Amazon. What are the benefits of the Amazon to the Brazilian Economy?

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1 Amazon What are the benefits of the Amazon to the Brazilian Economy?

2 Biodiversity-The Amazon The amazon encompasses parts of the territories of nine countries: Bolivia, Brazil, Columbia, Ecuador, French Guyana, Guyana, Peru, Surinam and Venezuala. 69% of the amazon is situated in Brazil. It occupies an eshmated area of 6,869,000 square kilometers- about 40% of the South American conhnent. The amazon is one of the most biodiverse systems in the world. An eshmated 5,500,000 square kilometers is occupied by dense tropical forests- conshtuhng 56% of all broad leaf forests in the world. It contains more than 30,000 species of plants, nearly 2,000 species of fish, 60 species of rephles, 35 mammal families and approximately 1800 bird species.

3 The Amazon Amazonia is vital system for climate stability. Amazon forest retain an immense amount of carbon that if released could greatly contribute to climate change. The rainforest provides carbon storage approximately 120 petagrams of carbon(120 billion metric tons of carbon) in their biomass. Annually, it processes approximately 18 Pg C through respiration and photosynthesis. The amazon contributes to the earth s cloud convection systems; which takes water to Brazil and rest of south America.

4 The Issues The amazon rainforest creates a dilemma for the Amazonian countries most especially Brazil. On one hand, it is a reservoir of resources for economic development and the other hand, it is recognized by scientists, environmentalists as a vital ecosystem that must be preserved for the benefit of the world in general. The amazon is subjected to Deforestation. Deforestation is defined as the conversation of areas of primary forest by human activities aiming at the development of agriculture/cattle ranching activities. In Brazil alone a cumulative area of 757, square kilometers have been deforested as at 2012 (representing 18.6% of the Brazilian portion) The combined cumulative deforestation for Bolivia, Colombia, Ecuador, French Guyana, Guyana, Peru, Surinam and Venezuela is 541,932 square kilometers as at The cumulative deforestation estimate for the forest as a whole of about 1299, square kilometers- an area 14% bigger than than Colombia.

5 Socioeconomic Benefits of Deforestation Rural income: There is a significant rise of GDP per capita in rural areas in all the amazon states. Apart from Ampa, the top 3 development leaders are the states with the highest levels of deforestation. For instance, between 1985 and 1995, a very high growth registered in the state of Mato Grosso could be attributed mainly to the expansioin of soybean production in the state. The second indicator of the benefits of Amazon is social benefits accruing to the national population. The expansion of cattle herd in the Amazonia has been responsible for drop in beef prices. This has allowed beef export to expand significantly. Exports grew from less than US$500 million in 1995 to US$1billion in 2000.

6 Socioeconomic Benefits of Deforestation

7 CaVle Herd Expansion

8 EsHmaHng the Economic(Social) Cost of DeforestaHon in the Amazonia Timber Extraction: Almerida and Uhl (1995) analyzes the cash flow of forest management in the Amazonia. They estimated that proper management of the amazon could generate an estimated future value of timber extraction of about US$28.5 per hectare/year. It has been criticized as been too conservative especially because the timber market in southeast Asia is drying up and could increase the price for Amazonia timber. Ecotourism : Using data on maximum potential for ecotourism activity in the state of Mato Grosso, an estimate of US$9 per hec/ year. This represents the net loss of revenue that the nondevelopment of ecotourism would incur in Amazonia. Carbon Stocking: The amazonia is estimated to be large forest carbon stock. Rovere(2000) estimates a density cover range between 70 and 120 tons of carbon per hectare. Adopting the value of a ton of carbon of $3( conservative), the average carbon density of 100 tons per hectare would cost US$300 per hectare.

9 Estimating the Economic(Social) Cost of Deforestation in the Amazonia Bioprospection: This is the value of the prospect of the forest biodiversity yielding new drugs and its active principles for medical uses. This is one of the main incentives for the preservation of the amazon. The estimate for the value of bioprospection has varied widely Pearce (1993) estimate between US$ 0.01 and US$21 per ha per year. Existence Value: Most studies have use contingent valuation to estimate people s willingness to pay for the cost of preserving natural species and places. Horton et al(2002) presented two possible conservation scenarios(5% and 20%) to responders in Italy and the UK. The average value estimated combining the samples in both countries was US$50 per ha per year for 5% of the area of Amazonia and US$67 per ha per year for 20% conservation.

10 COST OF DEFORRESTATION(Amazon)

11 RecommendaHons for Dealing with DeforestaHon in the Amazonia Sustainable development is the only way to deal with the deforestation problem. The world bank recommends the following for dealing with deforestation in the Amazonia: Information and Planning: the fundamental step in dealing with deforestation is to accept that profitability is the basic driving force behind deforestation. Forest protection policies should be aimed at producers especially cattle ranchers in the consolidated frontier region. Also, zoning can be used as a negotiation process betwee the economic agents and the government. Economic Instruments: 1. Creation of tradable development rights. 2. Tax Deforestation / compensate agents for not deforesting. Law Enforcement: The Brazilian authorities must have the willingness to enforce the laws that protect the Amazon.

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