Overexploitation or Sustainable Management? Action Patterns of the Tropical Timber Industry

The Case of Para (Brazil) 1960-1997

Imme Scholz

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781317845089
• Edition: 1
• Topic: History
• Subtopic: Military & Maritime History
• Index: History

The part played by the Brazilian tropical timber industry in deforesting the Amazon region has not been studied very much. This book describes the expansion of the timber industry in the Brazilian federal state of Para since the 1960s, when Amazon development became an important item on the government's agenda.

1 Introduction: Statement of the Problem and Structure of the Study

The Amazon and the tropical rainforest – as late as in the postwar era these keywords were used to evoke images of a luxuriant, green landscape, images understood either as a reference to fertile soils and big chances for resolute pioneers or as a source of noxious vapors, poisonous vermin, and mythological animals like the Anaconda, which drew all of life under its spell and could break even the drive of the pioneer. In either case the jungle was the symbol of a powerful, extravagant nature that could lead men to wealth or doom (Hurtienne 1993). Today when we hear the word Amazon we see wholly different images: tracts of scorched earth in which burnt stumps reach toward a gray sky out of swampy or ash-covered, smoldering ground. The life of indigenous peoples and rare animal and plant species is threatened by the advance of big cattle ranches, logging operations, and smallholders, all of whom, driven by the prospects of big profits or determined to secure their naked survival, have, for some thirty years now, been gradually destroying the earth's last closed rainforest area. This, however, has not only meant the irrevocable destruction of the local habitat for rare forms of life, it at the same time also poses, on a global level, a threat to the natural foundations of life itself: the loss of species is diminishing the natural reservoir of nutritional and medicinal plants on which biotechnology must draw its resources. Burning the forests contributes to the greenhouse effect, and it in turn is leading to unforeseeable climatic changes with potentially disastrous consequences – rises in sea levels, changes of temperatures and precipitation patterns with their effects on food production.

The Amazon rainforest, once a symbol of unfettered life itself, has become a sign pointing to the man-made threat to life on earth. For ordinary consciousness the jungle, often portrayed as a powerful force of nature capable, if need be, of turning its superior vital force against human intruders, has, thanks to popular science, taken on the character of an ancient albeit fragile ecosystem vulnerable to utter destruction at the hand of man within a number of decades.

As a consequence of this transformation of the symbolic role of the Amazon rainforest the latter has come to stand for the change in the relation between society and nature that has gained ascendancy in the 20th century. If the efforts of the last 200 years toward technical and social progress entailed subjugating and harnessing the forces of nature toward the end of exploiting them for the production of food, energy, and other goods, we are today experiencing the growth of an awareness that the natural reservoir has limits and can be exhausted. Technical progress and social change (to the extent that this can be consciously controlled) must from now on follow a more economical use of natural resources.

In 1990, at the G-7 summit In Houston, the world's seven economic powerhouses, acting on a German initiative, offered Brazil their participation in a pilot program designed to protect Brazil's rainforests. The aim of this program (PPG-7) is to encourage learning processes, in the Amazon region and the international community alike, geared to determining how the goals of environmental and resource protection might be brought into line with the goals of economic development and poverty alleviation at the local, regional, and global levels. Having overcome some initial problems, PPG-7 has, since 1996, met with a number of successes, in particular as regards the creation of protected areas for indigenous peoples and support for local initiatives aimed at a sustainable use of natural resources. The German government is funding roughly half of the US$ 320 million earmarked for the program, which, aside from forest protection, also provides for an institutional invigoration of the environmental authorities in the Amazon region and support for sustainable forest management.

The present study sees itself in the context of the agenda addressed by the goals of PPG-7: Its subject is the relationship between economic development, resource use, and innovation processes; the topic is developed with reference to the timber-processing industry in the Brazilian state of Pará in the eastern region of the Amazon. The study uses a historical reconstruction of the economic and technological development paths of the timber industry since the 1950s to establish how the dominant use pattern of the tropical forest came about and what role the given ecological facts, the Brazilian government's Amazon development policy, and the world timber market play in this process. The study focuses on action patterns and routines of the companies actively involved, and does so with an eye to determining both their role in the expansion of the industry and their innovative capacities.

The timber industry has attracted little interest in socioeconomic research on the Amazon region because the focus of such studies has as a rule been on processes of deforestation and their causes. Since deforestation is above all a consequence of the expansion of farming and cattie-ranching, and this expansion has been promoted by the public programs aimed at economic integration of the region, the development of the timber industry and its intertwinement with other industries has often fallen through the grid defined for the field under research. The present study aims to close that gap.

