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Under internal and global scrutiny, the Bolsonaro administration in Brazil is facing strong pressure to reconsider its controversial environmental agenda. Although deforestation was a problem long before Jair Bolsonaro assumed power in January 2019, the future of the Amazon Rainforest is clearly threatened under the current government. A cover story article in The Economist on August 1 Bolsonaro鈥檚 proposals would inflict on the Amazon biome, and the resulting consequences for the future of Brazil and the world.

Deforestation rates have since December, yet the Bolsonaro government remains unconcerned. In fact, at a press conference on July 19, Environment Minister Ricardo Salles鈥攁long with President Bolsonaro, Foreign Affairs Minister Ernesto Ara煤jo, and Institutional Security Office Minister General Augusto Heleno鈥� on deforestation collected and presented by Brazil鈥檚 National Institute for Space Research (INPE).

However, such a stance is not without economic and diplomatic ramifications. Brazil鈥檚 Minister of Agriculture Tereza Cristina expressed concern that the government鈥檚 environmental policies might affect the country鈥檚 commercial prowess, particularly in the agricultural export sector. Ireland鈥檚 parliament and Italy鈥檚 farm minister have already , and Germany decided to suspend sent to Brazil to finance projects aimed at preserving the Amazon after reports that nearly 400 square miles of forests were cleared in July alone. Ignoring the negative effects of deforestation poses a threat to Brazil鈥檚 decades-long standing as a respected defender of the environment, benchmarked by the country鈥檚 participation in the 1992 United Nations Earth Summit in Rio de Janeiro and the landmark 2016 Paris Agreement. Brazil has been an indispensable player in global deliberations on climate policy, through actions to curb deforestation and widen protections of indigenous people.

Most troublingly, the government鈥檚 current policy demonstrates little awareness for the true importance of the Amazon鈥攊ncluding its critical role in regulating the rainfall and weather patterns that have helped make Brazil an agricultural powerhouse. The country鈥檚 dependence on agricultural exports makes it highly vulnerable to climate change. Yet Brazil is uniquely poised to show the world that sustainable agriculture is possible, given its substantial expertise in agricultural research and innovation and its capacity to increase production without further deforestation. Combatting deforestation is not just in the interests of the world鈥攊t is in the economic and diplomatic interests of Brazil.

The world鈥檚 largest rainforest and one of Earth鈥檚 most vital natural resources, the Amazon is recognized as a carbon sink for its ability to absorb . It spans 2.7 million square miles鈥攏early 1.5 times the size of the entire European Union鈥攁nd is home to more than . Though the Amazon Rainforest spans nine different countries, falls within Brazil鈥檚 borders, in an area known as the Brazilian Legal Amazon. International in the past two decades have animated a collective moral and legal responsibility to protect such a biodiverse region, but much of the onus in enforcing these sweeping pledges falls on Brazil.

Deforestation in the Brazilian Legal Amazon had steadily increased from the 1970s through the end of the twentieth century, but the deforestation rate between 2004 and 2012. Much of this took place during the presidency of Luiz In谩cio Lula da Silva (popularly known as Lula), who served from 2003 until 2011. Brazil viewed environmental policy as , and as a means for exercising Brazilian power and leadership on the international stage. Although it was not without critics, the plan sought to unite the bifurcating agendas of large-scale infrastructure and environmental protection, advocating for conservation-based policies that would stimulate development.

The Role of Environmental Policy Interventions

According to the United Nations Framework Convention on Climate Change (UNFCCC), reducing greenhouse gas emissions鈥攁nd, by proxy, deforestation rates鈥攊s voluntary for developing countries. However, under pressure from civil society and international governments, the Lula administration signed into law a number of landmark policies that promoted environmental protections and sustainable agricultural practices.

Chief among them was the 2004 Action Plan for the Protection and Control of Deforestation in the Amazon (PPCDAM). This initiative encompassed a diverse array of policy interventions with :

1. To standardize land tenure rights and create new ecological reserves (over 190,000 square miles of reserves were designated between 2004 and 2011);
2. To improve land-use monitoring practices through satellite imaging and digital surveillance; and
3. To promote systems of sustainable agricultural production.

The PPCDAM set the precedent for future environmental conservation policies, though it included few mechanisms for enforcement or accountability. In 2007, a broad coalition of Brazilian and international non-governmental organizations launched the , to pressure the federal government into developing policies to combat deforestation. The government responded in 2009 with the National Policy on Climate Change (PNMC), which set a national greenhouse gas reduction target of at least 36.1 percent by 2020, and required any mitigation actions to be 鈥渜uantifiable and verifiable,鈥� .

