therefore, during this era, Brazil's legislation was characterized by restriction of gathering forest resources and creation of large protected area. However, there were largely ineffective in controlling deforestation as the nation's model of resources extraction for economic growth precedence over the sustainable use of forest resource.

Since the poor implementation of the previous forestry code, in 1948, Congress had discussed a new forestry code (Ahrens, 2003; Ondro, Couto, & Betters, 1995). 17 years later, the new forest code was issued in 1965, which making the transition to the paradigm of forest protection with increasing restrictions on private property rights by introducing Permanent Preservation Areas (APPs) (Law No. 4.771, September 15, 1965). A range of conservation area categories were also created by the law. Furthermore, to ensure the supply of charcoal which is an important raw material for the national industry, the new code and the law passed in 1966 to assign subsidized credit and tax exemptions for forest plantations (Law No. 5.106, September 2, 1966). As a result, those incentives became the essential instrument for the forest development and conservation and contributed to six million ha of planning during 1965 to 1987 (Sociedade Brasileira de Silvicultura [SBS], 1998, cited in Mery et al. 2001, p. 245).

During the period from 1997 to 2006, four critical development can be identified the forest policy transition of sustainable forest management under the influence of environmental movement grew and more active civil society: the institution of the National Forest Program (PNF), the National Conservation Area System (SNUC), the provision of fiscal incentives for natural forest management, and the Public Forest Management Law. To be specific, the PNF is central to the political transition to balancing use and conservation while the SNUC details criteria and guidelines for the creation and management of conservation areas. The creation of the PVG, SNUC, and incentives for natural forest management mark the transition from a protectionist to a sustainable management approach to forest resources. In order to meet the need of controlling the illegal use of public forest, maintaining its capacity to produce goods and services and foster socioeconomic development, in 2006, Brazil's first PFML was approved by Congress and sanctioned by President Lula. This law filled the gap of regulation of forest management on public land in Brazil. It regulated the management of public forests for sustainable use and conservation and mandates the establishment of national, state, and municipal forests and forest concessions. In this era, Brazil's forest policy is fundamentally different from it was during the protectionist period of forest policy development. Forest policy at this time can be characterized as democratization, a free and globalized media, and engaged civil society and more stable macroeconomic environment.

Property Rights and Land Tenure in Brazil

In Brazil, insecure property rights are considered as the main causes of land conflicts and deforestation (Araujo et al., 2011). Although Brazil have made huge progress in the economic growth and social improvements in the early years of this century, it is facing the challenge of agrarian property right and land tenure problems. The high levels of land concentration results in conflict and violence which aggravate the deforestation of the Amazon Forest (Reydon& Telles, 2015; 2016). Considering deforestation as a risk management strategy, it is said that insecurity of property rights can reduce the present value of forests and accelerate conversion into agricultural and pasture lands (Reydon& Telles, 2015; 2016;). Moreover, strategic interactions between landowners and squatters also cause deforestation. To be specific, landowners clear the forest land preventively for productive use and reducing the risk of expropriation, while squatters invade land plots, clear the forest and may afterwards gain formal property titles which recognized officially. Meanwhile, Brazil government lacks a strong political and legal frame work to solve those problems. Legal framework of Brazil considers those land conflict as institutional failures since it does not provide adequate protection to rights of landowners. For instance, many landholders do not have legal titles especially in remote area. Thus, it is costly for them to enforce property rights. Furthermore, in this context, it is risky for the title holders to loss their rights to the land because of land reform policies. In such political environment, agents are more likely to convert forests land into agricultural or pasture use. Hence, strategic interactions between landowners and squatters who compete for land access and attempt to legitimate their ownership could result in deforestation.

Despite the conflict between landowners and squatters, land monopoly also called land concentration was addressed as one of the main agrarian problems in Brazilian Amazon. According to the data from the 2006 Agricultural Census conducted by the Brazilian Institute of Geography and Statistics (IBGE), it was shown that land concentration which is estimated by the Gini index at 0.872 in Brazil. The land concentration has a trend of increasing compared with Gini index in 1975, 1985 and 1995. Moreover, in 2006, 2.3 percent of the total farm areas was occupied by the 50 percent of smallest farms while 69.3 percent of the total farm areas was occupied by the 5 percent of the largest farm area. The data reflect the high degree of land ownership concentration which is a consequence of socioeconomic inequality, rural poverty and social exclusion (Griffin et al., 2002). Additionally, people leaving rural areas also face a process of poverty and urban exclusion since the high concentration of urban land occupation patterns.

Additionally, the high deforestation rate of Brazilian Amazon is associated to the lack of appropriate land tenure regulation. It is convenient for the large landowner to increase their potential productive areas without effective governance to control deforestation. Referring to the 2010 FAO data, Brazil has lost 2.6 million hectares of forest per year in the last 10 years, which is a consequence of the continuing expansion of the traditional agricultural frontier in Brazil (Reydon, 2011). As a result, the economic activities such as timber extraction, cattle raising and development of modern agriculture legitimized land occupation by new possessors of land in the short term since they can provide income with little need for financial resources. In order to solve those agrarian problems and democratize access to land, a set of policies was enforced. Those policies aimed at modernizing the land property registration system, creating a cadastre of private properties, issuing land titles for tenants in possession, taxing land property, colonizing areas underuse, providing loans for land acquisition and implementing agrarian reform. However, it should be noticed that the origins of the conflicts do not derive solely from the existence of these policies, but because of the correlation of forces between large landowners and the masses of landless in the definition of the overall land distribution pattern.

