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Economic Impact of Deforestation on Amazon Rainforest

Writer: Berken Bulut 


Introduction


The Amazon rainforest, often called the ‘lungs of the planet’, is the largest tropical rainforest in the world covering an area of about 5.5 million square kilometers across nine countries in South America. This extensive and biodiverse forest area today plays an important role in regulating the earth’s second climate, absorbing large concentrations of CO² and releasing approximately 20% of the second oxygen produced by our planet. Approximately 10% of all native species on earth are found within the forest, making it one of the most biodiverse places. Their complex biomes provide significant assistance such as safeguarding the global water cycle, maintaining biodiversity, and supporting local communities whose livelihoods depend on these resources for their cultural, economic, and social well-being. There is a link between Amazon rainforest health and the global environment, thus conservation efforts should be focused on it for climate change mitigation purposes and natural balance preservation.


Forest clearance refers to the removal of forest or other fields from a region, typically to prepare the topography for other uses such as cultivation, logging, urban development, or mining. This method may lead to the perpetual destruction of forests and biodiversity, disrupt urban environments, reduce forest capacity to store CO² and contribute to global warming.


The removal of trees can be caused by natural causes such as fire or insect infestation. However, it is usually driven by big-rooted companies. Although the attention paid to deforestation in the tropics is well justified, it is worrisome that the extensive and more insidious processes of forest degradation are often overlooked (Francis E. Putz & Kent H. Redford, 2010).


Until the 2000s, more than three-quarters of the Amazon rainforest’s deforestation was used for raising cattle (Diana Roy, 2021). 3,980 square kilometers or more of the Amazon rainforest were destroyed, according to data from Brazil's National Institute for Space Research (INPE), approximately 5 times New York City.


2. Causes of Deforestation in the Amazon  


Causes of deforestation are generally making some profits, carelessness, and greed. Especially in recent times, people are in a consuming mentality due to this is a great opportunity for companies. This circulation goes like that so in the long run forests are in danger including the Amazon rainforest.


The expansion of cattle ranching and the cultivation of commercial crops such as soybeans and palm oil are driven by the increasing global demand for these commodities. As a result, large areas of land are being cleared for the mining of ores and minerals, leading to the destruction of forests. The use of fire for land clearing and uncontrolled wildfires are causing significant damage to forest ecosystems. Some fires are intentionally set to make way for agriculture and development, while others occur due to poor land management practices. In addition, weak enforcement of environmental laws and incentives for agricultural activities are contributing to environmental degradation. These policies often prioritize economic growth over the protection of the environment. The demand for products like beef, soy, and timber in international markets further fuels the expansion of agricultural and logging activities into previously forested areas.


3. Economic Benefits of Deforestation


Deforestation is generally done for economic reasons even if it impacts badly. Maybe in the short-run making some profits is nice but when we look at the long-run it has a big impact on the ecosystem and economy. Also, if we do not sew enough results will be impacted so seriously.


Expanding farmland for crops and cattle ranching is made possible by clearing forests, which leads to an increase in available farmland. This, in turn, results in the production of valuable commodities with high export value, such as soybeans, palm oil, and beef. Additionally, timber harvesting provides valuable hardwoods, and the sale of lumber and wood products can generate significant revenue. These activities serve as important sources of income for both local communities and countries. Furthermore, deforestation facilitates access to mineral resources such as gold, bauxite, and iron ore, contributing to economic growth and employment creation. Clearing forests for infrastructure development, including roads, dams, and urbanization, fosters improved transportation, energy supply, and housing, thereby supporting economic growth. Overall, deforestation can lead to rapid economic improvements, particularly in developing countries where land and natural resources are primary economic assets.


While deforestation can boost GDP through these activities, it is important to note that this growth may not be sustainable in the long term due to the environmental and social costs associated with forest loss.


