Adjusting the Environment
by Walden Bello
While some structural adjustment programs, such as those in
Ghana, tried belatedly, though unsuccessfully, to address the
social costs of adjustment, no structural adjustment program has
explicitly been designed to take the environment into account.
As a result, heightened environmental degradation and resource
exploitation have often accompanied structural adjustment efforts.
Indeed, it is hard to see how structural adjustment can be
made environment-friendly, since it usually contributes to impoverishment
and more inequality, which are two of the key causes of environmental
degradation. This is not to say that poor people harm the environment
because they are poor. Many tribal and peasant communities have,
in the past, developed ecologically benign systems of sustenance.
This equilibrium, however, has been disrupted in recent times
by the dynamics of impoverishment triggered by the development
of unequal control over land and resources, subjection of the
economy to external forces, and rapid population growth. This
mutually reinforcing relationship between impoverishment and ecological
degradation is described by the 1992 World Bank Development Report:
Because they lack resources and technology, land-hungry farmers
resort to cultivating erosion-prone hillsides and moving into
tropical forest areas where crop yields on cleared fields usually
drop sharply after just a few years. Poor families often have
to meet urgent short-term needs, prompting them to 'mine' natural
capital through, for example, excessive cutting of trees for firewood
and failure to replace soil nutrients.
The Bank then uses Africa as an example of the vicious cycle
of impoverishment and ecological disruption, overlooking the fact
that, together with the IMF, it has been responsible for the policies
that deepened the poverty of the continent in the 1980s:
Agricultural stagnation in Sub-Saharan Africa is a particularly
clear example of the mutually reinforcing nexus of poverty, population
growth, and environmental damage. Low agricultural productivity,
caused mainly by poor incentives and poor provision of services,
has delayed the demographic transition [to lower birth rates]
and encouraged land degradation and deforestation, which in turn
lowered productivity. Africa's forest declined by 8 per cent in
the 1980s; 80 per cent of Africa's pasture and range areas show
signs of damage; and in such countries as Burundi, Kenya, Lesotho,
Liberia, Mauritania, and Rwanda [all of which were under IMF and/or
World Bank programs] fallow periods are often insufficient to
restore soil fertility.
The debt crisis and structural adjustment of the 1980s heightened
the interaction between impoverishment and environmental degradation,
as increasing poverty and the external debt drove poor people
and poor countries to exploit lands and forests more intensively,
either for subsistence or for export. For instance, most of the
top 15 Third World debtors have tripled the rate of exploitation
of their forests since the late 1970s, a phenomenon that is undoubtedly
related to both the survival imperative of poor, landless people
and the pressing need of nations to gain foreign exchange in order
to make interest payments. Indonesia and Brazil, two heavily indebted
countries that also happen to contain much of the planet's remaining
forests, have seen their rates of deforestation increase by 82
per cent and 254 per cent respectively since the late 1970s.
But beyond poverty and indebtedness was another factor driving
more intensive resource exploitation. This was the ideological
bias of the standard SAP against any disincentives that might
stand in the way of the operation of market forces which were
seen as the e'lan vital of growth and prosperity. This translated
into opposition on the part of the economic authorities to effective
environmental regulation by the state. A close look at four countries
- Chile, Costa Rica, Ghana, and the Philippines - reveals the
dynamics of this vicious circle of poverty, structural adjustment,
market ideology, and environmental degradation.
Intensified Resource Extraction in Chile
In Chile, ideological preferences, pressure to gain foreign
exchange to make debt repayments, and the desire to attract foreign
investment combined to prevent the government from imposing any
meaningful environmental controls over the exploitation of natural
resources on which Chile based its export drive during the 1980s.
Wood has been one of the mainstays of Chile's export offensive
with exports doubling between 1983 and 1989. Increasingly, timber
production comes from industrial plantations, but in the rush
to make plantations the cornerstone of Chile's forest products
industry much natural forest was cut down and replaced by pine
monocultures. As Sandra Postel and John Ryan note, 'When a cathedral
grove of millennia-old alerce trees in Chile - containing some
of the world's oldest living organisms - is cut, no statistics
can capture the world's loss.'
As for the fishing industry, the annual sardine catch in 1987
and 1988 was about 2.2 million and 1.5 million tons respectively,
far above the 1 million ton limit to prevent over-exploitation.
It is therefore not surprising that the total fish catch declined
by 16 per cent in 1989 and another 22 per cent in 1990.
Over fishing was not, however, the only reason for the reduced
catch. Other contributing factors were the runoffs from mining
operations and pesticides which seeped into rivers and were then
carried out to sea. El Mercurio, the conservative Chilean daily
newspaper, notes that 'industrial wastes, primarily from the large
mining companies, in the form of tailings or surpluses from the
copper-refining process ... [have] seriously affected the coastal
area of the Second and Third regions.' The problem is not the
lack of environmental laws. Rather, as one study notes, 'The Chilean
government has been particularly loath to force state-owned mineral
operations to comply with the laws. At times, the prospect of
major revenue from projects leads government officials to simply
ignore environmental rules or studies.' As for pesticides, not
only were runoffs contributing to the reduced fish catch, but
their heavy use threatened the health of producers and consumers
alike. So heavy is the pesticide-dependence of Chilean fruit exports
that Chilean grapes, which account for one-fourth of grapes consumed
in the US, were temporarily banned from entering the United States
in 1990.