The reason why the timber industry was chosen as the subject of the present study is that an analysis of entrepreneurial action strategies can help us to understand what factors are instrumental in the ruthless exploitation of the tropical forest. As a rule studies dealing with the timber industry have the following shortcomings:

• – they proceed on the assumption of instrumentally rational action patterns on the part of the economic agents, but without looking into the matter empirically. The premise guiding the research is that there is an abundance of homogeneous timber resources; what the research strategies center on under these conditions is not efficient exploitation and processing but reduction of transportation costs, which account for the better part of production costs;
• – and then they neglect to view the development of the Amazon timber industry in the context of the Brazilian timber industry and the world market for timber, in this way failing to account for the effects of technical change on the competitiveness of tropical timber.

The aim of the present study is therefore to answer the following questions:

• – How and under the impact of what economic incentives and institutional conditions has the timber industry in Pará developed since the Amazon region was first opened up in infrastructurel terms in the 1960s?
• – What are the techno-organizational elements to which the entrepreneurial action patterns encountered in the Pará timber industry can be traced back? How have these elements and patterns changed in the past 35 years? What economic and institutional incentives have played a role here (e.g. subsidies, environmental legislation and monitoring)?
• – What influence does the ecology of the tropical forest have on the timber supply and utilization chances of the timber industry?
• – What role will technological innovation play for the future competitiveness of tropical timber from the Amazon region both in the domestic Brazilian timber market and in the world timber market?
• – What specific restraints do these action patterns entail for entrepreneurial learning processes and innovation? Can Pará's timber entrepreneurs generally be described as conservative and inimical or skeptical toward innovation?

Once these questions have been answered, we will be able to explain the expansion of the small and medium-scale saw mills and plywood factories in Pará and in the Amazon region as a continuation of the traditional development path of the Brazilian timber industry, which is based on overexploitation. At the same time, the south and southeast of the country have experienced the rise of a capital-intensive, competitive, outward-looking pulp industry based on eucalyptus plantations, which have attracted the lion's share of the investments made in the timber industry.

In the 1990s the economic and ecological framework conditions changed radically for the state of Pará: monetary stability and declining economic growth in Brazil compelled the companies of the industry, for the first time for decades, to cut costs systematically; the declining world demand for tropical timber sent prices downward; at the same time the procurement costs for stemwood rose because the forest stands surrounding the timber industry in the Amazon region had been depleted and the control of the environmental authorities had been stepped up under the pressure of world public opinion. The industry is now faced with the challenge of radically altering its action pattern, marked as it is by overexploitation of the tropical forests and an insufficient depth of processing, if it is to survive.

The following sections present the study's empirical and theoretical points of departure (1.1), make some preliminary remarks on the choice of the field of inquiry (1.2), and describe the way in which the study is structured (1.3).

1.1 Empirical and Theoretical Points of Departure

The empirical point of departure for the study was the question as to the extent to which foreign-trade relations promote or hinder the emergence of environmentally sustainable patterns of resource utilization in developing countries. This question posed itself in connection with previous work on the complex of trade and environment, in particular as regards the responses of exporters in developing countries to standards imposed in their OECD sales markets concerning the ecological quality of their products and production processes (Scholz 1993, 1996a; Scholz et al. 1994).

A number of NICs have begun to pursue a competition- and trade-oriented development strategy geared to building dynamic exporting industries as motors of economic growth; the existing factor endowments of these countries are the reason why, at least for an initial phase, the competitiveness of their exporting industries is based on an extensive exploitation of (renewable) natural resources as well as on low wage costs. Successful integration into the world economy by building new exporting industries and by pursuing a development path that is economically and ecologically sustainable in the long run – these objectives would appear to be mutually exclusive, at least in view of the newspaper articles and scientific reports available on the ruthless exploitation of natural forests and fishery resources, the depletion of soils, and the impending exhaustion of water resources in the interest of the exporting industries of developing countries. The perspective in these articles is often dominated by a justifiable concern over possible irreversible damage to the ecosystems in these countries; but they tend to occlude the environmental changes that have taken place there in recent years as well as to bias any more precise analysis of the agents responsible for these changes, their motives, and their objectives. A further factor is that it is precisely in the countries that are pursuing a world-market-oriented growth strategy that we have seen the emergence of a debate on environmental policy, indeed one that engages the various domestic actors no less than the purchasers of their products in the industrialized countries. This debate is concerned among other things with the question as to what features an environmentally compatible product must display, whether more environmentally sound management and manufacturing methods are possible, who is to bear the costs of developing and introducing them, and what role should be played by the state and social groups in elaborating and monitoring environmental policy.

