July 24 2004 The Economist Magazine
The Brazilian Amazon
Asphalt and the jungle
ALONG THE BR-163
A road project in the Amazon may be the world's boldest attempt to reconcile growth and conservation

YOU do not drive on the right of the BR-163, nor do you drive on the left. You drive on whichever bit of the road seems least likely to tear off the undercarriage of your vehicle. During the six-month rainy season, when the road becomes a river of mud, men with tractors wait for you to founder and haul you out for a fee. Under such conditions, the 1,765km (1,097 mile) journey from Santarém, a port on the Amazon River, to Cuiabá, capital of the state of Mato Grosso, can take a fortnight.

Within four years, if Brazil's government has its way, the BR-163 will be a super-highway, launching commodities towards markets in Europe and Asia, speeding computers and cell phones from Manaus to São Paulo and ending the near-isolation of hundreds of thousands of people living along its unpaved stretches.

Yet the paving of the BR-163 is feared as much as it is yearned for. The road joins what Brazilians call, without great exaggeration, the “world's breadbasket” to the “world's lungs”—the fields and pastures of Mato Grosso to the Amazonian rainforest. If the past is any guide, the lungs will suffer. Paving the BR-163 could lay waste to thousands of square kilometres of forest, carrying deep into the jungle the “arc of deforestation” through which it passes. It may visit similar destruction on the small farmers, gatherers and indigenous folk clustered along its axis. In Pará, the more northerly of the BR-163 states, older settlers are already battling loggers and land grabbers up and down the road. “On the one hand [it] will bring development,” says Cícero Pereira da Silva Oliveira, head of the union of rural workers in Trairão, a settlement 380km south-west of Santarém. “On the other it will bring ruin to the region—more land grabbing, more drug trafficking. Total violence will arrive.”
That would be a local disaster with global implications. During the 1990s, deforestation may have accounted for 10-20% of the carbon released into the atmosphere. Road development could deforest 30-40% of the Amazon by 2020, according to one estimate. But the paving of the BR–163 is supposed to be a different sort of roadworks, bringing growth that is ordered rather than chaotic, reducing social inequities rather than exacerbating them, preserving the Amazon rather than despoiling it.
Getting it right has now become a global project, involving NGOs, multinationals and grass-roots groups, as well as all levels of Brazil's government. There are plenty of disagreements, but this throng is forming unlikely alliances, overturning assumptions about how to police the forest and proposing novel ideas for reconciling growth and conservation.
The road was opened 30 years ago by dictators whose idea of manifest destiny was to send bulldozers to clear a trail into the forest and entice people to follow with the prospect of land and subsidies. “Land without people for people without land,” they urged, and many responded, settling along the margins of thoroughfares that took turns as dust and mud. One indigenous tribe, the Panará, was decimated by viruses brought by the settlers and expelled from its traditional territory. The BR-163 hosts what the transport ministry calls “the highest concentration of slave labour in the known world.”
Most governments since have promised to pave it. That the pledge may finally now be redeemed owes less to the demands of those living along the unpaved stretch, which lies mainly in Pará, than to the interests gathered at either end of the Cuiabá-Santarém road.
It starts in the capital city of Mato Grosso, a state that calls itself the “Amazon tiger”. While Brazil's economy shrank last year, Mato Grosso's GDP grew 8% thanks to a boom in soya, beef and other commodities. Such exports, notes Blairo Maggi, the state's governor, largely account for Brazil's trade surplus. This shields an indebted economy from chaos.
At the northern terminus, in the subdued port town of Santarém, stands a $20m grain terminal built by Cargill, an American trading company whose logo is now the town's most visible landmark. The terminal is handling grain delivered by river but will really come into its own when the BR-163 is ready for lorries bearing grain from Mato Grosso.
The payoff will be stunning. The farmers of Lucas do Rio Verde currently ship their production out through the congested ports of Santos and Paranaguá in Brazil's south-east. Paving the BR-163 would halve the time and cost of transport, reckons the town's mayor, Otaviano Olavo Pivetta. That would inject 37m reais ($12m) into the local economy, a gain that would be repeated across Brazil's central-western region. All Brazilian agriculture, which is already intimidating rivals abroad, will be more competitive.
Manufacturers in the duty-free zone of Manaus, who see the value of their tax breaks eaten away by the cost of delivering their fragile electronic goods via bumpy highways, expect freight costs to fall by 300m reais. The paving of the BR-163, which is to be a privately operated toll road, is a big part of the solution to Brazil's apagão logística—its logistical blackout—which threatens to choke off an economy that is just beginning to grow again. The road itself makes what looks like an irrefutable argument for an upgrade. In soya-growing Lucas, which lies along the paved stretch, municipal schools have semi-Olympic-sized swimming pools. Trairão, on the other hand, lacks not only asphalt but basic sanitation.