Many of Lula鈥檚 policy proposals could not have been implemented without the support of foreign governmental assistance and civil society organizations. In 2008, the Norwegian government pledged $1 billion to create the ; the money finances initiatives aimed at 鈥減reventing, monitoring, and combating deforestation, and promoting conservation and the sustainable use of the Amazon forest.鈥� Additionally, Brazilian non-governmental and civil society organizations such as , , and are critical for monitoring and enforcing sustainable land use practices.

Local and Global Economic Conditions

In 1994, after years of efforts to rein increasing prices, the Brazilian government, under President Fernando Henrique Cardoso, initiated a new stabilization plan named after its new currency, the real, which was pegged to the U.S. dollar. Though successful in curbing inflation, the Real Plan following the financial crises in Asia in 1997 and Russia in 1998. Exchange rates began to deteriorate by 2002 with the economic downturn in Argentina and that President Lula, elected that year, would default on the accumulated debt. Because of this, prices for domestic goods鈥攑rimarily beef and soybean, two of Brazil鈥檚 largest exports鈥攄ecreased, and many farmers responded by increasing their land-share to produce more in order to prevent their incomes from decreasing.

Yet as the economy began to expand again in the early years of the Lula administration, production did not return to its former levels: , with production rising from 15.8 million tons in 1990 to 67.5 million in 2010. Cattle-ranching saw similar expansions: between 2000 and 2010, and Brazil is now the largest beef exporter in the world. Much of this growth was driven by by countries like China and the United States.

In many developing countries, as the economy expands, , as a result of increased production. However, even as industries expanded through the early 2000s, Lula-era policies successfully curbed deforestation by creating reserves, monitoring land-use, and promoting sustainable agricultural practices. The results were impressive: 3.5 percent average , and a 56 percent increase in national coincided with an 83 percent from 2004 to 2012.

In addition to bold public policies, the market鈥檚 rejection of deforesting farmers played a significant role in decreasing deforestation. A 2006 Greenpeace report titled linked soybean production to 鈥渄eforestation, global warming, water pollution, and even the use of slave labor,鈥� implicating major companies like McDonald鈥檚 and grain exporter Cargill. In 2009, Brazilian NGOs released two additional reports鈥� and 鈥攚hich pointed at cattle ranchers, bankers, slaughterhouses, and beef exporters for the destruction of the Amazon. The international outcry that ensued forced multinational conglomerates and local ranchers alike to commit to more sustainable supply chain models.

Policy Changes Since 2012

However, this trend has not continued: deforestation rates , though they have yet to reach the peak level measured in 2004. Much of this is spurred by the reversal of Lula-era policies: the conclusion of Lula鈥檚 term in 2011 opened the door for the bancada ruralista, the rural caucus in Brazil, which has gained significant political power in the past decade. Dilma Rousseff, who assumed the presidency after Lula, was more amenable to their rural infrastructure and development in the Amazon, and today, the bancada ruralista currently control of Congressional seats.

The first policy to enter the political crossfire after the conclusion of Lula鈥檚 presidency was the Forest Code. Originally passed in 1965, the Forest Code encompasses a series of presidential decrees鈥攎any of them enacted during the Lula administration鈥攖hat regulates land use and management. In 2001, to require landowners to conserve 80 percent of their property in the Amazon, and 20 percent in other biomes, known as Areas of Permanent Protection.

A key problem is that regulations in the original Forest Code proved difficult to implement, especially without proper systems to measure deforestation. Using the lack of enforcement as pretext, the bancada ruralista overhauled the Forest Code in 2012, with support from President Rousseff and the who represent agribusiness interests. The new law offers a , including:

1. Granting amnesty to landowners who illegally deforested before 2008, which effectively reduces the area needing reforestation by 112,000 square miles, in order to meet global targets set under the PNMC;
2. Decentralizing the management of Brazilian forests, delegating the mapping and registering of all rural properties to individual states (which requires to implement); and
3. Reducing the amount of forestry designated as Legal Reserves and Areas of Permanent Protection.

Though farmers and ruralist politicians argue that the new Forest Code stimulates economic development, environmental activists warn that the overhaul will incentivize deforestation by eliminating legal repercussions. However, the new Forest Code also 鈥渋ntroduced new instruments that, once effectively implemented, allow for better monitoring of land use,鈥� according to a . Among these instruments is the Rural Environmental Registry, which requires landowners to register property with the government. Sixty percent of all rural areas on the digital registry platform SICAR.

