Amazon

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WAL-MART – SUSTAINABILITY PRINCIPLES

IN 2005, THE WAL-MART GROUP ADOPTED SUSTAINABILITY AS AN INTEGRANT PART OF THE BUSINESS AND DEFINED GLOBAL GOALS

RESTING UPON THREE PILLARS: CLIMATE AND ENERGY, WASTE AND PRODUCTS. IN EACH OF THE 15 COUNTRIES WHERE IT DOES BUSINESS,

WAL-MART DEVELOPS ITS SUSTAINABILITY PROGRAM ALIGNED WITH THE GLOBAL COMMITMENT AND ADAPTED TO THE REGIONAL REALITY.

THE STRATEGIES ARE IMPROVED ANNUALLY IN A PROCESS BASED ON CONTINUOUS LEARNING AND FOCUSING THE ATTENTION ON

MARKET CHANGES.

THE COMPANY’S ACTIVITIES IN THE RETAIL SECTOR REPRESENT APPROXIMATELY 8% OF THE DIRECT IMPACT ON THE ENVIRONMENT AND

THE REMAINING SHARE IS SPLIT AMONG OTHER AGENTS OF THE VALUE CHAIN, SUCH AS, SUPPLIERS AND CUSTOMERS. BASED ON THE

RELATIONSHIP WITH ITS STAKEHOLDERS, WAL-MART TRIES TO POSITIVELY MOTIVATE AND STIMULATE THE WHOLE CHAIN TO ADOPT THE

SUSTAINABILITY PRINCIPLES AND PROMOTES OPPORTUNITIES FOR EACH ONE TO DO ITS SHARE.

GLOBAL COMMITMENTS

CLIMATE AND ENERGY

ACTIONS ARE CONCENTRATED TOWARDS THE REDUCTION OF ENERGY CONSUMPTION AND USE OF MORE EFFICIENT

TECHNOLOGIES AND PRACTICES WITH LOWER IMPACT ON LOGISTIC SYSTEMS AND CONSTRUCTIONS.

Commitments: to be supplied 100% by renewable energy; reducing greenhouse gas emission by 20% in all stores, clubs and dcs until the end of 2012; to project and open a store that is 25%-30% more efficient and whose greenhouse

gas emission is 30% lower by the end of 2009.

WASTE

FOCUSED ON MANAGEMENT IMPROVEMENT, WITH THE REDUCTION OF RAW MATERIAL

CONSUMPTION, REUSE AND RECYCLING OF MATERIALS AND CORRECT FINAL DESTINATION OF DISPOSABLE MATERIAL.

Commitments: reduce packaging by 5% by 2013; generate zero waste to landfills; reduce the consumption of plastic bags by 50% until 2013.

PRODUCTS

THE COMPANY HAS BEEN WORKING WITH ITS SUPPLIERS TO CONSIDER THE ENVIRONMENTAL AND SOCIAL CHARACTERISTICS

OF THE PRODUCTS, EVALUATING THE PRODUCTION AND TRANSPORTATION PROCESSES.

Commitments: increasing the number of products with a differential in sustainability offered for sale in stores; reducing by 70% the phosphate in kitchen and laundry detergents by 2013; offering laundry products at least 2x more

concentrated by 2012 (clothes detergents and softeners).

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Commitments with the future

We must understand Brazil’s role in building a sustainable and shared future for the world. To what extent, this country with enormous cultural and environmental diversity can contribute to the development of economic models having as basis the ethics in value chains relations and respect for the bounds set by the environment.

Working for the introduction of this new economy means more than supporting the improvement of life quality. It means to extend the scope of modern society values and benefits to an important share of mankind that is still destitute of exercising its rights in a global fair society.

In order to support the current generation’s journey towards a fair and sustainable economy, Wal-Mart Brazil endeavors to make commitments to change processes and our way of interacting with the world. Our current knowledge about the impacts of human activity on the planet can no longer be ignored. To recognize them and acting to minimize them is a solidarity pact with future generations, which have also the right to live with quality and happiness.

Wal-Mart Brazil observes the characteristics of this continental country and works hard to offer an example of ethical and responsible behavior towards its natural resources. Therefore, we are heading for governance commitments and innovations in the value chain that will warrant the sustainability of actions in relation to the Amazon and the change of operations by means of a permanent engagement with ambitious social and environmental goals.

This publication – Wal-Mart Brazil Sustainability Dialogues – results from a comprehensive work performed by Wal-Mart Brazil jointly with its stakeholders, in order to maintain a dialogue on the impact of economic activities, the role of each social and economic player and the environmental bounds currently recognized by the most advanced studies.

By doing so, we expect to expand the understanding of the social- environmental reality, as well as, contribute to the necessary innovation in the offer of ways and solutions to help making the future a promising place for life in Earth.