The rape of Chile's environment that all these 'externalities'
of unrestrained entrepreneurship added up to was noted in a government
report cited by the New York Times which asserted that the economic
growth of Chile has taken place at the expense of the environment
... [T]he so-called export 'boom' was based on the use and abuse
of natural resources, permitting the degradation of the eco-systems
greater than their ability to regenerate.
Adjustment and Deforestation in Costa Rica
Costa Rica was subjected to 9 IMF and World Bank stabilization
and structural adjustment programs between 1980 and 1989. As in
Chile, a key aim of the adjustment was to make the Costa Rican
economy more efficient by opening up the domestic economy to imports
and foreign investment and by boosting the country's export industries
in order to gain foreign exchange. Two key export industries,
in particular, benefited from adjustment policies: the banana
industry and cattle raising. The accelerated development of these
sectors, however, was achieved at a high environmental cost.
In the banana industry, expansion was encouraged by structural
adjustment policies that not only produced deep tax cuts on banana
exports but gave new banana producers generous subsidies 'to strengthen
Costa Rica's international competitiveness.' This windfall triggered
the expansion of both foreign-owned and domestic plantations,
which in turn accelerated what was already an advanced stage of
deforestation. Perhaps the most cogent description of the environmental
consequences of these export-driven policies is provided by one
of their key supporters, the World Bank:
Starting in 1986, plantations expanded again, at a rate of
2,000 [hectares] per year. More important, regarding deforestation,
however, is that the banana growing area has shifted almost completely
from the South Pacific to the Atlantic Region ... It is estimated
that production will expand in this region by 5,000 [hectares]
by 1993 at the expense of forest cover. This expansion, accompanied
by land invasion by plantation workers, is said to constitute
a major threat to the protected areas of Tortuguero [on Costa
Rica's northeast coastline]. From an environmental point of view,
aside from the issues related to banana production (pesticides,
solid waste pollution, sedimentation), the expansion of banana
plantations gives rise to concern because it threatens the area's
biodiversity.
Deforestation was not the only form of environmental degradation
triggered by the expansion of banana plantations. The industry
is heavily dependent on pesticide use, leading, according to a
study by the School of Environmental Sciences at Costa Rica's
National University, to serious health problems for banana workers,
including 'spells of vomiting, dizziness, headaches, eye lesions,
skin burns, and allergies.' Moreover, once deforested areas were
planted with bananas, soil degradation accelerated, since bananas
rapidly deplete soil of its humus and nitrogen. To sustain banana
production, the banana companies substituted huge amounts of chemical
fertilizers for natural nutrients. These fertilizers then mixed
with pesticides to form chemical runoffs that washed into rivers
and eventually into the sea. The destruction of some 90 per cent
of the coral reef in Talamanca, a region on Costa Rica's southeastern
coast, is linked to these chemical runoffs.
Another key beneficiary of Costa Rica's SAP which has contributed
to environmental damage is cattle raising, which services the
international fast-food industry. To foster export expansion,
a third of state-financed agricultural credit has gone to cattle
ranchers. They have responded by turning forests into pasture
land more rapidly. The proportion of the national territory under
forest cover dropped from half in 1970 to 31 per cent in 1987,
and 70 per cent of deforested land is now used for pasture. So
intensely do ranchers covet forest land that in Costa Rica, 'ranchers
practice 'fence-creeping' - literally edging their fences beyond
their property lines into national parks.' Yet tropical soils
without forest cover quickly degrade, leading the ranchers to
abandon the land within a decade and generating constant pressure
to bring new forested land into pasture.
SAP and Ghana's Environment
The focus of Ghana's structural adjustment program was to
make cocoa production more profitable for farmers so that they
could increase output, resulting in greater foreign exchange earnings
for Ghana. Output rose, but, as pointed out earlier, precisely
because of this, the price of cocoa fell on world markets because
of finite demand. With the value of exports flat and imports inexorably
rising, this led to a worsening of the current account balance
from a deficit of US $43 million in 1986 to a deficit of $229
million in 1990.
To make up for the fragile state of the cocoa industry, the
government moved to revive commercial forestry, with World Bank
support. Timber production rose from 147,000 cubic meters to 413,300
cubic meters in the period 1984-7, accelerating the destruction
of Ghana's already much-reduced forest cover. With deforestation
proceeding at a rate of 1.3-2 per cent a year, Ghana's tropical
forest is now just 25 per cent of its original size, and the country,
according to a study of the World Watch Institute, will soon make
the transition from a net exporter to a net importer of wood.