Effects of Agricultural Policies

Brazil is the world's leading exporter of poultry, beef and will soon be the leading exporter of soybeans, cotton and biofuels (Nepstad et al., 2014). In this context, the expansion of beef and soybean industries are considered as the primary divers of deforestation in Brazilian Amazon.

In order to relieve deforestation, Brazilian government has implemented numerous incentive-based policies in the last decades. During 2005 to 2013, a 70% reduction of deforestation had been achieved which suggests that it is possible to manage the advance of a vast agricultural frontier. According to Nepstad et al., concluded in 2014, there are three phases in Brazil's decline in Amazon deforestation: Agro-industrial expansion, frontier governance and territorial performance. Phase 1 was from the late 1990s through 2004, during which deforestation of Brazil became very sensitive to global impacts since commodity market conditions and the first large-scale expansion of mechanized crops especially soy in this region. During the last few years of this phase, more than half of deforestation took place in the Mato Grosso which is Brazil's largest agricultural producer. As the most important legal restriction on forest clearing on private lands, The Brazilian Forest Code (FC) was established and set a minimum portion of each property that must be managed as a forest reserve. Moreover, protected areas and indigenous reserves were established at a slow rat and far from the active agricultural frontier. From 2005 through 2006, the second phase was frontier governance. During these years, the area of soy planted in the Brazilian Amazon was retracted since the profitability of Brazilian soy production decline. Regional planning processes organized to prepare for highway paving projects, strong political leadership, and a national commitment to expand protected areas, which resulted in rapid expansion of the protected area and indigenous territory network with many of these areas created in active agricultural frontiers. Phase 3 is territorial performance. During this phase, the profitability of soy production began to increase, and the intensity of cattle production continued to grow. County rather than individual farm became the geographical unit of intervention by adopting a territorial performance approach to deforestation. The Critical Counties program was launched and stimulated collective action to reduce deforestation.

The deforestation decline after the phase 2 was a consequence of mutually reinforcing factors. Those factors decreased the demand for new deforestation since the retraction in this areas' soy production, dramatically increasing beef yields and rapid decline in the Amazon cattle herd size. Through the improved law enforcement imposed on illegal deforestation, deforestation became riskier than before. The supply of undesignated forestland was limited through both a rapid expansion of protected areas in active agricultural frontier zones and delays in highway paving. During the phase 3, reduction of deforestation is associated of incentives for sustainable production with territorial performance approach. The farmers given incentives without territorial performance operating in isolation are faced with many demands for regulatory agencies, commodity buyers, and financial institutions but do not receive significant positive incentives to slow deforestation. However, for the farmers received incentives with territorial performance approach, the type of collective action to slow deforestation that is achieved in the Green Country program could be reinforced through multiple incentives for country-wide declines in deforestation. In this case, regulatory agencies can simplify their licensing procedures, commodity suppliers can give full access to markets and better terms on preharvest loan packages, and banks can lower interest rates and improve terms (Nepstad et al., 2013).

According to the analysis, future trends of deforestation in Brazilian Amazon will also depend on a continued perception of risk associated with deforestation. Soy Moratorium was an important source of market access risks, however, it was scheduled to end in 2014 since the large number of legal soy producers not yet operating at scale and appear to have contributed little to the decline in deforestation although it has made significant progress in establishing legal frameworks and eventually delivering these incentives by farm-level approaches. It is suggested that regulatory agencies could make their regulatory requirements simpler and easier to understand or give environmental licensing procedures discounts. Better terms on preharvest packages could be given by commodity suppliers, and lower interest rates or better terms on loans to legally compliant landholders should be given by banks. Moreover, in order to make the transition to low-deforestation, high-production land use systems, climate finance programs, such as the Amazon Fund, could establish funding mechanism of innovation and competition for delivering finance to regional consortia (Nepstad et al., 2014).

Results and Discussion

Conclusion

Deforestation in Brazilian Amazon is driven by the multiple factors. According to analyze historically policy change in Brazil, it could be said that policy plays an important role in reducing deforestation. Those policy frameworks and their impacts can not only provide experiences and lessons for Brazilian Amazon, but also for all over the world. Dissecting the case in Brazilian Amazon can provide insights to other countries regarding how to use political instruments to make progress in controlling deforestation. Firstly, concise and complete legislation and regulation should be implemented to regulate harvesting and land use in public land. Secondly, it is urgent to allocate property right and land tenure with the basis of equity and rationality to avoid conflict and abuse of forest land. Finally, enforcement of laws, interventions in production supply chains, restrictions on access to credit, and expansion of protected areas can provide positive incentives to reduce deforestation rate.

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