Héctor Núñez President and CEO, Wal-Mart Brazil

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Building sustainable businesses

The Wal-Mart Brazil Dialogues Program is part of our effort to inte-grate all our actions into the global strategy of building a company with sustainable businesses. Sustainable businesses require a supply chain that is also oriented to environmentally correct, socially fair and economically viable activities.

In the second quarter of 2009 we conducted a series of meetings with suppliers, specialists, representatives from civil society, gover-nment, non-governmental organizations and institutions, with the objective of raising subsidies to make up a set of practices that will help us to design the Supply Chain of the Future.

We drew up three sector reports – Amazon, Packaging and Produc-tive Chains – they served as grounds to the three events with the participation of specialists and three workshops that enabled the interactive interchange of ideas and proposals with dozens of our stakeholders’ representatives.

The discussions held during these meetings and workshops in Bra-sília and São Paulo were very important to evaluate the different views and contributions and as of them, to prepare and submit the renewal of our sustainability public commitments with our supply chain and with the company as a whole.

You will find in this document the contents of the Amazon report and some initiatives already taken by Wal-Mart Brazil towards the improvement of a business model that will continue to offer the lo-west price, so that our customers can always enjoy a better life.

And a better life – we believe – is not possible without sustainability.

Daniela de Fiori Vice-President, Corporate Affairs and Sustainability, Wal-Mart Brazil

6Pages 6 and 7: Shutterstock Image Bank Page 11: Photo fromthe LBA / INPE Program collection - Paulo Artaxo

SUMMARY

1. Brazilian Amazon 1.1 Biological diversity 1.1.2 The Ocean River 1.2 Social-cultural diversity 1.3 Social-economic scenario 1.3.1 Brazilian Amazon indicators

2. Amazon Challenges Today 2.1 Illegal land appropriation 2.2 Clandestine roads 2.3 Deforestation 2.4 Predatory productive chains 2.4.1 Timber 2.4.2 Cattle ranching 2.4.3 Soybean

3. Government Strategic Actions 3.1 Sustainable Amazon Plan 3.1.1 Amazon deforestation prevention and control plan 3.1.1.1 Monitoring and inspection 3.1.1.2 Protected areas 3.1.1.3 Land zoning / zee 3.2 Land legalization 3.3 Growth acceleration plan in Amazon (gap) 3.4 Amazon fund 3.5 Climatic change national plan

4. Amazon and Global Climate 4.1 Water cycle 4.2 cCarbon cycle 4.3 Fire

5. The Value of the Standing Forest 5.1 Environmental services

6. Opportunities for Sustainable Development 6.1 Forest economy 6.2 Responsible actions taken by private initiative 6.3 Sustainable connections – productive chains and consumers

7. Wal-Mart and The Amazon 7.1 Sustainable Amazon forum 7.2 Sustainable cattle ranching workforce 7.3Amapáflora:theoryintopractice

ACKNOWLEDGEMENTS

The editors of this Report express their thanks to all sources contacted, specially to Adalberto Veríssimo, Imazon - Instituto do Homem e Meio Ambiente da Amazônia; Adriana Ramos, ISA - Instituto Socioambiental; Eugenio Scannavino Netto, Health and Joy Project / Amazônia Brasil; João Meirelles, Peabiru Institute; Paulo Artaxo, photographer; Paulo Vitale, photographer; Ricardo Young, Instituto Ethos de Empresas e Responsabilidade Social; Ministry of Environment and IBAMA – Brazilian Institute of Environment and Natural Resources.

PRESENTATION

The Amazon is the most biodiverse region in the world. It is present in 9 countries and in Brazil, the biome concentrates 5.1 million sq.km. of rainforests and transition ecosystems. In view of its geographic coverage and due to its biodiverse characteristic, the region has today a fundamental importance in international forums as a global protagonist, considering that it represents an enormous stock of carbon and contributes to the regulation of ecosystems and climatic and hydric regimes. In this sense, the preservation of the extensive areas of rainforest is considered one of the vertices of the Earth natural balance and of the continuity of life on it.

In the last 30 years, the events of forest destruction in Brazil became worldwide notorious, in view of the global greenhouse gas emissions (carbon gas, methane, nitrous oxide). In this context, the Amazon stands out as a potential villain of the global warming, both due to deforestation and to ground-clearing fire. This scenario places Brazil in the 4th position in the rank of countries that most contribute to climatic changes. From 1997 to 2006, the intentional ground-clearing fires in The Amazon accounted for 32% of greenhouse gas emissions related to rainforests.

The Amazon acts also on the preservation and regulation of the pluvial systems that influences the economy and well-being of the Latin American South and Southeast regions, going up to interfere with the North Hemisphere climatic cycles, influencing the water temperatures in Central America and in the Gulf of Mexico.

In addition, the standing Amazon forest supplies the so called “environmental services”, that can be translated into benefits to Brazil and other Latin American countries. Its unmatched biodiversity is a still unexplored and unknown potential to the science, which permits to reinvent the regional economy, supported by ecomarkets and with positive results for Brazil as a whole.

