Originally published by Council on Hemispheric Affairs on 28/09/2015. [For references, go to source]
Since the election of President Ollanta Humala in Peru in 2011 priority has been given to neoliberal policies, free trade agreements, integration into the Pacific market through the Pacific Alliance (with Mexico, Colombia and Chile), and the intent to increase exports in order to promote wealth in the country. It appears, if one takes a look at macroeconomic indicators, that the economic situation in Peru is going very well: the Gross Domestic Product (GDP) has increased 25 percent since 2010 with a growth rate around 6 percent in the past 5 years, the country debt has decreased from 25 percent of the GDP to 20 percent, and inflation remains impressively low at about 3 percent.
While the economy is on the rise, Peru´s economic model is based on a certain abundance of natural resources. The main exports of Peru are primary products due to excessive mining and deforestation leading to many problems for local populations and Indigenous People. Gold represents around 20 percent of the country’s exports, copper ore around 18 percent, the refined petroleum nearly 7 percent while lead and refined copper account for 4.2 percent each, which means that more than half of Peruvian exports are based on extraction of resources. This economic model, based on primary resources, is now at its limits because of new global economic turmoil. The demand for commodities will decrease and competition will intensify among countries that export their resources with the decline for European markets and the difficulties of the Chinese to shift from an export-driven economy to one based on internal consumption. If this pessimistic forecast holds, decreasing commodity prices and increasing production due to competition will result in an environmental catastrophe.
Deforestation and economic development
Economic growth has been set as the most important goal of the Peruvian government under President Ollanta Humalla and is a priority that Peru wants to achieve at all costs. As stated by Mary Menton from the Center for International Forestry Research (CIFOR), an international center of investigation that conducts research on the use and management of forests in less-developed countries, “much of this growth is happening — and is likely to keep on happening — at the expense of the Peruvian Amazon.”
According to the data gathered by the non-profit Rights in Resources Initiative (RRI), an important U.S.-based NGO working on forest and tenure rights, Peru´s forests cover about 67.8 million hectares, or more than half of the land area in Peru (53 percent). Officially, and as claimed by the Peruvian Ministry of Environment, the goal of the government is to achieve zero net deforestation through the conservation of 54 million hectares of forest. On the ground, the situation is very different and it appears that priority may be given to emphasizing neoliberal economic growth.
Infrastructure projects and deforestation in Peru: a Brazilian hand
The official claim from Peruvian authorities to fight against deforestation and to support mechanisms such as Reducing Emissions from Deforestation and Forest Degradation (REDD) is in complete contradiction with a titling process that promotes the development of the agro-industry in the Amazon. Furthermore, it does not take into account the future energy and infrastructure expansion in the region. The link between the development of infrastructure and deforestation was demonstrated in a 2010 paper titled the Derecho Ambiente y Recursos Naturales (DAR), which synthesized the most recent studies establishing a link between highways, roads, and deforestation. The conclusion of this study was clear: the construction of new highways and roads in the Amazon region is one of the main drivers of deforestation. Thus, the official zero deforestation goal is unobtainable under current development strategies.
As noted by the Guardian, the infrastructure development in the Amazon is mainly driven by the Brazilian economy and its search for expansion towards the Pacific. In fact, Brazilian expansion in recent years is mainly due to a boom in commodities and the massive exportation of soybean, minerals, and oil to China. It is therefore understandable that the Brazilian government promotes infrastructure projects crossing the Brazilian Amazon toward the Pacific, through Peru. These development projects are mainly financed by the Brazilian National Development Bank (BNDES) as well as other regional banks.
One of these projects, and probably the most representative one of this move to the Pacific, is the South American Integration Initiative (Iniciativa para la Integración de la Infraestructura Regional Suramericana(IIRSA), which is a new set of infrastructure projects in the region. Included in this initiative is the highway projected to pass through the Amazon, financed by the BNDES, and estimated to cost around 70 billion USD. As reported by the Guardian in December 2013, the project also “include[s] more than 500 mega projects, including hydroelectric dams, highways, waterways, ports and gas pipelines stretching across the Amazon basin.”