The cost of progress?
The road will transform as well as transport, but not necessarily for the better. The Amazon forest has already shrunk by 15% since the 1960s. In general, some 85% of deforestation takes place within 50km of a road, because a road makes it more profitable to fell trees, first for timber and then for pasture, the biggest contributor to the denuding of the forest. The paving of the BR-163, which passes through one of the Amazon's most varied bird habitats, will destroy 22,000-49,000 square kilometres of forest within 35 years, according to a report in 2002 by two research institutes, IPAM and the Instituto Socioambiental. Without law and order, the road could usher in the strong and flush out the weak.

Trairão is a jangling ten hours by road from Santarém. Small farms and pasture line the verges of the highway, and lorries loaded with ipé, a tropical hardwood, ply it ceaselessly. The municipality has ranching on a small scale but Ademar Baú, a farmer who is also Trairão's mayor, sees great possibilities. The region is “very suitable” for cattle, he says, with lots of rain and no disease. Farmers are beginning to experiment with rice and soya.

But the logging is clandestine, and the farming takes place in a legal limbo. Mr Baú says that 90% of the proprietors in Trairão have no clear title to their land. He blames this on “bureaucracy”, in particular the federal agrarian-reform agency, called INCRA. Because INCRA rarely sells land outright, and then usually in lots of 100 hectares, landowners acquire it through fronts, cannot borrow money from banks and cannot get official sanction for logging.
With the paving of the road in prospect, Trairão is experiencing a boom. Its population has swelled from 14,000 to 25,000 in the past two years. The price of land along the road has jumped nearly tenfold. So common are overlapping claims, says Mr Baú, that if all were valid Trairão would rise three storeys high.
Like much of Pará, Trairão is caught up in what may be the unruliest property market in the world. The federal government owns 70% of the state's land, through agencies such as INCRA, Indian reserves and national forests. Much of INCRA's property is federal in name only, and thus an invitation to grilagem, which refers to an earlier practice of putting land deeds in boxes of crickets to make them look authentically antique.
There are trappings of legitimacy. Enterprises apply to INCRA for documents called protocolos, based on parcels of land surveyed from the air and impressively “geo-referenced”. These are then sold to loggers, speculators or aspiring ranchers, sometimes via the internet. The protocolo concedes no right of ownership, yet is bought and sold as if it does. Sometimes it is enough to persuade earlier settlers to leave. If not, there can be violence. “When I arrive, the ribeirinho [river dweller] is there,” says a logger from Itaituba, a district along the BR-163. “He's been there 80 years. I have the document. That means a battle, sometimes to the death.”
Land clashes, an old story in southern Pará, rage along the BR-163. In Santarém, Cargill's terminal has opened up a new front in Brazil's soyabean boom. By night, planters recently arrived from Mato Grosso cruise the waterfront in shiny Hilux pickup trucks, a marker of rural prosperity. Often, the locals are happy to sell out to deep-pocketed buyers. Sometimes, alleges a local organisation of family farmers, they are pressured to leave. In Castelo dos Sonhos (“Castle of Dreams”), four out of five corpses in the cemetery are those of murdered members of the rural workers' union, says Socorro Pena of IPAM. Over 500 people have died in Pará's land wars.

Development and conservation
Brazil has grown up since the generals etched the BR-163 into the forest. No longer does the government think it sufficient to build something and then abandon it. Now, 15 federal ministries are pondering every conceivable consequence of paving the road, from greater prostitution to opportunities for organic derivatives of castor oil. Social movements, which barely existed 30 years ago, are subjecting the project to intense public grilling. For them, government services, from policing to education, are as important as conservation.