The integrated planning is one of the current challenges to be faced by the Amazon forest and contemplates the tripod of sustainability (economic feasibility, environmental safety and social justice). Thus, Wal-Mart Brazil wants to get better acquainted with the Amazon, because it believes that it is only based on solid grounds of information and dialogue with representatives from government, civil society, institutions and specialists on the subject, that it will be possible to develop actions to promote the forest preservation and the responsible sustainable use of its resources.

This report represents the first step towards an ample dialogue that will lead to the setting up of entrepreneurial commitments based on environmental safety criteria and social responsibility in actions having a direct relation with the region or that are connected to it via production and consumption chains. These commitments are in line with a joint action of the government, companies and civil society, having as assumptions the land ordering and legality, in order to permit the existence of a safe environment to attract investments that will lead to the Amazon sustainable development.

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One of the biggest tropical trees in the world, the Sumaúma, is commonly found in periodically flooded forests alongside the Amazon Rivers.

Photo from the Ministry of Environment collection

The Amazon – Global Protagonism

THE AMAZON IS A FACTOR OF GLOBAL PROTAGONISM FOR BRAZIL. IT IS THE LARGEST RAINFOREST IN THE WORLD, FUNDA-MENTALLY IMPORTANT FOR THE EARTH CLIMATIC REGULATION AND A GREAT POTENTIAL FOR THE DEVELOPMENT OF A FOR-EST ECONOMY, BASED ON BIOTECHNOLOGY AND BIOMASSES. THE CHALLENGES OF ITS PRESERVATION AND THE RESPON-SIBLE USE OF ITS RESOURCES PLACE THE COUNTRY AT THE CENTER OF THE INTERNATIONAL ATTENTION.

THE AMAZON’S SUSTAINABLE DEVELOPMENT IS DIRECTLY RELATED TO THE ECONOMIC MODEL TO BE LOCALLY ADOPTED AND TO HOW THE USE OF ITS RESOURCES BY VECTORS IN OTHER BRAZILIAN REGIONS OR IN THE WORLD WILL OCCUR. TO WAR-RANT THAT THE AMAZON WILL SURVIVE THIS GENERATION AND WILL CONTINUE TO OFFER ITS RICHNESS TO MANKIND, IT IS NECESSARY TO ENSURE GOVERNMENT, CIVIL SOCIETY AND COMPANY COMMITMENTS.

REGARDLESS THE FACT THAT THE AMAZON “BRAND” IS ONE OF THE BEST KNOWN IN THE WORLD, THE REALITY OF ITS POPU-LATIONS, THE CONDITION OF ITS FORESTS AND ITS STRATEGIC IMPORTANCE FOR THE SUSTAINED DEVELOPMENT ARE STILL UNKNOWN. OVER 25 MILLION PEOPLE LIVE IN THE AREA, IN BIG CITIES LIKE MANAUS, BELEM AND SCATTERED ALL OVER TRADITIONAL, INDIGENOUS, RIVERSIDE COMMUNITIES. THE SOLUTIONS FOR THE AMAZON’S SUSTAINABLE DEVELOPMENT SHOULD GO BEYOND THE PRESERVATION OF THE ECOSYSTEM AND CONSIDER, FOR INSTANCE, BETTER LIFE CONDITIONS FOR THE POPULATIONS, THEIR ACCESS TO HEALTH, EDUCATION AND FAIR WORK.

WE HEAR A LOT ABOUT DEFORESTATION IN THE REGION, BUT VERY LITTLE ABOUT ITS PEOPLE, HISTORY AND ECONOMY. THE OUTLOOK SUBMITTED HEREIN INTENDS TO INDICATE THE AMAZON’S PROBLEMS AND DILEMMAS, AS WELL AS, SOME ALREADY TESTED SOLUTIONS. THE PROPOSAL IS TO LOOK FOR DEVELOPMENT BASED ON THE TRIPOD OF SUSTAINABILITY, PROMOTING ECONOMIC FEASIBILITY IN THE REGION WITH ENVIRONMENTAL SAFETY AND SOCIAL JUSTICE.

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In Brazil, with the addition of transition ecosystems surrounding the rainforest territory, the area concen-trates 5.1 million sq.km, or nearly 60% of the country.

The administrative Brazilian Amazon (established in 1953 by the Brazilian Federal Constitution) is called Legal Amazon and comprises nine states: Acre, Ron-donia, Amazonas, Roraima, Para, Amapa and To-cantins, besides the western part of Maranhão and northern part of Mato Grosso.

GEOLOGICAL PROFILE

About 420 million years ago, the Amazon plain was covered by sea water and formed a gulf that drained into the Pacific Ocean. The Andes mountain range did not exist. South America and Africa were a single con-tinent. In the following 150 million years the rivers be-gan to excavate their beds and flow from east to west, draining into the Pacific Ocean. Seventy million years ago, the Andes range rose up and blocked the water flow to the west. The accumulated water formed lakes and swamps and originated the current Amazon River that flows from west to east and drains into the At-lantic Ocean.