Beyond the relaxation of the Forest Code, the poor performance of the real in recent years has only worsened the rate of deforestation. In fact, from 2015 to 2016 alone, deforestation rates , the largest annual growth rate since Lula. This coincided with one of the in Brazil鈥檚 history. As the real weakens, agricultural exports become more profitable, stimulating illegal logging and land-clearing deeper in the Amazon.

Furthermore, increased demand for agricultural production鈥攅specially soybeans and beef鈥攕timulates investment in infrastructure, which often requires clearing nearby forests. The Rousseff administration, bolstered by the bancada ruralista, financed additional infrastructure projects under the new (PAC-2), primarily BR-319, a mega-highway from the northern city of Manaus to regions in the south, and the , connecting southern Peru and the Brazilian ports of Rond么nia and Acre. Rousseff also proposed building 30 hydroelectric dams in the Amazon as part of the . Though many of these dams remain under construction, they have caused enormous controversy: the Belo Monte Dam, completed in 2016 as the third-largest hydroelectric complex, along the Xingu River. the danger that 鈥渨here roads are built in the Amazon, farmers and ranchers follow in droves to cut the forest.鈥�

Under the new Bolsonaro administration, deforestation is expected to increase even further, with the recent , the to the Ministry of Environment鈥檚 budget for climate change-related activities, and the proposal to in the Amazon, which represent 35 percent of the Amazon biome.

Most alarming is the lenient enforcement of environmental laws鈥攆rom January to May of 2019, Ibama, Brazil鈥檚 Institute of the Environment and Renewable Natural Resources, imposed the in the past decade. Government seizure of illegally-harvested timber has fallen from 883,000 cubic feet in 2018 to 1,410 in 2019, the equivalent of ten large trees. Even worse, deforesters rarely face punishment when caught鈥攊n fact, most are simply . Without granting environmental agencies the power to monitor and prevent illegal logging, the Bolsonaro administration has further emboldened deforesters.

Recommendations for Curbing Deforestation

Without preventative, conservation-based legislation and renewed investment in innovative techniques for agricultural production, deforestation in the Amazon Rainforest鈥攁nd in 鈥攚ill continue to rise. Considering agricultural products account for nearly , a combination of policies is required to promote sustainable agricultural development:

1. Implement incentive-based credit-lending policies tailored toward different environmental actors.

The demography of land tenure changed dramatically with the upheaval of the Forest Code. In 2011, smallholder properties (land under 100 hectares) accounted for 13.9 percent of total accumulated deforestation; large properties (under 500 hectares) contributed 47.7 percent; and very large landholders (under 2,500 hectares) 35.8 percent. However, has shown that the 鈥渄eforestation share attributed to the largest properties (all land under 2,500 hectares) has declined by 63 percent, whereas that of smallholders increased by 69 percent.鈥� Contrary to general belief, large agribusiness is decreasingly responsible for deforestation鈥攁nd farmers on smaller properties are critical targets for conservation policies.

Reforming the credit-lending system is one way to directly influence smallholders, who rely most on access to rural credit. Analysts from INPUT (Iniciativa para o Uso da Terra) found that improved credit access for family farmers : family farmers rely on credit to invest in equipment and materials like seeds and fertilizer.

In 2008, the 鈥渕ak[ing] credit for agriculture and ranching dependent on having no pending fines for illegal deforestation.鈥� Though such fines are often not paid, a ban on credit takes immediate effect and cannot be appealed. This resolution most heavily impacted smallholders, who cannot easily afford to pay fines but depend the most on credit.

Thus, offering more favorable credit-lending conditions to smallholders who comply with鈥攐r go beyond鈥攖he requirements in the Forest Code would incentivize rural land registration and more sustainable smallholder farming. Because interest rates are higher on existing or already-cleared farmland, poorer farmers are unable to purchase arable land and must move deeper into the Amazon for unclaimed territory. Redefining farm size as a criteria of credit access, lowering interest rates for poor smallholders, and consolidating credit-lending conditions across regional banks will to invest in new techniques for agricultural production. This also provides a stronger justification for government subsidies to support the banks offering credit to smallholder properties.

2. Reform Brazil's income and property tax codes to protect family farmers and promote sustainable agricultural production.

The current tax code in Brazil exacerbates inequality between smallholders and large corporations in ways that contribute to deforestation. Family farmers are often subject to than agribusinesses, and primarily on investments unaffordable for small land-owners, such as farm vehicles, agricultural machinery, and breeder animals. The agriculture industry also provides important tax benefits for large holders and corporations, making agricultural projects attractive to investors. These policies encourage corporate demand for arable land, increasing prices. Poor smallholders, priced out of more expensive land holdings and looking to evade higher tax rates, often settle on inexpensive forested plots in the Amazon, as illustrated by the attributed to family famers since 2011.