The foregoing is based on two observable developments:

First, export-oriented companies in developing countries more and more frequently see themselves confronted in their European sales markets with ecological standards covering their products and the processes used to produce them (Scholz 1993; Bennett and Verhoeve 1994). These new standards compel these companies to engage in complex learning processes that comprise environmental, technological, and organizational dimensions and can require both simple and highly complex adjustments of products, production sequencing, and production processes. As is shown by the experience of the OECD countries, successful learning processes of this sort require – apart from innovative businesses – economic, political, legal, and administrative framework conditions that create incentives to improve the environmental soundness of production and product alike as well as institutions in the business environment (training and advanced training, research and technology, finance, and trade and environmental policies) which offer support in searching for adapted solutions.

Second, empirical research on ecological adjustment processes at the level of firms and sectoral institutions conducted in recent years emphasizes the growing importance of environmental product quality.¹

The Chilean case study, for instance, has shown that outward-looking and competition-oriented policies have entailed ambivalent effects; on the one hand they have encouraged the commercial exploitation of natural resources, and done so at the expense of losses sometimes high in absolute terms. On the other hand the orientation in terms of the quality and efficiency standards of the OECD countries has increased the willingness to undertake ecologically grounded adjustment measures. Companies and R&D institutions have started to build up the technological and organizational knowledge base needed to work out adjustment measures and put them into practice (Scholz et al. 1994).

Ecological learning processes induced externally (via trade relations) run up against limits where they encounter solidified constellations of economic power and interests and the organizational and articulation capacities of potential agents of environmental reform processes are, due to the historical particularities of political structures, weakly developed (labor unions, consumers, social movements, smallholders, indigenous population groups). Learning processes can be inhibited when the executive branch is unable to adequately exercise its supervisory and support functions in the field of environmental protection because it lacks the manpower resources and structures at the regional and local levels are weakly developed² or when environmental and resource protection is accorded a priority too low compared with other issues on the social-policy agenda.

In more general terms, the following questions arise: What factors and conditions have given rise to the empirically observed ecological awareness and the actual propensity to act in an environmentally responsible fashion in certain areas of the export sector? Is there any promotion or support of social learning processes that go above and beyond this? Are environmental reforms encouraged in this way?

The theoretical perspective of the debate on sustainable development does not necessarily appear to support the proposition that integration into the world economy can under certain conditions promote the introduction of more environmentally sound production patterns. This proposition is accepted by the greater part of the theoretical and/or practice-oriented studies on possibilities, limits, and regulatory needs of strategies of sustainable development which are markedly influenced by tenets of neoclassical environmental economics. This perspective would indicate that the fundamental problem consists in increasing the allocative efficiency of (renewable and nonrenewable) natural resources. This goal – according to the general hypothesis – can be reached by harnessing the market mechanisms for the consumption of environmental goods and at the same time using political regulations to ensure and legitimate the effectiveness of market-oriented instruments (Endres and Querner 1993; Pearce and Turner 1990).

Approaches such as ecological economics are more critical with regard to the issue of free trade. Their analysis is marked by a fundamental critique of industrial society (high energy and material intensity of industrial patterns of production and consumption), and they accord the highest priority to environmental and resources protection as a means of putting a stop to the destruction of global life-support systems. They call for an orientation of economic activities in terms of equilibrium models that take the limited carrying capacity of ecosystems into account (steady-state economy) (Daly 1992b; Costanza 1991).

What role is played by trade relations in these approaches? In the classical line of argument external trade contributes to welfare gains in that the countries involved specialize in different fields according to their comparative advantages, gradually come to engage in complementary economic activities, and can in this way achieve increases in overall economic efficiency. In ecological regards, too, these countries are in competition with one another: they have different natural-resource endowments, different levels of pollution, and different systems of legal and economic regulation. If all countries have comparable environmental-protection goals, and compliance with them is in fact monitored, it is possible to neutralize the negative environmental impacts of external trade. More recent approaches to analyzing the dynamic determinants of competitiveness (man-made competitive advantages) (Nelson and Winter 1982; Hurtienne and Messner 1994; Esser et al. 1994) also see external trade as exercising functions that increase efficiency, and with it welfare, in that competition compels economic agents, who are interlinked via global markets and production structures, to engage in constant processes of learning and innovation. An optimization of production patterns in ecolo...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Figures
• Abbreviations
• Summary
• 1 Introduction: Statement of the Problem and Structure of the Study
• 2 Determinants of Natural Resource Use: Theoretical Approaches from the Field of Economics and the State of Research
• 3 Alternative Approaches to Economic Action from the Fields of Sociology and Evolutionary Economic Theory
• 4 Tropical Ecology and Sustainable Forestry
• 5 The World Market for Tropical Timber
• 6 The Timber Industry in Pará and in Brazil in the 1990s
• 7 Historical Reconstruction of the Development of Pará's Timber Industry
• 8 Patterns of Resource Utilization and Foreign Trade: Results of the Study and Conclusions
• 9 Conclusions for Development Cooperation
• Notes
• Bibliography
• Appendix