1.1 BIOLOGICAL DIVERSITY

The Amazon, the largest rainforest in the world, is an enormous stock of biodiversity of the world – many of the innumerable animal and vegetal species are still unknown to mankind.

According to estimates, the largest continuous area of rainforest concentrates around 40% to 50% of the biological diversity existing on earth, consider-ing the animal and vegetal species existing in the Brazilian Amazon.

The Brazilian Institute of Geography and Statistics (IBGE) identifies in the Brazilian biome 70 species of plant life that have not been altered by man, besides six already altered species. There are seven forest groups depending on climate, geological forma-tion, relief and hydrography in order to exist: nearly

1. The Brazilian Amazon

The Brazilian Amazon encompasses 3.6 million sq.km. of the Amazon biome; the region includes a territory belonging to nine Latin American countries (6,900,000 sq.km.), representing 59% of the territo-ry that stretches from the Andean mountain range, in the West to the Atlantic Ocean, in the East. The biome advances into Brazil, Bolivia, Colombia, Ecua-dor, Guyana, French Guyana (France), Peru, Suriname and Venezuela.

BRASIL

GUIANA

SURINAME

GUIANAFRANCESA

COLÔMBIA

VENEZUELA

PERU

BOLÍVIA

Countries’bordersAmazon Biome

SOUTH AMERICAN AMAZON BIOMESources: WWF - Brazil and IBAMA

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services similar to that of buses and trucks, and the access to communities and cities can be made only by waterways2. The Amazon rivers account for 20% of the world’s surface freshwater reserves3. The whole basin pro-duces 20 billion daily tons of water vapor, which reg-ulates the atmospheric moisture, the South Ameri-can winds and the earth’s climate.

1.2 SOCIAL-CULTURAL DIVERSITY

The region is still a green vastness inhabited by ap-proximately 25 million people (20.3 million people and 12% of the Brazilian population, according to the 2000 census) of the most varied ethnic and cultural origins. They live in big cities like Manaus and Belem and small villages along the river banks. The urban Amazon concentrates 768 cities and is home to 70% of the population.

84% are non-flooded forests, encompassing 96% of the Amazon (4% are permanently flooded lands, or flooded according to seasons).

There are more species of trees in a hectare of Ama-zon forest, than in the whole European and North American territories together1.

The annual cycles of floods (Winter) and drainages (Summer) set the rhythm for the natural life, either in swamps, periodically flooded lands, permanently flooded lands, non-flooded forests or in areas of tran-sition to the Savanna, Caatinga and Semi-arid lands.

UNKNOWN DIVERSITY

International researchers believe that only 10% of the Brazilian Amazon species are scientifically known. There are regions where men have never set foot. Ac-cording to estimates, the territory contains about 25% of the plant and animal species already catalogued; there are 30 thousand known species of plants; 300 edible fruits surveyed; 1,200 species of birds and 324 species of mammals identified.

1.1.2 The Ocean RiverThe first European expedition to the Amazon River in 1539 was commanded by the Spanish explorer Francisco Orellana. On their arrival, Orellana and his men ran into a tribe of fierce warrior women who were very fair and tall, with very long hair braided and wound about their heads. They were very skilled with bows and arrows. The voyage was chronicled by Friar Gaspar de Carvajal, who referred to the water flow as the “river of the Amazons”, after the Greek mythology warrior women.

The Amazon River basin, which accounts for one-fourth of the world’s freshwater, used to be a lake related to the Pacific Ocean million of years ago. To-day, it forms the largest hydrographic basin in the world, with over 7 thousand tributaries draining an area that covers 584.6 million hectares in Latin America. With its 25 thousand navigable kilometers, the rivers stands for the Amazon roads – over one thousand vessels of all kinds operate transportation

Storm in the Amazon rainforest

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The remaining 30% of the population live in rural areas, out of which, approximately 3 million people inhabit forest communities – it is in the “traditional communities” that the caboclos and ribeirinhos, be-sides indigenous peoples are concentrated. Only 200 thousand people out of this population are indige-nous (55.9% of Brazilian Indians). In spite of the Por-tuguese language hegemony, 180 native languages still survive and are spoken by nearly 180 indigenous peoples4. Last but not least, the Amazon has been in-habited for over 12 thousand years: we must preserve it, not in order to isolate it, but to study and develop it under a totally different outlook.

1.3 SOCIAL-ECONOMIC SCENARIO

1.3.1 Brazilian Amazon indicatorsThe Amazon’s importance in economic terms can not be estimated only by its indicators - when compared to the Brazilian Southern and Southeastern regions, the Amazon represents 8% of the GDP. However, its natural resources sustain large productive chains, such as, cattle ranching, timber, soybean and min-ing, corresponding to 70% of the national GDP5. The Amazon detains 50% of the electric potential of the country, whose passive demand is around 5% - in this sector, the sustainable dialogue should include the economic opportunities for the region, without caus-ing any harm to the environment and the population.