Indeed, economist Fantu Cheru predicts that Ghana could well be
stripped of trees by the year 2000.
Deforestation has triggered a vicious ecological cycle, leading,
according to Development GAP, to regional climatic change, soil
erosion, and large-scale deforestation. Moreover, deforestation
also threatens household and national food security now and in
the future. Seventy-five per cent of Ghanaians depend on wild
game to supplement their diet. Stripping the forest has led to
sharp increases in malnutrition and disease. For women, the food,
fuel, and medicines that they harvest from the forest provide
critical resources, especially in the face of decreased food production,
lower wages, and other economic shocks that threaten household
food security.
Forest destruction, however, is but one of the many dimensions
of environmental destruction wrought by structural adjustment.
Charles Abugre calls attention to the fact that the rapid mining
of environmental resources as evidenced by fast depleting forests,
bush-fires ravaged savanna lands as well as open cast mining without
land reclamation plans, deep sea over-fishing and the reckless
dumping of toxics from mines and industries are undermining the
main assets of the poor-land and water resources.
Intensifying the Philippine Environmental Crisis
Like Ghana, the Philippines has been one of the most structurally
adjusted countries, as it has been 'on the cure' almost continuously
since 1980. Structural adjustment, in fact, has been one of the
threads of continuity between the newly elected government of
Fidel Ramos, the recent government of Cory Aquino, and the dictatorship
of Ferdinand Marcos.
There appears to be a strong consensus that the stabilization
programs of the IMF and the World Bank during the 1980s had a
strong negative impact on the environment. A World Resources Institute
locates the problem in the sharply escalating pressures on the
country's fragile natural resource base that were brought about
by the economic contraction triggered by the SAP. Adjustment created
so much unemployment that migration patterns changed drastically.
The large migration flows to Manila [the capital] declined, and
most migrants could turn only to open access forests, watersheds,
and artisanal fisheries. Thus the major environmental effect of
the economic crisis was over-exploitation of these vulnerable
resources.
While exploitation of natural resources for subsistence needs
increased during the 1980s, resource exploitation for commercial
purposes, both for domestic consumption and export, declined.
This was due to a combination of an overexploited resource base
and lower demand owing to global economic stagnation in the middle
of the decade. Nonetheless, the IMF-World Bank pressure on the
country to gain foreign exchange in order to service the external
debt still resulted in a substantial outflow of natural resources,
accounting for almost US $23 billion of the $50 billion worth
of products exported by the Philippines between 1981 and 1989.
And it discouraged serious government efforts to impose environmental
controls on resource use.
The staggering consequences of the vicious interaction of
impoverishment, adjustment, export-orientation, and environmental
degradation included the following:
1) the portion of the country covered by forest declined from
34 per cent in the mid-1960s to 21 percent in the mid-1980s;56
2) coastal fish resources were depleted, as the annual fish
catch rose to an average of 374,000 tons a year in 1980-4, from
311,000 in 1970-4;
3) 70 per cent of coral reefs, have been destroyed in the
last 15 years thanks to a combination of situation from denuded
mountains, tailings from mines, and harmful fishing techniques
[including] gargantuan drift nets used by foreign fishing fleets,
dynamite blasting by fisherfolk in search of quick and easy catches,
and cyanide squirted into the reefs to stun and catch the exotic
tropical fish about half of which will end up inhabiting aquariums
in US homes...;
4) and of the Philippines' original 500,000 hectares of mangroves,
the coastal breeding grounds of fish, only 38,000 hectares remain,
much of the rest having been converted into fish or prawn farms
geared mainly to producing for foreign markets.
Prawn farming in the Philippines, in fact, provides a good
illustration of the devastating environmental impact of debt-driven,
export-oriented production. With World Bank encouragement, the
Philippines went into prawn farming in a big way in the 1980s,
with the value of prawn exports, most of which are exported to
Japan, growing eight fold between 1980 and 1987. Intensive prawn
farming necessitates a mix of fresh and salt water, which explains
why prawn ponds are located on the coast: vast quantities of fresh
water are pumped from underground aquifers and mixed with salt
water from the ocean. However, as Robin Broad and John Cavanagh
point out, the parched underground aquifer begins to suck in water
from the sea, raising salinity levels. This inland water migration
... left unchecked ... will eventually ruin the land for agriculture
- and, ironically, for aquaculture too. Experts claim that it
would take a generation after the prawn farms stopped operating
to flush out the salinity.
By the end of the 1980s, the Philippines had indeed been reduced
to a 'plundered paradise,' to borrow Broad and Cavanagh's description,
and a not insignificant factor in this had been the seemingly
endless adjustment process.
from the book
Dark Victory by Walden Bello
published by
Institute for Food and Development Policy (Food First)
398 60th Street, Oakland, CA 94618
Environment
watch
Dark Victory