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A Vision For The Forest

excerpts from

The Truth About Rainforest Destruction

a book by Russell G. Coffee

The Sustainable Development Solution (cont.)
(This is a continuation of the NEW DIRECTIONS chapter, which was too big for one file.)
International Trade Regulations

Rainforests (and the environment) can be protected through new regulations on international trade. These regulations need to be coordinated among all nations and would penalize through trade restrictions those nations whose industries produce goods non-sustainably.
Trade Agreements

Mechanisms for enforcing this international effort already exist--the trade agreements that currently govern international trade. The focus of most trade agreements, however, needs to change. Trade agreements, i.e., trade treaties, typically focus on the short-term; their goals are to increase corporate profits, not promote long-term development. For example, the North American Free Trade Agreement (NAFTA), which recently lowered trade barriers among Canada, the United States, and Mexico, is allowing many American businesses to relocate to Mexico to avoid costly environmental regulations in the U.S. Eventually, these businesses will damage Mexico's environment, while their products, for the most part, will be consumed by people in the United States and Canada. In the long term, such a trade relationship can only worsen living conditions in Mexico and damage the Mexican economy. This is why many U.S. environmental organizations, as well as many Mexicans, are opposed to the changes brought about by NAFTA. To promote sustainable development, NAFTA needs to be amended so that free trade is possible only for goods whose production does not damage the environment in any of the three countries.
NAFTA is just one of many trade agreements that can help promote sustainable development. Other such agreements include the General Agreement on Tariffs and Trade (GATT), the Asia-Pacific Economic Cooperation Agreement (APEC), and the agreements being discussed under the Enterprise for the Americas Initiative (EAI). Of these agreements, GATT is the most comprehensive. Signed by more than 120 nations, GATT is a treaty that governs about 90 percent of all internationally traded goods and is updated periodically. (Future GATT agreements will be the responsibility of the newly created World Trade Organization) APEC, which is under negotiation, is an attempt to create free-trade among 18 countries bordering the Pacific Ocean, including the United States. The EAI, which is also under negotiation, is an effort by the United States to expand NAFTA to include all the countries of North and South America. Trade agreements, such as APEC, GATT, NAFTA, and those being considered under EAI, all should place restrictions on goods produced at the expense of rainforests and the environment.
Won't This Hurt Us Economically?

All of these international agreements are part of a larger effort by international businesses to increase free-trade around the world. Conventional wisdom holds that doing this will make everyone better off. Herman Daly, an economist for the World Bank, disagrees. He warns, "Further growth beyond the present scale is overwhelmingly likely to increase costs more rapidly than it increases benefits, thus ushering in a new era of ‘uneconomic growth' that impoverishes rather than enriches." What Daly is saying is that increasing trade in goods produced from resources that are not replaced will make us worse off.
The reason for this paradoxical situation is that most countries do not take into account the value of natural resources when they measure their economies. Their gross national product (GNP), a measure of economic vitality, only measures what they produce. For example, if a country's forests are destroyed to produce lumber, that country's GNP will increase when that lumber is sold--but GNP will not record the loss in forest resources. Robert Repetto, a policy expert for the World Resources Institute notes, "A country could exhaust its mineral resources, cut down its forests, erode its soils, pollute its aquifers, and hunt its wildlife and fisheries to extinction, but measured income would not be affected."
Recalculating GNP

Calculations of a country's GNP need to reflect losses in natural resources, including the loss of rainforests. This is, in essence, natural resource accounting on a national level. Some countries--Australia, Canada, France, the Netherlands, and Norway--already are implementing a national accounting of their natural resources. In addition, the United Nations Statistical Commission is creating guidelines for countries to measure the costs of replacing natural resources. Various international organizations, such as the World Resources Institute, are doing the same. When our existing economies become sustainable, then we can proceed toward global free-trade. Otherwise, increases in trade will only diminish our planet's stock of natural resources and accelerate the destruction of our rainforests.
What We Can Do

Domestic trade regulations and international trade treaties that protect the environment are powerful agents of change. As individuals, we can vote for politicians and political parties that support these ideas or become active in one of the many environmental organizations that lobby for such policies. A list of these organizations is included in the appendix of this book.
Rethinking Intergovernmental Lending

Changing the focus of the World Bank and the IMF, can help save rainforests. These international lending institutions, which were originally created to rebuild the economies damaged by World War II, must now rebuild a world damaged ecologically and largely impoverished.
Past Policies