In fact, from 2000 to 2004, there was an average 6% per year GDP growth in the area, totaling R$ 137.9 billion. In 2005, the Legal Amazon produced a GDP of nearly R$ 170 billion. But 50% of these amounts are due to industrial goods produced in the Manaus Free Trade Zone6. Nevertheless, the GDP per capita amounts to R$ 7,161.20 – 40% to 61.5% lower than the Brazilian GDP as of the year 2000 – 85% of the inhabitants have never had a formal job (21% of the economically active population in 2004), and 30 people living in traditional communities do not have enough food to survive7.

DATA ON PRODUCTIVE CHAINS AND EMPLOYMENT GENERATED IN THE AMAZON, IN RELATION TO NATIONAL PRODUCTION.

Source: IPEA

8,3%

20,07%

1970 2006

AGRICULTURAL & CATTLE RANCHING PRODUCTION

7,4%

24,5%

1970 2006

GRAIN PRODUCTION

16,1%

35,8%

1970 2006

LIVESTOCK

14,1% 17,5%

INDIVIDUALS INVOLVED

1970 2006

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thousand sq.km. of invaded land (illegally occupied, without deeds). This means that 96% of the occu-pied land9 is not recognized by the National Institute of Colonization and Agrarian Reform (INCRA); which includes both public and privately-owned lands. Of these, 420 thousand sq.km.10 are publicly-owned lands (state and federal properties) in a precarious ownership situation – one-fourth of the 3.8 million sq.km.of the occupied area of the Amazon Basin is in Brazil.

Among the privately-owned properties, those mea-suring over 500 hectares (each hectare almost the size of a soccer field) make up 53% of the total area (158 million hectares), in spite of making up only 11% of the owners who do not possess the definitive title-deed, 158 million hectares.

2. The Amazon Challenges Today

2.1 ILLEGAL LAND APPROPRIATION

The vocabulary of the history of the occupation of the Amazon includes not only “big owners”, but also squatters, land invaders and unclaimed lands. The agrarian crime occurs with the introduction of hard wood exploitation by large illegal businesses in unoc-cupied public or private lands. Deforested lands clear grounds for cattle grazing, a very common procedure in the area. This continuous predatory exploitation has been practiced systematically since the ‘70s.

According to the Ministry of Agrarian Development, the Legal Amazon8 concentrates approximately 700

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2.2 CLANDESTINE ROADS

In the Amazon development model, roads displaced settlement axes that originally followed the rivers and attracted the populations, thus leading to an intense urbanization of the region. In the early ‘90s, urbaniza-tion exceeded the landmark of 50% of the region’s population and the waves of migrations between re-gions were intensified. The roads became necessary for the forest peoples’ mobility and for trade.

The main problem of the communication axes by land lies in clandestine roads, which are illegally ex-ploited accesses to natural resources. Through them, it is possible to flow off the predatory production of illegally collected timber. The non-authorized roads are the first phase of the forest’s irregular occupa-

The lack of governance and the disorganized exploi-tation were responsible for another disorder: the agrarian disorder. The precarious legalization of the Amazon lands generates the overlapping of territo-ries with uses that can not be conciliated or that have several owners, thus allowing for land invasions. The absence of a legitimate authority is not solely restricted to land registration, but it translates also into lack of safety and justice for the population – the conflicts over land use lead to homicides. In ad-dition to the explicit and armed violence, the slave labor and many times the use of child labor are other plagues that emerge where the forest has been de-stroyed. Furthermore, basic health and education services are precarious.

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The “fishbone effect” occurs with the opening of by-roads, which are generally clandestine too. This is one of the main threats to the untouched forest. 11

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FEDERAL ROADSOPEN NEW WAYS

In the case of the BR-163 (Cuiaba-Santarem) highway, the Federal Government proposed a regional plan to minimize its impact upon the surrounding areas. Six-teen million hectares of protected areas and commu-nity support programs were created. The government executive committee and the plan’s forum with com-munity participation have been in place since 2008.

tion, commonly initiated by timber extractivists, who open narrow trails in the forest in search of hard wood. Two thirds of the Brazilian Amazon’s defores-tation occurs in the neighborhood of these trails and in their successive ramifications that open new ways of occupation. It is the fishbone effect.

Research work disclosed by the Amazon Institute of Man and Environment (IMAZON) in early 2007 identified the existence of 173,000 kilometers of clandestine roadways inside the Brazilian Amazon. Invaders build roads under tall trees to conceal them from satellites. Many illicit actions occur also during rainy seasons, when the clouds reduce the clearness of the images.

