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New president’s green goals for Brazil may be held in check

Budget constraints and the persistent sag of the global economy handcuff President Inácio “Lula” da Silva’s promises to reduce the South American country’s deforestation and better protect its precious Amazon, University of Miami experts maintain.
The Amazon
A fire is seen near a logging area in the Transamazonica Highway region in the municipality of Humaita, part of the Brazilian state of Amazonas, on Sept. 17. Photo: The Associated Press

Environmentalists around the world cheered the victory in late October of Inácio “Lula” da Silva. 

Yet sustainability specialist David Kelly and economist Alex Horenstein, both faculty members in the University of Miami Patti and Allan Herbert Business School, urged holding the applause and highlighted a range of factors likely to prevent the new Brazilian president—at least in the short-term—from reversing the policies that have led to record deforestation of the Amazon in recent years. 

“Lula’s heart is in the right place, but he has to stop the subsidies and provide jobs that are alternatives to deforesting the Amazon,” said Kelly, an economics professor and academic director of the Master of Science in Sustainable Business program. “He has to help the organizations that are trying to prevent the deforestation and do all this with a Congress that he doesn’t control.” 

Horenstein, an associate professor and Latin American specialist, noted that despite his campaign promises to implement regulatory changes and promote a sustainability agenda, Lula’s options are sorely limited. 

“Just as the rest of the world, Brazil faces economic challenges in the short term and particularly so as an emerging country,” noted Horenstein. “China, Brazil’s main trading partner, is mired in slowdowns due to COVID policies and lockdowns. Brazil has a sizeable debt to GDP ratio and, more importantly, some 90 percent of the budget is already allocated.” 

Horenstein noted that of the 10 percent of the budget that remains, Lula campaigned on a promise to expand the social safety net—creating an economic scenario that leaves little for environmental issues. He warned against the risks of overspending. 

“What’s needed is a long-term plan and strategy. It’s far too common in Brazil and Argentina in particular to make promises the leaders cannot fulfill,” said Horenstein. “They should not overstretch their economy.” 

He referenced the administration of Dilma Rousseff (elected in 2011 and impeached and removed from office Aug. 31, 2016) who increased expenses dramatically leading to a severe recession and creating the frustration that resulted in the election of Jair Bolsonaro, who Lula narrowly defeated in the recent election. 

“I hope we learn from that disastrous experience,” Horenstein said. “Lula’s first step should be to stabilize the economy and create an environment that is receptive to investment and growth and to not spend more than they can.” 

Kelly echoed the call to focus on growing the economy as the most efficient way to ultimately protect Brazil’s unique Amazonian wilderness. 

“Brazil needs to grow its way out of this, developing good jobs in the cities to decrease the pressure on the Amazon,” he said. 

Additionally, Kelly pointed to the problem of lax enforcement of existing environmental controls. He referenced the exportation of Brazilian hardwoods, an area that the international community has worked hard to reduce in recent years. 

Yet Kelly pointed to research showing that Brazilian loggers have simply circumvented some of the controls by relabeling the hardwoods under other categories, much like the controversy surrounding the harvesting of Chilean sea bass.

Horenstein pointed, however, to the challenges Lula faces in terms of enforcement. 

“Unfortunately, in Latin America and especially in Brazil and Argentina, there’s a long tradition of corruption—if there’s money to be made, people find a way around the rules,” he said. “That’s true for environmental rules or any others.” 

To its benefit, Brazil has made progress toward diversifying its economy, including in the airline industry with Embraer, Brazil’s multinational aerospace manufacturer, Horenstein pointed out. 

“But what China [its main trading partner] needs is commodities, and Brazil still relies a lot on the export of commodities, so the only way to reduce that dependency is to make manufactured goods more profitable,” he suggested. 

He also noted that as Brazil is one of the main producers of meat in the world and rainforests are cut down to provide for the cattle that produces the meat, consumers could help the situation by demanding a certification that shows the meat comes from animals not raised on Amazonian lands.

The United States could assist in terms of shifting trade away from China, but that would bring the U.S. farming industry more in competition with that of Brazil. 

Despite the challenges Lula faces to better protect the Amazon, Kelly emphasized the importance of doing whatever is possible. 

“The Amazon is the most precious ecosystem in the world and protecting it goes a long way in terms of the impact on combatting climate change globally,” Kelly said. “It’s hugely important because it sucks up a lot of CO2, contain tremendous biodiversity, and is not easily replaceable.” 

And while the scenario may not be ideal for Lula, the constraints may prove beneficial to the country in the long run, the Latin American specialist suggested. 

“Lula won a very close election and doesn’t have a majority in Congress, yet it might be a good thing in that it’s not going to be easy for him to overextend the budget because this limitation might bring stability to implement long-term policies,” Horenstein said. “So, the situation is not totally good, nor bad.”