The development of the agro industry in Peru and government involvement:
The dams, highways and other expanding infrastructures have huge consequences on the rainforest, and not only by direct deforestation. The BNDES is linked with other economic sectors that act with a mindset of developmentalism, which means that the rainforest is seen as an unavoidable casualty on the path to economic development.
The new and future inter-oceanic highways will cause the Peruvian Amazon to suffer major consequences with the expansion of settlements and buffering of deforestation zones. According to an article published by the CIFOR, the destruction of the Peruvian Amazon is rising and “expanding over more than 145,000 hectares last year”, which is an 80 percent jump compared to the beginning of the century.
According to the NGO Imazon, which monitors the deforestation rates in the Amazon with the use of satellite images, “1,373 square kilometers of rainforest was chopped down between August 2014 and December 2014, a 224 percent increase relative to the prior corresponding period a year before. Forest degradation from selective logging and fires is pacing 664 percent ahead of last year. Forest degradation typically precedes outright clearing.” And this pace is concerning, because Brazil, which is the driver of this new trend, is one of the Amazonian countries that has improved the most on deforestation thanks to the soy bean moratorium. Brazil is operating under a double standard by working to mitigate deforestation issues at home, while continuing to support indirect deforestation in neighboring countries. In Peru, Suriname and the Guyanas the rates of deforestation are far worse than in Brazil. In the case of Peru, the annual forest loss has multiplied by nearly 3 since 2001.
The government is actively encouraging settlement in the Amazon, largely due to immigration from the highlands. Consequently, the government has promoted a set of policies to encourage the expansion of agriculture for local consumption and in several cases for international markets such as palm oil. One of these policies aims to grant land titles to people that “add economic value to the land,” which means in nearly every case that they convert forest land to agriculture.
This movement toward deforestation, excessive logging and mining, at the hands of large or small holders, has led to consequences that could have been avoided, such as the threat on Peru’s food system. As explained by Mollie Bloudoff-Indelicato in National Geographic, there are several regions of the Peruvian Amazon where legal and illegal loggers are selling wood, palms, and fruits in order to make quick cash. This practice is in turn leading to a quick deforestation of these areas and a complete disequilibrium of the national food market. According to the Instituto de Investigaciones de la Amazonia Peruana (IIAP) “in Iquitos, 17,000 female aguaje plants are cut to satisfy the city’s demand for aguaje fruit.” The local products coming from deforestation are now being sold abroad, which leaves the local market in need with prices rising, a trend that is foreseen to continue in the next years.
In April 2015, the Environmental Investigation Agency (EIA) published a report called “Deforestation by Definition.” This report exposed “the ongoing and looming threat of illegal deforestation in the Peruvian Amazon due to installation of agro-industrial monoculture plantations, such as palm oil,” and came to an astonishing conclusion. EIA’s Peru Program Director Julia Urrunaga stated that, “the Peruvian government is allowing corporations to destroy primary forest in violation of national law by using a skewed interpretation of the legal definition of forests. The current practice of defining forests according to agricultural productive capacity, regardless of the presence of standing trees, is not only illogical, it’s illegal.” In fact, the government is failing to define forests as forests and using many different tactics to promote the production of palm oil, one of the main products exported by the country and other agro business in the Amazon.
In theory, thanks to the Peruvian forest law number 27308, the conversion of land from its original use is forbidden in Peru, which means that deforestation is not allowed if the land is originally recognized as forest for its “best land use capacity (BLUC)”. The agro industrial projects such as palm oil plantations are supposed to be only promoted on land that is BLUC designated for agricultural purposes. But as stated by the EIA report, “The government has not conducted a comprehensive assessment of the BLUC of Amazonian forested land. Currently, out of Peru’s 74 million hectares of forests, there are approximately 20 million hectares of forests to be found in the country that have not been classified and lack official studies to define their BLUC. Forests within these 20 million hectares are vulnerable to BLUC assessments that, based on soil and climate characteristics, may define them as agriculture land.”