4. Long Term Problems


As the world seeks to slow the pace of climate change, preserve wildlife, and support more than eight billion people, trees inevitably hold a major part of the answer. Yet the mass destruction of trees—deforestation—continues, sacrificing the long-term benefits of standing trees for the short-term gain of fuel, and materials for manufacturing and construction (Christina Nunez, 2022).


Trees are needed for a variety of reasons, not least of which is that they absorb the carbon dioxide we exhale and the heat-trapping greenhouse gasses that human activities emit. As those gasses enter the atmosphere, global warming increases, a trend scientists now prefer to call climate change (Christina Nunez, 2022).


In addition, It is present that itmminent danger of disease causes by deforestation. An estimated 60 percent of emerging infectious diseases come from animals, and a major cause of viruses’ jump from wildlife to humans is habitat loss, often through deforestation (Christina Nunez, 2022).



 Figure 1: This interactive map shows deforestation rates across the world in 2015 (UN Food and Agriculture Organization (FAO))


5. Economic Impact 


The Brazilian economy is deeply intertwined with the exploitation of its vast jungles, particularly the Amazon. While industries such as mining, agriculture, and others have driven economic growth, they have also significantly contributed to deforestation (Marek Hanusch & Joaquim Bento de Souza Ferreira Filho, 2023). Activities like mining, ranching, and agricultural expansion have resulted in the loss of approximately 25% of Brazil's forests, causing irreparable damage to the ecosystem and contributing to greenhouse gas emissions (Marek Hanusch & Joaquim Bento de Souza Ferreira Filho, 2023). In 2015, the consequences of deforestation were felt in both the short and long term. While immediate benefits included the availability of arable land and timber, the long-term impacts encompassed soil degradation, loss of biodiversity, and climate change (Marek Hanusch & Joaquim Bento de Souza Ferreira Filho, 2023).


Such a collapse of the ecosystem would have grave economic implications. As such, stable climate conditions upon which industries such as soybean and corn production depend will be compromised. Therefore, Brazil may face unfavorable international trade as a result of environmental issues (Jonny Walfisz, 2021).


In Brazil’s case, it could contribute about BRL 40 billion (around $8.2 billion) annually to GDP in the Amazon by 2050 by shifting towards a less deforested, greener, and fairer alternative model through which sustainable employment opportunities can be provided for local inhabitants and the indigenous population dependent on forests (Jonny Walfisz, 2021).


Conclusion


The deforestation of the Amazon Rainforest is a complex economic problem for Brazil. It has provided short-term economic benefits such as increased agricultural production, job creation, and infrastructure development but these come at a significant long-term price tag. All that deforestation brings about are soil degradation, climate change, loss of biodiversity, and international pressure which are unsustainable for Brazil. To balance this economic growth with environmental conservation, Brazil needs to look into and invest in sustainable practices that will protect the Amazon’s invaluable resources while also securing livelihoods for its people. Finding this balance is crucial to the future economic health not only of Brazil but also the world at large.


References


Francis E. Putz & Kent H. Redford (2010), The Importance of Defining 'Forest': Tropical Forest Degradation, Deforestation, Long-Term Phase Shifts, and Further Transitions JSTOR


Diana Roy (2022), Deforestation of Brazil’s Amazon Has Reached a Record High. What’s Being Done? Council on Foreign Relations 


Christina Nunez (2022), Why deforestation matters—and what we can do to stop it National Geographic 


Hannah Ritchie (2021),  Deforestation and Forest Loss Our World in Data

Marek Hanusch Joaquim Bento de Souza Ferreira Filho (2023), Two sides of the same coin: Reviving Brazil’s economy and curbing Amazon deforestation World Bank Blog 


Jonny Walfisz (2021), Why stopping deforestation doesn't just save lives, it revives economies Euro News.

Marek Hanusch & Joaquim Bento de Souza Ferreira Filho (2023), A Macroeconomic Perspective of Structural Deforestation in Brazil’s Legal Amazo World Bank 


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