- High levels of deforestation will increase risk of reaching ‘tipping point’ of irreversible environmental damage in eastern Amazon
- Likely election of Luiz Inácio Lula da Silva will slow but fail to stop deforestation due to congressional opposition and resource constraints
- Less likely re-election of Jair Bolsonaro would lead to further government policies that cause greater environmental damage
- Amazon deforestation is surging again with 1,454 sq km lost in September, representing an increase of 48% compared to the same month last year, according to the National Institute for Space Research (INPE). (7 October)
- Incumbent far-right President Jair Bolsonaro publishes a decree further weakening the National Indian Foundation (FUNAI), the government-run indigenous affairs agency. (10 October)
- In a televised debate before the presidential election’s second round, the left-wing candidate Luiz Inácio Lula da Silva criticises Bolsonaro for showing “no respect for the Amazon” and pledges to create a ministry for indigenous people if elected. (17 October)
The erosion of FUNAI’s capacity, via the elimination of regional committees and technical coordination units, will further weaken environmental protections. INPE data confirms a major increase in Amazon deforestation, caused by the incursion of farming, cattle ranching, illegal logging and mining during the Bolsonaro presidency, which began in 2019. In the first nine months of this year alone, 8,590 sq km were cleared, marking the highest level since 2007. Bolsonaro, a champion of unrestricted economic development in the region, has also cut the budgets and powers of various government agencies – including FUNAI – protecting the environment and indigenous communities.
A failure to substantially and urgently reverse deforestation will bring the Brazilian Amazon ever closer to a “tipping point”, where it transitions from a humid carbon sink into a dry, degraded savanna that becomes a net emitter of carbon. Such a tipping point is anticipated to occur when 25% of the forest is lost. According to the Monitoring of the Andean Amazon Project, 13.2% of the original Amazon biome has already been lost. However, this rises to 31% in the eastern third of the region. Bringing the rainforest back from the tipping point would require ending illegal economic activity, reforesting, and protecting indigenous communities that earn their livelihoods from the forest.
Even in the event of a Lula election victory, significant progress in countering deforestation will be unlikely. Lula has promised a “relentless fight” against deforestation, enforcement of the forest code, and the creation of a ministry for indigenous affairs. He has also spoken of creating a forest conservation alliance between Brazil, Indonesia and the Democratic Republic of Congo. However, conservative farming, cattle ranching and logging lobbies are well represented in the new Congress and will limit his ability to legislate against such activities. Meanwhile, a Bolsonaro victory would mean that deforestation continues at its current unsustainable pace, or may even accelerate given that he supports a bill which would allow mining anywhere in the Amazon, including inside indigenous reserves.
Implications for Business
Reputational: Regardless of the election outcome, concern over the global environmental impact of deforestation in the Amazon is likely to remain high, meaning that companies with a significant “Amazon component” in their supply chains (including products such as beef, soya, timber, and gold) will be closely scrutinised by environmental campaigners and may run the risk of consumer boycotts.
Security: Deforestation is connected with a wide range of illicit activities in the Amazon area, including burning protected forests, operating drug trafficking routes, illegal gold mining and illegal fishing. Given the vast area of the territory and limited law enforcement resources, the risk of violence remains high.
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