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THE DEFORESTATION ARC

The so-called “deforestation front”, originating in the Southern, Southeastern and Mid-Western regions of the country, resulting from attle raising and soybean plantations has, over the past 30 years, created a pres-sure rim over the forest. The arc-shaped rim, which stretches along The southern and eastern borders of the Amazon region, is the “deforestation arc”.

DEFORESTATION EVOLUTION DURING THE FIRST DECADE OF THE YEAR 2000

Yearly average, in sq.km, of destroyed forest in theLegal Amazon region.

83% of biome still preserved55% with old growth forest and 28% under immediate pressure.

18.226 18.16521.238

25.282

27.379

18.759

14.039

11.224

1999

/200

0

2000

/200

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2001

/200

2

2002

/200

3

2003

/200

4

2004

/200

5

2005

/200

6

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/200

7

2007

/200

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Map showing fire sources within the deforestation arc.A study dated April, 2009 estimates that ground-clearing

fires make a 19% contribution towards global warming.

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Certified wood brings sustainable wealth

2.3 DEFORESTATION

One of the main problems of the Amazon is its annual deforestation rate – as of the year 2000, the defores-tation rate has remained between 10 and 20 sq.km. per year, due mainly to the advance of cattle raising and soybean fields towards the region. In the 90’s, the deforestation rate reached 27 thousand sq.km. Therefore, the search for a new development model for the Amazon region must combine social responsi-bility and environmental protection, allowing for the non-predatory exploitation of the forest’s resources. It is through inspection policies and incentives to the forest production with environmentally certified ori-gin, that society – and consumers – may see a way out for the Amazon region and for the country.

Deforestation in the Brazilian Amazon region has been reaching high levels since 1970, and the past two decades registered the highest rate of land clear-ing. Currently, some 20% of the land has been defor-ested. The biome (boasting some 4 million sq.km. in area), has been affected by almost 17%, or an area equivalent to nearly 700 thousand sq.km. (similar to the area of France and Spain together). If we consider the 2006 Imazon survey, we will have a more worry-ing scenario: if we add the area under human occu-pation, more than 40% of the Brazilian rainforest is under serious risk!

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2.4.1. WoodThe Brazilian Amazon is today the main rainforest wood production center in the world. In the forest, out of the more than 5 thousand species of existing trees only some 350 are used for commercial pur-poses. Each year, 10 million trees are felled; 70% are cut down illegally, and out of the remaining 30% –for which official authorization is obtained – a mere 3% are taken from certified areas, that is, from areas where the timber is cut down according to interna-tionally determined rules.

The international market uses wood for civil cons-truction and other necessities of every day life. The main consumer markets in Brazil, Europe, Asia and the United States prefer less than 30 species of wood, which represent 80% of the lumber market.

2.4 PREDATORY PRODUCTION CHAIN

The first stage of the deforestation cycle begins with the opening of trails used for the cutting of hard timber, which is followed by irregular occupation of the land; once the forest cover is destroyed, the land becomes pasture land and is subsequently used for monocultures.

In short: the parceling of the territory through illegal and predatory occupation has its origin in historical settlings, introduced in the early 70’s. The defores-tation cycle follows the order of illegal exploitation of rainforest hard wood, intensive cattle-raising and mechanized soy crops on vast expansions of land.

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cut without authorization from the Convention on International Trade of Endangered Species (CITES). The inspection authorities not only seize what is endangered, but take care of all the species leaving illegally. The low cost of these illegal practices causes illegal lumber companies to proliferate – according to data from Imazon, there are more than 3 thousand timber mills in the region, mostly of which are illegal.

In the timber mills of the region, with no technol-ogy nor trained staff, the wood waste reaches 50%. Timber companies often used the same authoriza-tion for one plot to exploit several areas, and until recently they used to fake bills of shipment – in 2007 the authorization and shipment bills were inserted in an electronic system in order to curb the use of il-legal papers.

Most of the Amazon wood remains in Brazil itself – in 2001, Brazil kept 86% of the marketed logs. São Paulo demands 20% and 25% of this national consumption. In 2001, the State purchased 6.1 million cubic meters in logs12.

More recent figures show that, in 2004, 24.5 millions of cubic meters of logs (or 6.2 million trees). Of these, 64% were consumed locally; 36% were exported. In this same year, exports generated US$ 943 million (US$ 381 million in 1998) and only 379 thousand jobs (against 359 thousand in 1998), hiring 5% of the eco-nomically active population13.

The tropical species from the native forests have great value. Mahogany is one of the most popular species and because it risks extinction, may not be

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2.4.3 SoybeanSince the late 1990’s, soy has been changing the settlement model in the transition area between the plains and tropical forests. Currently, the agribusi-ness reaches the heart of the woodland area, with extensive farming areas that completely eliminate the plant coverage. Such deforestation causes seri-ous climate changes, unbalances the rain regime and silts up the rivers. Additionally, farming can generate contamination by pesticides.