In the recent past the World Bank and the IMF have encouraged many less-developed countries to produce and export natural resources, such as timber, cattle, and agricultural products, to repay debts owed to foreign commercial banks. On average, less-developed countries still spend about 30 percent of the money they earn from exports just to repay interest on their debts. (In 1986, Mexico and Argentina spent over 50 percent of their export earnings to service foreign debts.)
Largely because of these policies, many underdeveloped countries have become economic and environmental disasters. They have sold off their natural resources and tried to save money by cutting social programs. Within these countries are not only high rates of tropical deforestation but also some of the poorest living conditions in the world. It is estimated that in less-developed countries over 700 million people are malnourished and more than one billion people lack proper sanitation and safe water. Selling the natural resource assets of these people to repay foreign debts is a policy that should be abandoned.
Appropriate Policies for the IMF and World Bank

The mandate of the IMF and World Bank has never been to rescue commercial banks that make bad loans. The purpose of these institutions is, rather, to improve human conditions. This includes environmental conditions. Appropriate lending policies should help tropical countries develop self-sustaining economies that are not oriented around the export of natural resources. The IMF and World Bank need to help troubled countries produce food for local markets, create diversified economies, and build industries that produce goods for domestic use. Also, less-developed countries must be allowed to protect their industries by restricting the operations of foreign companies within their borders.
In addition, appropriate policies would include investments in people, i.e., support for small businesses and technological improvements, financial assistance for education and job-training, and more spending on health care. In the long run, these types of policies will do more to alleviate poverty than do the current policies of encouraging impoverished people to migrate into rainforests. All of these policies will help build self-sustaining countries.
World Bank Environmentalism

To some degree, the World Bank is taking steps to support sustainable development and protect the environment. In 1989 the World Bank began making what it called "an environmental assessment" on all projects that could have a negative impact on the environment. In 1994, $748 million in loans were approved for projects to improve the environments of underdeveloped countries.
The World Bank also changed its lending policy toward commercial logging in tropical forests. It did this after several conservation groups (including Friends of the Earth and the World Wide Fund for Nature) started a letter-writing campaign to protest loans for logging rainforests in Guinea and The Ivory Coast. After receiving over 30,000 protest letters, the World Bank revised its lending policy, stating it would "not under any circumstances finance commercial logging in primary tropical moist forests." More needs to be done, however. The world's financial centers need to develop long-term plans to sustainably develop the world.
Monitoring Intergovernmental Institutions

As individuals and as environmental organizations we can monitor the policies of institutions like the World Bank and IMF. We can voice our concerns directly to them or to our elected government officials who oversee our country's financial contributions to these organizations. All World Bank documents, including project information and environmental assessments, are available through the Internet at http://www.worldbank.org or the World Bank's Public Information Center at 1818 H Street, N.W., Washington D.C. 20433. The IMF can be contacted at 700 19th Street, N.W., Washington D.C. 20431.
Resolving the Debt Crisis

For some tropical countries, interest on their foreign debt is accumulating faster than can be repaid. As a result, these countries are under tremendous pressure to intensively log, ranch, and farm their rainforests to make quick, short-term profits. In such cases, reducing the debts of these countries to a manageable level can help save rainforests. One way to do this is through a process called "debt forgiveness."
What is Debt Forgiveness?

Debt forgiveness is an arrangement between an indebted country, the commercial bank that is owed the debt, and the World Bank or other third party. Through mutual agreement, these three parties reduce the country's debt in exchange for a World Bank guarantee on the remaining debt.
Benefits of Debt Forgiveness

All parties involved in debt forgiveness can benefit. The countries whose debts are forgiven have additional revenues available for social programs, investment in their economies, and environmental protection. The commercial banks benefit because the guaranteed debt is worth more to them than the unsecured original sum, even though it is for a smaller amount. In other words, the banks believe it is better to be owed $10 billion guaranteed by the World Bank than to be owed $11 billion without any guarantee. (This phenomenon is called "the debt Laffer curve," named after the theories of economist Arthur Laffer.)
The World Bank also benefits from debt forgiveness, despite the fact that it could end up paying off the debt. This is because the World Bank's goal is to strengthen and stabilize the world economy. To the member countries of the World Bank, the cost of guaranteeing a loan may be much less than the cost of dealing with economic and political instability in a country saddled with too much debt. From an environmental standpoint, loan guarantees are much less costly than the price of a neglected environment.
U.S. Policy on Debt Forgiveness