The also incentivizes deforestation. Based on the principle that land should be productive, it imposes higher tax rates on 鈥渦nproductive鈥� land, which includes forests. Land that is deforested鈥攅ven without reason鈥攊s considered 鈥渦sed land,鈥� and is therefore taxed less than preserved forestry. As in the case of other countries, the is often only a fine. However, these singular fines cost far less than the tax benefits and income generated from the land, which encourages large corporations and small family farmers alike to deforest their land.

A positive start would be to to exclude deforested land and instead adopt terminology around land productivity. This not only encourages land preservation (especially in areas where biodiversity is high, such as the Amazon) but incentivizes reclaiming deforested areas. Additionally, developing a progressive, tiered corporate tax code that promotes sustainable family farming and closes depreciation loopholes for capital investments is central to curbing deforestation in the Amazon.

3. Invest in research and technology for sustainable agricultural practices, particularly those that use already-deforested land.

Numerous studies have that Brazil can meet global food security demands without further destroying the Amazon Rainforest. Yet if farmers are to respond to these increasing agricultural demands in a sustainable way, they must have greater access to technology. One solution is investing in climate-smart agriculture: an that considers sustainable agricultural productivity, resilience against climate change, and a reduction in greenhouse gas emissions. Climate-smart agricultural programs were recently implemented in Brazil: the MAIS Program (Modulo Agroclim谩tico Inteligente e Sustent谩vel), which supports family agricultural production in the Jacu铆pe Basin, has . Additionally, properly administer water, fertilizer, and pesticides to increase productivity.

Further research can also be invested into more efficient deforestation monitoring systems. For decades, the National Institute for Space Research has used satellite data to record rates of deforestation across the Amazon. The , launched in 2016, even sends law enforcement teams to illegally-deforested sites. However, the data is only released every three months. Developing a more effective and frequent monitoring process may help curb deforestation rates.

Brazil has made progress by investing in technology for sustainable production. But 鈥渄espite the increase in agricultural productivity, the variation of productivity across farms remains huge, as a result of which more land needs to be brought under cultivation to compensate for poor yields,鈥� according to a .

4. Improve partnerships with the private sector to support agricultural innovation projects.

Much of the investment in technology comes from the private sector. Developing public-private partnerships to support the acceleration and implementation of sustainable production techniques will be critical for production in the Brazilian Legal Amazon, considering the lack of government revenue and in recent months. Private sector finance and corporate commitments to sustainability play an enormous role in achieving forest conservation and restoration, according to a .

Embrapa, the Brazilian Agricultural Research Corporation, has the cerrado鈥擝razil鈥檚 largest savanna biome鈥攊nto one of the country鈥檚 largest soybean production sites. The cerrado provides a cheaper and more sustainable alternative to the Amazon by increasing the area and productivity of existing farmland. This region now accounts for 50 percent of Embrapa鈥檚 grain production. Balbo, Brazil's largest producer of organic sugar, has invested in 鈥溾�� a new approach to precision agriculture that revives ailing crops and land 鈥渟tarved of vitality鈥� through decades of farming. Even McDonald鈥檚, one of the biggest purchasers of Brazilian beef and soybean, has to enforcing an environmentally-conscious supply chain; and Boeing a $1 million investment to support Brazil鈥檚 sustainable aviation biofuel industry.

The New Moral Imperative

There is an enormous environmental incentive to protect the Amazon Rainforest from deforestation: more tree cover is a natural barrier against the increasing rates of CO鈧� emissions and global warming. However, there is also an economic incentive: a recent study found that the Amazon Rainforest, if kept intact, would in the economy. In fact, destroying the Amazon would 鈥渞educe rainfall so significantly that it would generate a .鈥� President Bolsonaro鈥檚 commitment to economic development would undercut the benefits the Amazon offers to Brazil鈥檚 economy, as well as to the rest of the world.

The Amazon Rainforest is a bulwark against global warming and a critical contributor to Brazil鈥檚 economic future. Innovative conservation-based policies, private sector investment, and international collaboration will all be vital to protecting one of Earth鈥檚 most valuable natural resources.

Image: Aerial view of the Amazon Rainforest, near Manaus, the capital of the Brazilian state of Amazonas, by Neil Palmer for CIAT, International Center for Tropical Agriculture [CC license]