The plantation expansion with mechanized farming creates few jobs. The advance of soy production in the Amazon results in income concentration – this activity in the region is for medium and large land-owners, which requires high technology. Soy affects the price of food, and takes over family farming ar-eas – exit the beans, enter the soybeans16

2.5 SOCIAL CONFLICTS

Deforestation affects not only trees and animals, but also the communities living there. After the green areas of the villages are removed, slums are cre-ated, which increases violence, illegal occupation of public land and human poverty. The cycle is endless, because the commodities market encourages the de-forestation of new areas.

Normally, after a predatory economic development boom, with fast profit, there is a sudden decline in the economic and social indicators of the region. The deforestation areas are abandoned when the soil fertility is exhausted after the forest that pro-tects it is cut down. Instead of green, social economic degradation grows: it is the “collapse”. The “boom-collapse” effects was described in the study by Adal-berto Veríssimo, of Imazon, and evidences that the local development indicators in deforested zones do not bring about any meaningful improvement in as-pects such as poverty or other investments. Much to the contrary, a land disorder and the breaking apart of the social tissue take place. This economic model does not sustain one single generation with wealth production and jobs, the study confirms.

2.4.2 Cattle raisingCattle-raising is responsible for two thirds of the bi-ome deforestation in the Amazon Region, or nearly 650 thousand sq. km. – pastures account for “77% of the area converted for economic use14. In less than 30 years, the size of the herd in the Legal Amazon region increased from 1 million to almost 65 million heads of cattle. Today there are 4 heads of cattle for each inhabitant of the Amazon region.

Cattle-raising in vast pastures with low productivity (0.7 heads/ hectare) accounted for 33% of the Brazil-ian herd in 2003 (22% in 1990). There was an 140% in-crease between 1990 and 2003, mainly in the States of Amapá (17.5%), Acre (12.1%), Roraima (10.5%) and Maranhão (8.8%). On the other hand, in the Federal District (-10,8%), Rio Grande do Sul (-2,9%) and São Paulo (-2,5%) husbandry decreased15.

Beef consumption increased fourfold between 1972 and 1997. The best part of this still is for domestic consumption: 83% of the cattle raised in the North is for consumption in Northeastern, Southeastern and Southern Brazil, and some 13% remains in the Ama-zon region. In 1996, the IBGE reported that 59% of the Brazilian herd found in the Northern region is in the hands of large landowners (more than 500 hect-ares). Small cattle raisers represent 41% of farmers and are concentrated in settlement areas in the de-forestation arc zone and move to pioneer frontiers, where the land is cheaper.

In the cattle raising industry, a 5-thousand hect-are area employs ten workers. Overall, there are 118 thousand direct jobs in the sector (data from Ima-zon), that account for 0.02% of Brazil’s GNP (data from Instituto Peabiru). Under this viewpoint, the business is not at all profitable and, in the Amazon region, investments yield only 4.6% per year. As to forestry, the same area would hire 230 workers and the return on investment would be 33% higher, on average. According to researcher, João Meirelles, the numbers do not reflect the situation, if one takes into account the environmental losses resulting from ground-clearing fires, biodiversity loss, water pollution, etc.

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presented both violations: deforestation and use of slave labor. The irregularities occur in areas with a historical land, social and economic conflict – of the seven cities listed in March, 2009 as priorities for environmental control, the six first have already recorded enslaved persons: Marabá, Pacajá, Itupiranga, Tailândia (PA), Feliz Natal (MT), Amarante do Maranhão (MA) and Mucajaí (RR).

3. Strategic Actions by Government

With international support, new national public poli-cies have taken into consideration a stabilized popu-lation growth and the emergence of a forest econ-omy in the remaining 80% which is still preserved, grounded on environmental services and markets for products stemming from the sustainable han-dling of forest resources. One of the challenges in current times is the integrated planning of this tran-sition. The law on land closes the cycle on the protec-tion and sustainable development expected for the Amazon region, which began with the implementa-tion of the policy on creation of Conservation Units [Unidades de Conservação], satellite monitoring and the tracking of the 20% limit for the tree felling in private areas.

The study “Lessons for the disclosure of the list of environmental violators in Brazil”[“Lições para divul-gação da lista de infratores ambientais no Brasil”], prepared by Imazon reveals “positive aspects in the public and private spheres” in the full disclosure of the list of environmental crimes and the administra-tive sanctions applied. The identification of produc-tive chains linked to slave labor and the integration of “black lists” with the blocking of access to credit and public funding proposes nothing more than the fulfillment of the legal precepts.

Under the Amazon sustainability standpoint this glob-al and integrated view is necessary for investments in infrastructure works or major forestry business.