As shown by the EIA report, there are numerous cases of this ongoing trend. In Tamshiyacu, the enterprise Cacao del Peru Norte is planning to develop a palm oil plantation with the Melka Group. In Tierra Blanca and Santa Catalina and in Maniti and Santa Cecilia there are other similar planned projects for palm oil production. Palm oil plantations already exist in Nueva Requena, Tocache and Palmas de Shanusi, and Palmas del Oriente. 
In other words, the Peruvian government does not, on purpose, classify forests as forestry BLUC in order to switch land use and convert it into palm oil plantations or other agro industrial projects. This is accomplished with the active help of the private sector, including large corporations such as Grupo Romero, which operates in 12 countries in Latin America and exports products to 23 countries around the world. The Grupo Romeroalso benefited from loans from the International Finance Corporation (IFC), the financial arm of the World Bank.
Not only is the agro industry damaging the forest, but also legal and illegal mining activities:
One of the other main drivers of deforestation is the mining sector, both legal and illegal. As reported by The Guardian on many occasions, large and small-scale extractive operations have been mapped and their advance into the forest is growing. Gold miners are working in hundreds of small groups that are difficult to identify. Mr. Greg Asner, who developed the Carnegie Airborne Observatory (CAO) stated, “In all, we found that the rate of forest loss from gold mining accelerated from 5,350 acres (2,166 hectares) per year before 2008 to 15,180 acres (6,145 hectares) each year after the 2008 global financial crisis that rocketed gold prices.” As reported by Mongabay, based on a study from Proceedings of the National Academy of Sciences (PNAS), “the extent of gold mining in the Peruvian Amazon has surged 400 percent since 1999 due to rocketing gold prices, wreaking havoc on forests and devastating local rivers.”
Mining not only destroys tropical forests, but also causes the release of mercury filled sediment into rivers leading to severe effects on aquatic life. This mercury pollution has been reported as a consequence on several occasions. Illegal and small gold mining operations are responsible for an estimated “30 tons of toxic metal in rivers and lakes in the Amazon region every year” and native communities have often been poisoned with it severely. As reported by the Guardian, “Native communities had levels of mercury roughly five times that considered safe by the World Health Organisation (WHO)”.
The expansion of mining is currently ongoing. The Monitoring of the Andean Amazon Project (MAAP) in a June 2014 blog post documented “how gold mining deforestation continues to expand within the Department of Madre de Dios, Peru [and in the] Amarakaeri Communal Reserve, an important Peruvian protected area that is co-managed by indigenous communities, as well as Peru’s National Protected Areas Service (known as SERNANP).” Even national reserves and indigenous reservations are no longer protected by these deforestation and clearing trends.
Is this kind of economic development really alleviating poverty?
In Peru, nevertheless, poverty has been more than halved during the past decade, from 48.5 percent of the population in 2004 to 25.8 percent in 2012, according to the World Bank database. And according to many government officials, this is due to these economic activities.
Despite this, the economic growth that allowed the poverty reduction will have consequences on climate change that in return will strongly impact the wealth of the Andean region. As reported by the Guardian, “Peru has already lost 39% of its tropical glaciers due to a 0.7C temperature rise in the Andes between 1939 and 2006.” The United Nations, through its United Nations Development Program (UNDP), reported that extreme events, which are expected to increase due to climate change, will lead to a dramatic reduction of people´s well-being and the destruction of people’ assets can lead to significant deterioration of skills and opportunities in nutrition, health, education, and income over middle and long term. In other words, the path of development chosen by Peru is unsustainable. While it has effectively led to economic growth and to an increase of the Human Development Index by 28% between 1980 and 2012 (life expectancy at birth increased by 14.2 years; Peruvian schooling increased by 3.2 years and the Gross National Income per capita increased by about 60%), all of these achievements are now threatened by climate change.