Until recently, the United States only supported World Bank efforts to refinance, rather than forgive, the debts of financially troubled countries. But in 1989, U.S. Treasury Secretary Nicholas Brady announced that the United States would begin to work with the World Bank to arrange debt forgiveness for impoverished countries. This new policy was known as the Brady Plan. As part of the Brady plan, about half of Mexico's foreign debt was restructured, forgiving about $12 billion worth of future payments. Where Mexico was concerned, the U.S. felt it could benefit from a stable, southern neighbor. A stronger Mexican economy would result in more demand for U.S. goods and fewer illegal immigrants from Mexico.
Since the U.S. announced its new policy, debt forgiveness has become a viable, although under-used, option for the World Bank. To date, the World Bank has made debt forgiveness arrangements for Argentina, Mexico, Jordan, Mozambique, Guyana, Uganda, Bolivia, Costa Rica, the Philippines, Venezuela, Uruguay, and Niger. The Brady Plan, however, has fallen short of its goal, which was to reduce the debts of 38 countries by 20 percent over three years. A renewed effort at debt forgiveness is needed if we are to decrease the pressure on less-developed countries to sell off their forest resources.
Debt-For-Nature Swaps

On a smaller scale, various environmental organizations are helping alleviate the debt burdens of some countries, while at the same time creating rainforest preserves. These organizations, often collaborating with each other, buy from international banks a portion of the debt of an impoverished country; they then "forgive" the debt when the country sets aside a nature preserve. This exchange is known as a debt-for-nature swap.
Typically, international banks sell the debts of troubled countries at steep discounts because they know that full repayment is unlikely anyway. These discounts allow environmental organizations to create nature preserves in foreign countries without spending large amounts of money. The first "debt-for-nature swap" occurred in 1987, when Conservation International purchased $650,000 worth of Bolivian debt for 15 cents on the dollar. This debt was cancelled when Bolivia set aside 2.7 million acres in conservation areas. In 1991 the Rainforest Alliance also made such an arrangement. This organization bought Costa Rican debt from the Central American Bank for Economic Integration. The Rainforest Alliance then exchanged the debt for Costa Rican land and created the International Children's Rainforest.
In total, debt-for-nature swaps have resulted in the forgiveness of $98.4 million in debt but have cost conservation organizations only $16.7 million. Because of debt-for-nature swaps, wildlife preserves have been established in Bolivia, Costa Rica, the Dominican Republic, Ecuador, Ghana, Poland, Jamaica, Madagascar, Mexico, Nigeria, the Philippines, and Zambia. Pioneering this effort are Conservation International, the Conservation Trust of Puerto Rico, Debt for Development Coalition, the National Park Foundation of Costa Rica, Monteverde Conservation League, Missouri Botanical Gardens, the Rainforest Alliance, the Smithsonian Institute, the Nature Conservancy, and the World Wildlife Fund.
The Sustainable Development Solution

The destruction of rainforests can be stopped. But it will require a change in our thinking. We can no longer view less-developed countries as a source of raw materials for the products we, in the developed world, want to buy. The World Bank and IMF need to help these countries build self-sustaining economies that do not damage the environment. We need to realize that wiping out rainforests to pay off banks is a poor exchange. Through debt forgiveness and debt-for-nature swaps, we can reduce the debts of underdeveloped tropical countries and remove the pressures on them to sell their natural resources.
Our economic systems need to recognize the value of a healthy environment. Government regulations can be used to penalize businesses that damage the environment and reward those that produce goods sustainably. Even our environmental efforts must change. Through ecotourism and extractive reserves, we can protect more natural areas by producing more income from these areas. Our planet's resources are limited, and we are devouring them at an increasing rate. This can change, however, if we simply replace resources as we consume them. This is the sustainable development solution.

Click here to read:
a Short Review,
the Introduction,
about Rainforest Indians,
about Rates and Causes of Deforestation,
about Who Profits from deforestation,
about Sustainable Development,
about Solutions,
who has Endorsed The Truth About Rainforest Destruction,
about author Russell G. Coffee.

Click here to see NASA Photos of burning rainforests that can be seen from space.

Please feel free to E-mail author Russell G. Coffee with your questions or comments.
© 1996 russellcoffee@juno.com