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Political and Institutional Factors Geopolitical

Geopolitical concerns are often a reason for opening up a frontier, when national boundaries are ill-defined, or territories are threatened. During the rubber boom of the late 19th century, the westernmost region of the Amazon lowlands was disputed between Brazil and Bolivia. Frustrated by the inability of both countries to reach an agreement on their future, people in the region declared their independence from both countries, creating the independent state of Acre (Barbosa 2000). The newly independent state, composed primarily of Brazilians, managed to expel the Bolivians from the area, thus opening the door for Brazil's de facto control. Despite the fact that Brazil was the imperialist power in this case, the possibility of Bolivia reclaiming the region for itself played on Brazilian insecurities.

In the 1970s, the Superior War College of Brazil was influential in promoting a policy for populating and integrating Amazonia with the rest of Brazil. The view was that development policy should follow the geopolitical needs of the country, that is, the population vacuum in the interior should be filled, as a protection against groups who were said to be "communist guerrillas". The reality was, however, that these were local groups protesting the military dictatorship of Brazil, but that was all the more reason for the military to create a series of agencies responsible for development of the country. For Amazonia, the main agency was the Superintendence for the Development of the Amazon (SUDAM). The responsibility for forest protection came under the Brazilian Institute of Forest Development (IBDF), and indigenous people's affairs came under the National Indigenous Foundation (FUNAI). However, these agencies were compliant when powerful interests demanded the clearing of forests or the removal of indigenous peoples. Things began to change as a result of the re-establishment of democracy in the mid-1980s. The new civil liberties allowed indigenous peoples to organize and form coalitions with environmentalists and grassroots organizations within Brazil and abroad. Central to this change has been the participation of a free Brazilian media eager to cover events taking place in Amazonia, sparked to a large extent by national and international interest over the fate of the forest (Barbosa 2000).

Land Tenure

Land tenure policies that give settlers the right to land only if the forests are cleared stimulate deforestation. In many tropical countries, forest clearing is considered to be an activity that "improves" the land, and lack of improvement indicates that the settler has no interest in the land, or is incapable of using it "productively". A common tactic in the Amazon to ensure tenure is to clear a large area of forest, burn it, put a strand of barbed wire fence around it, and stock it with a few head of cattle. There is no expectation, however, on the part of the settler to make any money from the cattle. Rather the expectation is that the land will be sold at a large profit after the government extends roads and facilities into the region (Schneider 1995). Land speculation, especially by corporate ranches, still occurs in the Amazon (Smouts 2003). In the Malaysian state of Sabah, laws dating from the British colonial period make the state government the holder of all forestry property rights, but permit any native person to obtain title to forest land by clearing and cultivating it. In the Philippines, land claims predicated on forest clearance involved not only small-scale shifting cultivators, but also extensive livestock operations (Repetto 1988). In recent years, as a result of the disappearance of the forest frontier in the Philippines, agricultural intensification has become more important than land clearing (Coxhead et al. 2001).

Tax Policies That Encourage Deforestation

A variety of government policies (investment incentives, credit concessions, tax provisions, agricultural pricing policies, and the nature of lease or sale of forest exploitation rights) create incentives to engage in faster deforestation. Such policies are often instituted when the free market does not accomplish geopolitical goals in frontier regions at a fast enough rate. For example, when the Brazilian government in the early 1970s wanted to open up the eastern Amazon region, officials in charge of regional planning and local financial institutions made considerable effort to convince entrepreneurs to invest in the region. Livestock production was publicized as the most promising investment in part because of national demand and because it seemed to carry little risk. Ranching received the highest priority ranking of projects by government agencies, but among ranchers and corporate groups, livestock was recognized as an only marginally profitable enterprise. However, the enormous gains in land value and the use of incentive monies and reductions or elimination of taxes made clearing of forest for ranching a sound financial option (Hecht 1982). As a result of international pressure to conserve rain forests, Brazil reduced or eliminated many tax benefits deriving from deforestation. However, ranching has not declined in importance because cattle production has become increasingly profitable due to improvements in technology, such as grasses that respond well to fertilization (Cattaneo 2001).

Lack of Enforcement of Environmental Laws

While many developing countries have environmental laws to regulate logging, the laws are often weak and have poor enforcement (see case study below on Indonesia). As a result, there has been a recent dramatic increase in foreign investment in tropical logging by companies to take advantage of this situation (Laurance 2000).

The Transmigration Program in Indonesia (Box 4.1) is an example of how several political and institutional factors interact to cause deforestation.

The Indonesian transmigration program (World Bank 1988; Muntingh 1997; Katoppo 2000; Kusumaatmadja 2000; Fuller 2003)

Resettlement programs were begun in Indonesia in 1905 when Indonesia was under Dutch rule. Because there were high population densities on some islands and sparse populations on others it was believed the resettlement programs would result in better conditions for both the source and the receiving islands.