The government envisages a two-phase process to soften the impact of the road (see map): first, “emergency actions” to accompany roadworks starting next year, such as beefing up law enforcement and settling property claims, and then an environmentally friendly master plan for the road's “area of influence”—nearly 1m square kilometres and 1.7m people. “The predatory paradigm of the past 500 years is being broken,” boasts Alexandre Gavriloff, the transport ministry's director of concessions.
A traveller cannot help but wonder whether government can break paradigms on its own. The Santarém branch of INCRA administers federal property spread across 17m hectares in 11 districts. Two vehicles are working properly and one is barely functioning, says the unit's chief, Pedro Aquino de Santana. Its employees are mostly too decrepit to travel; the youngest was hired 21 years ago. IBAMA, the federal issuer of environmental licences, is hardly in better shape. Flávio Montiel, its director of environmental protection, says that “IBAMA today doesn't have the means to supervise” but contends that things are improving. After seeing its budget for policing Brazil's forests slashed to a derisory 17m reais this year, it has received an emergency infusion of funds.
The government proposes to ride up the BR-163 like a no-nonsense sheriff on the American frontier, but a truer analogy would be to 19th-century Afghanistan, which drew outside powers and local potentates into a contest for influence. The players of this latter-day Great Game are an assortment of local and global pressure-groups, multinationals, foreign lenders and various levels of government with diverse interests. Yet they have mounted a challenge to the traditional approach to managing the forest, which relies on enforcement, not inducement. “The government is not set up to be able to manage the Amazon,” says Michael Jenkins of the Katoomba Group, which marshals private-sector incentives for green ends. Alliances between environmentalists and enterprises can help, he thinks. That means “folks traditionally seen as arch enemies need to be in the same room with us.”
No enemy is more arch than Mr Maggi, who, besides being Mato Grosso's governor, is part-owner of the world's biggest soya producer. Anything that is good for soya is bad for Brazil, many Brazilians believe. It contributes to deforestation, usually indirectly, by occupying pasture and pushing ranchers deeper into the forest; it poisons rivers with pesticides. Soya planters amass land but employ few people. During the year in which Mr Maggi took office, Mato Grosso's rate of deforestation more than doubled. No coincidence, his critics said.
Mr Maggi is certainly no tree hugger. Asked about the effects of growth on the environment, he replies that “you don't make an omelette without breaking eggs.” He opposes new reserves for indigenous people, who, so far, have been the forest's most reliable protectors. Yet Mr Maggi vows to defend the law, which in Brazil is strict: 80% of densely forested private land may not be cleared, nor may the banks of rivers. As the Amazon links its economy to that of the rest of the world, the cost of flouting the law is mounting.
The Maggis' company, Grupo André Maggi, is the best example. Its European customers, tutored by pressure-groups, are nervous about the fate of the forest, and its bankers are becoming so. The Maggi company wants to borrow $30m from the International Finance Corporation (IFC), an arm of the World Bank that imposes relatively strict green norms on its clients. It is also a client of Banco Real, owned by a Dutch Bank called ABN-AMRO, one of several summoned by NGOs last November to be warned against financing tree-toppling soya. The IFC named a mediator between the Maggi company and the NGOs. With their encouragement, it obeys the law and insists that the 500 other farmers from which it buys soya do so as well.
NGOs are putting similar pressure on Maggi's competitors: the Nature Conservancy is tackling Cargill, for example. The ultimate aim is a system of certification, assuring consumers in the first world that soya growers are complying with environmental law. It is harder—and more important—to extend that idea to the frontier, where anonymous ranchers are doing most of the deforesting, but there is progress here, too. Brascan, a Canadian-owned company, may soon start up ranching in the Amazon; Maggi-like, it will lend cattle to other ranchers provided they obey the law.
Private schemes underpin public policies that are themselves in flux. Pretty much everyone in the Amazon regards as irrational the decree limiting deforestation to 20% of a proprietor's land (50% in less-dense forest, insists Mato Grosso). It does not give priority to the most environmentally valuable land. It forces farmers to pay for extra land, which discourages them from protecting it.
The main contender to replace legal reserves is “economic and ecological zoning”, which proposes a tactical retreat in the battle against deforestation in order to win it. The government of Pará recently proposed a master plan that blesses deforestation that has occurred so far but raises from 33% to 62% the share of territory off-limits to any but forest-friendly development. For the BR-163, it envisages a strip of development 40km wide on each side of the road, but this would go no farther. The plan accommodates the idea—put forward by social movements—of reserving a mosaic the size of Maine for sustainable use and pure conservation east of the road. This is a surprise coming from a government seen as no friendlier to the forest than Mato Grosso's. Rather than punish people for chopping down trees, the idea is to lure them to “zones of consolidation”, where the damage has already been done.

Mind the gap
Visions of the Amazon are converging, yet stop short of consensus. The green-minded federal environment ministry would consider modifying the system of legal reserves, but only after deforestation is brought under control. As for the land along the BR-163, “it is not in the interest of the government to open [new] areas” to development, says João Paulo Capobianco, secretary of forests and biodiversity. But the choice between growth and conservation is a hard one. At the close of an interview, Gabriel Guerreiro, Pará's environment secretary, unexpectedly invites a visitor to tap his teeth: they are false. His teeth fell out when he was an impoverished 15-year-old growing up in the forest. “I don't accept being condemned to poverty,” he says.

The path towards a benignly blacktopped BR-163 is as rough as the road itself. Some worry that the quest for governance will be steamrollered in the rush to pave it. Mr Maggi—fearing that sceptics will block the project indefinitely—now lobbies for a southbound rail line as an alternative. The miracle would be a road that promoted Brazil's growth while protecting the indispensable Amazon.

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