This formula for poverty reduction through economic development seems to mandate environmental destruction in Amazon forests and Andean glaciers. In Peru’s highlands, 60.3 percent of the population is still classified as poor and 21.1 percent as extremely poor, and economic development based on deforestation is claimed to help alleviate poverty. As reported by a CIFOR blog post from January 2014, citing Che Piu, lead author and president of the Environmental Right and Natural Resources (Derecho Ambiente y Recursos Naturales, DAR), “the indigenous people and other rural people that conserve and sustainably manage the forests can never obtain property title over those forests, creating a contradiction that we need to resolve in order to create real incentives against deforestation.” The reality is that while small stakeholders can contribute to deforestation, the profits always go to the elites, both on an international and local level, rarely benefiting local communities and indigenous people.
This economic development path, even if it can have short and medium term benefits as well as positive effects on the alleviation of poverty, is likely to have worse consequences over the long term, and among the first to suffer the consequences of climate change will be those living in the Amazon forests and in the Andes, since these regions are expected to be the most affected by climate change. As the Guardian reported, the Andes in Peru will probably suffer an increase of 6 Celsius degrees on average by the end of the century, and even if Peru directly contributes only “0.4% of the world’s greenhouse gases, it was ranked third after Bangladesh and Honduras, in climate hazards risks” by the UK’s Tyndall Center for Climate Change Research.
Ms. Maria Eugenia Mujica, one of the UNDP report’s authors, states that “If we disregard [environmental] sustainability, whatever progress we have made in poverty reduction or improvement of human development will just be erased due to climate change.”
Indigenous rights, inequality and economic development
The only path to stop this trend and encourage sustainable economic development is by strengthening community forest rights and by mitigating climate change. These two essential changes are based on a RRI – World Forest Institute (WRI) report released in July 2014. The key findings of this study are that “when Indigenous Peoples and local communities have no or weak legal rights, their forests tend to be vulnerable to deforestation and thus become the source of carbon dioxide emissions,” but also that “legal forest rights for communities and government protection of their rights tend to lower carbon dioxide emissions and deforestation [and to] maintain or improve their forests’ carbon storage.” Qualifying the benefits of its recommendations, the report pessimistically states that even with legal rights to their forest, local and indigenous communities can suffer from government actions that ignore their rights and lead to high carbon dioxide emissions and deforestation, as it is the case in Peru.
Local and indigenous populations are struggling against this movement towards deforestation and against their own government, and the fight seems difficult to win. During the last 14 years, 132 land rights titles have been given to native communities, a number that pales in comparison to the 737 titles awarded between 1990 and 2000. In July 2014, a new law promoting foreign investment and economic development leaves even the idigenous population with unprotected land titles. The State now has the right to give a land title to foreign enterprises for oil industry development, gas projects, or for infrastructure without consultation of local and indigenous population. In 2009 the largest indigenous protest in Peru in decades ended in a blood bath with 34 deaths, an event that has been named locally as El Baguazo. The state also sued several community leaders in asymmetric legal warfare. Clearly, indigenous land rights have deteriorated since the 1990s.
Slowly, however, the struggle has paid off and the government has progressively recognized the right of indigenous and local communities trying to promote a law that obligates previous consultation. On March 16, 2015, as stated by the non-profit Rights and Resources “7 indigenous organizations representing 52 Amazonian communities met in Lima to finalize the implementation plan for Prior Consultation in the regulation processes of the Forestry Law (Law N29763). This plan has been developed with indigenous stakeholder participation since 2012.”
Unfortunately, more setbacks have come in recent years. The executive branch of the Peruvian government is promoting what is known as Paquetazos, a set of laws that give priority to extractive industries on the local and indigenous communities. As stated by UpsideDownWorld, these set of laws are “neoliberal reforms that threaten to undermine environmental and labor protections and is a gift to the extractive industry.” One of the most critical parts of this legislation is the deregulation of environmental norms and the reduction of the Ministry of Environment (MINAM) authority; the MINAM has been stripped of several of its main functions such as setting and regulating environmental norms. Now, this power is given to the Council of Ministers, placing this power under the government umbrella.
