When markets fail to manage the supply of and demand for goods and services, the outcome is referred to as ‘market failure’. There are multiple causes for market failure, but the most common is the inability to consider positive and negative ‘externalities’. An externality, in the lexicon of an economist, is a cost or benefit that is not considered when calculating the financial return on an investment. Environmental problems are the product of a market failure because the producers and consumers of goods and services do not pay for the damage caused by their creation or, conversely, do not enjoy a monetary benefit from a sustainable outcome.  Market failures can only be corrected by government action, which typically takes the form of: (1) the application of regulations via command-and-control rules that obligate producers and consumers to adopt specific practices; or (2) market-based policies that incorporate the cost and benefits of externalities by imposition of taxes or subsidies. Unfortunately, governments must deal with constituents’ resistance to having their options restricted or accepting the increased cost of a good or service, or their unwillingness to pay the taxes required to finance a subsidy.

The development of policies and the administration of the state is defined by political scientists as governance. The discordance between policy and outcome is, in part, the consequence of the failure of governance in the Pan Amazon. Despite the enormous progress these nations have made in fifty years of democratically elected governments, they have not avoided the pitfalls caused by social and economic forces beyond their control, including the rapacious nature of globalized markets, the growing impacts of climate change and the disruption brought by the Covid-19 pandemic. Nor have they successfully managed hazards that are, theoretically, resolvable by actions based on integrity and foresight. Elected officials routinely subsume the public’s interest to the vested interest while enriching themselves and their relatives; worst of all is when malfeasance fosters a culture of mediocrity that further alienates citizens and lessens respect for state institutions.

Discontent has led to a surge in populism that threatens liberal democracy, a phenomenon aggravated by the dissemination of disinformation via social media.  Unscrupulous and ambitious political figures have exploited this dissatisfaction to exacerbate the polarization that characterizes many aspects of Amazonian society. As the region grapples with an extended (lethargic) economic recovery from the pandemic, the potential for renewed social protest, political turbulence and democratic instability looms large.

The nations of the Pan Amazon have enacted policies to conserve the biodiversity and ecosystem services of the biome and its ancillary ecosystems. These include the consolidation of protected area systems and recognition of the territorial rights of Indigenous peoples, as well as efforts to improve land use and forest management. Infrastructure investments and mineral extraction projects are preceded by environmental and social review, while regulatory systems seek to obligate landholders to comply with environmental law. Most importantly, governments have called for an end to deforestation and some are collaborating with agribusiness to incorporate the principles of sustainability into their supply chains. Despite these measures, the progressive fragmentation and degradation of the region’s terrestrial and aquatic ecosystems continue and may be increasing in both qualitative and quantitative terms.

The multiplication of civil society organizations is, in part, a consequence of society’s inability to effect change via the electoral process and to establish an efficient civil service. The proliferation of nongovernmental organizations (NGOs) comes with significant disadvantages, however, because they may reduce pressure on governments to improve and invest in state institutions.

For example, in the Amazon, many NGOs conduct research and provide extension support that might better be provided by public universities, which are also centres of intellectual formation. Efforts by NGOs are often fragmented and inefficient, particularly if they choose to compete among themselves for limited donor resources. Civil society organizations are key for holding governmental agencies accountable and they can be useful when an agency decides to outsource a specific task. However, NGOs cannot replace governmental agencies, either in scale or in legitimacy. Good governance requires competent governmental agencies.

The legal framework of environmental governance

Modern environmental law was born in the first decades of the twentieth century in the United States. It began with consolidation of the national park system by Theodore Roosevelt, who also initiated the creation of the federal agencies that are the stewards of the nation’s renewable natural resources. This development of a holistic management philosophy occurred over several decades and was accompanied by the growth of civil society organizations that lobbied for legislation and public funds to support (utilitarian) conservation and the scientific management of the nation’s natural resources.

Conservation ideals spread to other continents, and by mid-century most of the Pan Amazonian countries had created one or more national parks.

Brazil was an early leader in 1921 with the creation of the national forest service within the Ministry of Agriculture, Industry and Commerce. This was followed in 1934 by an executive order by President Getúlio Vargas that created the legal basis for forest protection and wildlife management. The decree described a series of infractions that were termed ‘forest crimes’ punishable by fines or imprisonment. This law did not have a material impact on land use in the decades after its promulgation, but it did establish a legal precedent of historic proportions.

The global environmental movement was fundamentally transformed in the 1960s, following the publication of influential books that highlighted the danger of industrial pollution and the limits of conventional development. This led to the birth of nongovernmental organizations that lobbied governments to enact legislation to combat pollution and protect endangered species.

The requirement to evaluate potential impacts was enshrined in law in 1970 and codified by the regulations emanating from the newly established Environmental Protection Agency in the United States. Public outrage at environmental disasters, particularly oil spills and toxic waste dumps, motivated corporations to change their business practices to reduce exposure to environmental risk. The same social and economic forces were changing the political agendas in Western Europe and led to the establishment of the United Nations Environment Program in 1972.

Throughout the 1960s and 1970s, the Pan Amazon nations were distracted by domestic issues, and several suffered an extended period of military rule. Nonetheless, urban elites and academics pushed authorities to incorporate environmental principles into governance structures. Starting in the 1980s, international conservation organizations began to support local advocates while pressuring multilateral institutions to include environmental programmes in development strategies. Economic growth continued to be the priority, but nature conservation and poverty reduction came to the forefront of overseas development assistance. Simultaneously, multinational corporations lobbied for regulatory clarity in order to limit investment risk and facilitate the flow of private capital to Pan Amazon countries.

These parallel agendas reached their peak during the 1990s, with the ascendancy of the Washington Consensus, which dictated policies of market-based economics, privatization and democracy. Environmental conservation was promoted as part of a broader strategy to promote a global, rules-based economy. Ironically, the global economy is now understood to be a major driver of environmental degradation in Global South and of deforestation within the Pan Amazon.

Cover image: The first protected area in the Amazon, Kaieteur National Park, was created in 1929 to preserve the landscapes surrounding the Kaieteur Falls, located on the Potaro River, Guyana. Due to its height and volume, Kaieteur is considered the most powerful waterfall on the planet. Credit: Sorenriise via Wikimedia (CC BY-SA 3.0 Unported).

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0).

To read earlier chapters of the book, find Chapter One here, Chapter Two here, Chapter Three here, Chapter Four here,  Chapter Five here y Chapter Six here.