By Mario Osava
RIO DE JANEIRO, Oct 20 2008 (IPS)

The global economic recession or slowdown that will result from the financial crisis that broke out in the United States could bring some benefits for the environment in the short-term – such as a reduction in power consumption and in the deforestation of the Amazon rainforest -, but the overall effect may turn out to be negative in the long run.

A decline in global demand for farm products and the ensuing drop in prices, especially in the case of beef and soy, would ease pressure on the Amazon jungle, said Paulo Barreto, a researcher at the Amazon Institute of People and the Environment (IMAZON).

The expansion of cattle-raising activities, which require vast extensions of cheap land, is the leading direct cause of the clearing of the rainforest, which accounts for 75 percent of Brazil’s greenhouse gas emissions. Soy, other crops and lumber harvesting are other causes.

IMAZON’s monitoring activities indicate that in the last Amazon year, which spans from August to July, deforestation was reduced by six percent, as compared to the 12 months prior to that period. Decisive in this was the significant drop in June and July, months in which unsustainable logging is usually intensified, facilitated by the low-water season.

Barreto told IPS that this decline could mean that certain effects of the global economic and financial crisis are already being felt in the region, but that it was more likely due to the measures implemented by the leftist government of Luiz Inácio Lula da Silva, especially the credit restrictions imposed on landowners who failed to comply with environmental and land regulations.

With the global economy in a rut, there would be a reduction in the use of natural resources, pollution and the loss of biodiversity, but this will not necessarily translate into seizing the opportunity to maintain that tendency in the future, he said.

The shortage of capital may also “delay technological improvements, prolonging the use of obsolete technologies,” while lower cost oil would steer the attention away from efforts to replace fossil fuels with more sustainable energy sources, said Roberto Smeraldi, director of Friends of the Earth/Brazilian Amazonia.

But the crisis will have some positive aspects, both immediate and long-lasting. With “less easy money” available, the world will be forced to value efficiency and “withdraw resources from projects that were only justified by the supposedly abundant liquidity,” Smeraldi told IPS.

The activist believes that greater regulation in the financial system will bring about “increased social oversight and greater responsibility in environmental issues.” He also predicted a reduction in the rate of mineral extraction and the production of crops for export.

The financial crisis and the environmental crisis have the same origin, namely “the ‘externalisation’ and spreading around of liabilities, whether bad debts or pollution and waste,” said Smeraldi.

The impacts of the global financial crisis on climate change will be “manifold and contradictory,” Eduardo Viola, a professor of international relations at the University of Brasilia, told IPS.

“The drastic contraction in global liquidity” will also curtail investment in “non-carbon based energy sources,” such as wind and solar power and biofuels, thus “slowing down the energy revolution,” as the driving force of high petroleum prices will be removed, he said.

Coal will be used increasingly, as credit constraints will hinder the construction of hydroelectric plants in countries such as China and India, which need to expand their sources of energy in order to sustain their economic growth, Viola said.

As for climate change, the crisis will have a negative effect – even if it does work against an increase in greenhouse emissions – because it “freezes the situation,” postponing the implementation of mitigating policies to avoid job losses, he added.

A positive prospect, according to the professor, is that the shock that is being felt worldwide may serve to “change mentalities and values,” throwing into question “hyper-consumerism and a way of life driven by material and immediate satisfaction” in favour of greater sustainability.

But for now the uncertainty is still too great, and it will all depend on whether the world chooses to cooperate in moving towards a new financial governance, which would also have a positive effect on the environment, or whether the path chosen is conflict, Viola concluded.

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