Beginning in 1979, the scale of the transmigration program significantly increased, from about 52,000 families during the previous 5 years to 366,000 families during the subsequent 5-year period. Movement was chiefly from the overcrowded islands of Java, Madura, Bali, and Lombok to the largely forested islands of Sumatra, Kalimantan, Sulawesi, and Irian Jaya. An important reason for the transmigration program was the limited land available for farming. In Java, most farming families had less than half a hectare of agricultural land. Farmers had to move onto steep slopes and into forest reserves, where cultivation and erosion caused environ mental degradation, siltation of reservoirs, and flooding. Urbanization in Java's major cities was occurring at more that 4% per year, resulting in about 1.6 million new residents each year.

Transmigrants were recruited in rural areas. They were required to be married, to be "of good character", and to have had previous farming experience. Migrants were moved by plane or bus, and on arrival at the receiving island they were given a small house on 0.25 ha of village land and 1 ha of cleared land outside the settled area. In addition, they were supplied with planting materials for minor tree crops such as coffee and small livestock. Public facilities including schools and clinics were provided in the village center. Subsistence supplies were provided for 1 year while the land was tilled and crops established. Settlements were expected to be self-sufficient at the end of 5 years.

In 1985, the World Bank, which helped finance the transmigration program, initiated a review of the resettlement program. Their report noted serious deficiencies. Land clearing was often of poor quality, road construction and maintenance standards were low, and the supervision of contractors uneven. Land for settlement became difficult to find, and land for large-scale settlements in Sumatra was virtually exhausted. The provision of agricultural supporting services, including input supply, extension, and credit, was inadequate, and no progress was made on programs to introduce tree crops to existing settlements. Institutional arrangements for coordination, planning, budgeting, and monitoring and evaluation were weak. The most sensitive issues were social and environmental. Rapid land clearing without adequate planning led to conflicts between transmigrant colonists and local people. Deforestation was also noted as an increasing problem. In January 1986, the government of Indonesia made significant reductions in all development budgets in response to declining oil revenues. In May 1986, the budget was further reduced to 38% of the previous year's figure. It was assumed that most of the transmigration in future years would be from unassisted migrants.

At the time that the transmigration program was expanding, concessions were increasingly granted for logging in the outer islands. Through road building, the transmigration program was instrumental in opening up the outlying islands to exploitation and environmental damage. In 1997, huge forest fires raged across Borneo (Kalimantan). Muntingh (1997) detailed how the fires were caused in part by logging companies acting illegally. Logging continued unchecked, even in designated conservation areas, by concession holders linked to the timber industry and politicians. Substances used in the preservation of logs polluted the rivers and water supply, leading to the death of fish and protected animals, including orang-utans and bears.

Logging and its aftermath severed traditional peoples' ties with their customary land, undermined their sense of identity, eroded their religious and cultural framework, and created great disorientation. Traditional communities became alienated and cultural degradation was manifested in violence. In September 1999, an Update Conference on recent developments in Indonesia was held at the Australian National University that reported on the environmental and social developments during the previous decade. The country had become subjected to a regime of "runaway rent seeking, crony Capitalism (contracts given to old friends, sometimes called 'cronies', and relatives instead of opening bids to the free market), nepotism, and blatant corruption". As public outcry increased, the government responded with increased repression. Environmental rules were disregarded, warnings were ignored, and international protests were unheeded as major companies with close links to highly placed officials began to invest in large-scale agribusiness ventures, such as oil palm plantations. Land clearing was carried out during the worst drought in 50 years. An area of 1.7 million ha of forested land was lost to fire. Other costs due to the massive burning included haze-related losses in the transportation sector, disruption to the distribution system, and long-term health consequences to 20 million people exposed to thick haze for over 4 months in Sumatra and Kalimantan. The increasing population in Indonesia's outer islands continues to threaten forests and their wildlife.

A recent study based on satellite and field-based analysis (Curran et al. 2004) has reported that between 1985 and 2001, Kalimantan's lowland dip-terocarp forests that had been designated "protected areas" declined by more than 56% (>29,000 km2). Deforestation resulted primarily from intensive logging by timber concessions, followed by the clear-cutting of residual stands for oil palm plantations. Threatened nomadic and large vertebrates with extensive lowland ranges are predicted to decline precipitously, especially carnivores, ungulates, and primates (e.g. the Malayan sun bear Helarctos malayanus, the bearded pig Sus barbatus, and the orangutan Pongo pygmaeus). Curran et al. (2004) concluded by citing a World Bank report that indicates that rate and extent of loss of lowland protected forest area in Kalimantan far exceed previous projections. Stemming the flow of illegal wood from Borneo requires international efforts to document a legitimate chain-of-custody from the forest stand to consumers through independent monitoring.

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