Latin America: Natural Resources. Coby Captein. Natural resources and commodities, ranging from petroleum to natural gas to coffee

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1 Latin America: Natural Resources Coby Captein Natural resources and commodities, ranging from petroleum to natural gas to coffee beans, are an instrumental part of Latin America s economy; the region is home to some of the biggest oil and natural gas producers in the world. However, much of this industry is predicated on unsustainable resources that threaten to doom the area in the not so distant future if no region wide program for the development of sustainability is implemented. As it stands today, oil is one of the biggest moneymakers for the Latin American economy. Mexico, Brazil, Venezuela, and Colombia are all among the top twenty oil producers in the world (List), with Venezuela being a member of OPEC. These countries, which lie at the heart of the region s economy, are dangerously dependent on the resource. About 3% of Brazil s GDP, nearly 10% of Mexico s GDP, and a staggering 25% of Venezuela s GDP come from oil exports (List). And when the oil market is on a downswing, as it is right now, so too are the economies of those countries (The Good), and consequently the region as a whole. Many of the biggest Latin American oil producing companies have had to drastically scale back future goals in recent months, and the Mexican government s privatization of its oil industry underwhelmed expectations (The Good). South America and Mexico are also comparably important with natural gas (List), with similar risks at play. The natural resource industry also extends to mining, where Latin America is again one of the biggest world powers. Chile is the world s leading producer of copper (Campbell), with Peru coming in second for copper and first in silver (Campbell). Brazil is also the world s leading producer of niobium and tantalum, elements used extensively in metallurgy, and the

2 third ranked producer of iron ore (Campbell). A large percentage of the exports of the countries in the Caribbean region are precious minerals as well. However, the industry is also prone to corruption and extortion by kidnapping (Campbell), so efforts must be made in the future to improve this industry as well. Conspicuously absent in all this is Central America, whose countries economies are based almost entirely on tourism and agriculture. Agriculture in Latin America, in fact, is not as large an industry as on other continents, and only three Latin American countries, Guyana, Nicaragua, and Paraguay, rank in the top fifty countries worldwide in share of GDP comprised by agriculture (List). Despite that, deforestation has been a huge problem in countries such as Brazil (which has already razed more than 13% of its forests (Malhi)), Colombia, and Mexico, as well as most of Central America, which risks the sustainability of the industry in coming decades, considering that the need for agricultural resources will only increase. Finally, more work must be done to improve the development of renewable energy sources in the region as a method of weaning certain countries off of less sustainable methods. According to the Energy Information Administration, only Paraguay, Belize, and Costa Rica have over 90% of their energy supplied by renewable sources such as wind and hydropower (International). Chile, Bolivia, Suriname, Argentina, and various Caribbean countries are under 40%, and Mexico, Jamaica, and Cuba are well under 20% (International). However, Brazil, despite its large population, has reached 83% renewable energy, and is the second biggest producer of hydropower in the world (International). Other countries would be smart to follow their lead.

3 Latin America possesses a wealth of natural resources that are driving force behind the region s economy, but are at risk of running out and causing avoidable stress in the future. The following propositions seek to continue the development of natural resources in the country, but focus more on sustainability and renewability. Oil/Natural Gas: 1. Form a committee among all petroleum and natural gas producing countries in Latin America comprised of top politicians and economists from each country. No member should have ever been associated with the oil industry in any way. Countries which do not produce petroleum or natural gas will also be permitted a representative, albeit with less decision making power. 2. All countries must pledge to make efforts to reduce their dependency on oil and natural gas, reducing the percentage of their GDP represented by oil revenue by at least 20% in the next twenty years. Failure to come close to these goals will result in minor economic sanctions, and a UN delegate will meet regularly with the country s leaders to catalyze programs to wean the countries off oil. For countries that have a negligible percentage of their GDP based on oil, they will not need to make any sort of change. 3. At least 15% of all revenue from oil and natural gas exports must be invested in renewable resources. Agriculture/Mining: 1. All Latin American countries must agree to stringent deforestation laws under which at least 90% of logged forests must be replanted immediately, and must not have cut

4 down a large enough percentage of their forests at any given time to significantly disrupt the ecosystem, to be determined by an environmental board. 2. Another international committee, this time comprised of local politicians who live in areas directly affected by agriculture and mining, but not directly involved in the industry itself, will be formed to monitor corruption and extortion and will report any infractions to the UN. Every five years the UN will undergo an independent review of the individual committees to make sure they are free of corruption themselves. 3. Any mines not found to be following the safety laws must be compliant within ten years of the legislation, or they will be closed until the committee can be assured of their safety going forward. Renewable Resources: 1. All Latin American countries that have not already reached 90% renewable energy levels must commit to improving that level by at least 30% in the next thirty years, with a check in every ten years from the UN to ensure that progress is being made, until the country reaches the 90% threshold. Failure to do so will result in sanctions, proportionate to how far each country is from reaching their goal. However, if the country has demonstrated insurmountable financial inability to achieve this, they may receive international aid to help them reach the goal. 2. Once countries have reached the 90% threshold, they must maintain that level and be able to demonstrate to an independent committee that they are further developing the renewable resources. Once they reach 99.5%, they must simply show that they are maintaining that level.

5 3. Countries that invest over 2% of their yearly GDP in developing wind, hydro, or solar power will receive tax breaks or other incentives to be determined at a different time. 4. There will be an annual meeting for all Latin American countries in which a representative from each country will present the progress they have made in the renewable resources sector, and share information and findings on how to best continue improving. Works Cited Campbell, Keith. "The State of Mining in South America an Overview." Mining Weekly. Mining Weekly, 21 June Web. 7 Feb < state of mining in south america an overvie w >. "International Energy Statistics." EIA. US Energy Information Administration, Web. 7 Feb < "List of Economic Indicators." TheGlobalEconomy.com Web. 7 Feb

6 Malhi, Yadvinder, J. T. Roberts, Richard Betts, Timothy Killeen, Wenhong Li, and Carlos Nobre. Science. American Association for the Advancement of Science, 11 Jan Web. 7 Feb < "The Good Oil Boys Club." The Economist. The Economist, 18 July Web. 7 Feb < latin americas oil firms need mor e foreign capital historic auction mexico shows>.