A national movement of the people took place last June 2015 to protest these paquetazos. Antolín Huáscar Flores, President of the National Agrarian Confederation (Confederación Nacional Agraria, (CNA) said in an interview with Servindi that “[we] consider that environmental paquetazos are to destroy our land and deliver it [to] large transnational companies,” mostly in the extractive sector.
The Forest People Program reported that, “the council of AIDESEP, which represents over 1800 communities in the Peruvian Amazon, called for the repeal and shelving of recent legal reforms being pushed through Peru’s parliament that threaten to further weaken indigenous peoples’ rights to land in favor of development projects. They also announced that they would file a formal complaint with the Inter-American Development Bank (IDB) if promised changes to a nationwide land titling program remain undelivered.”
In September 2015, the AIDESEP reported during a conference at the Inter-American Development Bank that the titling program led by the government aims at individual titling and not community titling, thus allowing poor individuals to sell their titles for a pittance to big private companies out of desperation. Far from being supportive of sustainable growth and indigenous people’s land and tenure rights, the Peruvian government is still an opponent to the progressive movement. Consequently, the AIDESEP is now aiming at filing a complaint with the IDB
Economic Development over Indigenous Rights: Applications to the Whole of South America
An evolution in how economic development is conceptualized has not only occurred among Peruvian leaders, but also among Brazilian authorities, who are trying to create a new economic block under its dominion in South America. These efforts, led by Brazil but also pushed by many other South American countries, have been seen as a way to escape the hegemony of the United States, a country that has considered the hemisphere its natural back yard. Further encouraging the formation of a South American economic bloc is the rise of economic ties with China, one of the foremost trading partners of South American countries. Brazil and neighboring countries have seen this as an opportunity for emancipation and escape from U.S. domination. Yet, it remains to be seen if American domination will be replaced with Chinese domination.
Indeed, far from leading to emancipation, this relationship has already evolved into a new form of dependency. As Mr. Pierre Salama, a French economist puts it, the Latin American economies are under a regime of early de-industrialization, and the main countries in the region are reorienting their economies by focusing on commodities. In practice, that means that Brazil can make more money thanks to exportation of soybeans by clearing the rainforest than by promoting massive investments in high-level technology and industry. Argentina, Chile, and Mexico are all tempted this path. In Peru, Venezuela, and Colombia, the situation is even worse: the dependence on commodities and oil prices is increasing year after year and the possibilities of developing a strong and diverse economy are diminishing.
In Bolivia, Evo Morales, who built an electoral platform on the preservation of Indigenous People rights and land, is now turning his back on his supporters and is backing a highway in protected areas, such as national parks and the indigenous territory Isiboro Secure. Recent laws he has supported in Bolivia are opening protected areas to oil and gas exploitation. In Colombia, as in other surrounding countries, the commodity boom “unleashed a new scramble for oil, minerals and cropland that is accelerating deforestation and fueling a new wave of land conflicts from Colombia to Chile.” As the Washington Post reported, “in Colombia, Peru, Bolivia and the other five nations whose territories cover 40 percent of the Amazon basin, the loss of vegetation increased threefold in the same period, wiping out a combined area of forest cover larger than the state of Maryland. Last year, the pace of deforestation in those nations jumped 120 percent.”
Even if the commodities prices are recently going down, the competition is only going to increase, as governmentsstruggle to maintain economic growth by preserving their market share. The unavoidable consequence will be increasing pressure on forests and tenure rights, as well as the multiplication of conflicts in the coming years.
Throughout South America, but more specifically in Amazonian countries, the Indigenous People and activists repeat the same sentiment: this economic development is not sustainable and is spurring violence. Peru registerd 213 conflicts for the month of August, ofwhich 142 were related to socio-environmental issues.When will progressive governments stop fueling social conflicts and propose an alternative to the very kind of economic development they denounced 15 years ago?
By: Clément Doleac, Research Fellow at the Council on Hemispheric Affairs