During 2006, a group of entities working in the Am-azon completed the Legal Amazon Social Conflicts Map. The survey identified 675 conflict points which take into account the cross data from INPE (Instituto Nacional de Pesquisas Espaciais) [Brazil’s National In-stitute for Space Research], IBGE (Instituto Brasileiro de Geografia e Estatística) [Brazilian Institute of Ge-ography and Statistics], of the Labor Ministry and of the CPT(Comissão Pastoral da Terra) [Pastoral Com-mission on Land].. Murders and land conflicts hap-pen by invasion of community reserves during the deforestation expansion or by illegal occupation of land owned by the government or individuals which lack property documents registered with Incra. The conflict map coincides with the deforestation arc, and is always ahead of the farming development range. The Ministry of Justice mapped the violence in the several municipalities (Municipalities Violence Map17), which revealed that 556 Brazilian municipali-ties (some 10% of the total municipalities) concen-trate 73.3% of the homicides.

Sixty-one out of the 100 municipalities with the highest deforestation rate in the Brazilian Amazon are also among those with the highest homicide rates in Brazil. In 2007, the cities with the highest average rate, namely more than 100 homicides for each group of 100 thousand inhabitants, were Coro-nel Sapucaia (MS), Colniza (MT), Itanhangá (MT) and Serra (ES), respectively. This year, these cities left the traditional violence champion, São Félix do Xingu, in the state of Pará behind them.

A survey carried out by the agency, Repórter Brasil, and based on data from the Labor and Employment Ministry (MTE) and Environment Ministry (MMA) in-dicates that 74% of the municipalities with the high-est deforestation rate in the Amazon were already caught using slave labor. The index summarizes the crossing of data collected by the Mobile Slave Labor Group (Grupo Móvel de Trabalho Escravo) of the Ministry of Labor18, during inspections, and the defor-estation “black list”, which comprises places with the highest rates of deforestation and which are liable for 55% of the destruction of the Amazon biome19. In 2009, the first governmental update increased the number of cities listed from 36 to 43. Thirty-two of these municipalities in the Legal Amazon region,

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3.1.1.1 Monitoring and InspectionoThe Amazon Forest Satellite Monitoring Program (Prodes), started in 1988, uses images with a space resolution of 20 to 30 meters for a detailed analysis of the deforestation trends in the Brazilian Amazon. Launched in 2004, the Real Time Deforestation Detec-tion System (Deter) uses images with a resolution of 250 meters: less precise, it supplies day-to-day data.

The integrated tools allow quick in-site actions and an estimate of the trends which are subsequently detailed by Prodes. The system enabled a reversion in the increasing deforestation rates.

3.1.1.2 Protected AreasThrough Law # 9.985 enforced in 2000, Brazil estab-lished the Nature Conservation Units System (SNUC), which was enacted by Decree # 4.340, enforced 2002. The law fulfilled article 225 of the Federal Con-stitution. Between 2003 and the end of 2007, Brazil doubled the number of federal environmental con-servation units, which totaled 100 thousand sq.km. (20% of the Brazilian Amazon), if we consider the units created by the federal government (60 thou-sand sq.km.) and those of the state governments. The target of the Ministry for the Environment is to reach 90 thousand sq.km. by 2010; this target is in the center of the structural environmental reform.

According to warnings issued by the National Rubber Tree Council at the second Meeting of Forest People, which took place in September, 2007 in Brazil - 20 years after the first meeting, which was held in the

3.1 THE SUSTAINABLE AMAZON PLAN (PAS)

The creation of the Sustainable Amazon Plan was instrumental in the drop in deforestation during the first term of the Lula government. The PAS stands on four themes:

1) territorial regulation and environmental manage-ment;

2) sustained production, with innovation and com-petitiveness;

3) infrastructure for sustained development; and4) social inclusion and citizenship.

In order to accomplish its purposes and targets, the PAS has, as its major ally, the Amazon Deforestation Prevention and Control Plan [Plano de Ação de Pre-venção e Controle do Desmatamento na Amazônia].

3.1.1 Amazon Deforestation Prevention and Control PlanLinked to the Brazilan President’s Office and involv-ing 11 ministries and the state governments, the Am-azon DPCP (PAC) has, since 2004, been implementing strategic actions and working towards enforcement of the law against illegal deforestation through-out the region. The target in its second phase – as of 2008 – is to reach zero illegal deforestation using economic and funding tools.

The actions in strategic areas are comprised of remote satellite environmental monitoring, inspection of the territory, fire and deforestation prevention of seizures, besides incentives for sustainable production.

Although deforestation has advanced in the past 30 years, the period between 2004 and 2007 received special attention on the part of the federal govern-ment, and the measures implemented by the Minis-try for the Environment, with the participation of the community, resulted in a deforestation reduction rate of 59% over three years, which is half the aver-age rate of 23 thousand sq.km. existing since 198820.

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3.2 LAND REGULARIZATION

The Amazon will hardly develop if there is no safety and peace in the area. The federal investments on development, energy and biofuels also depend on the land regularization. Without the regularization, it is not possible to carry out plans against defores-tation and consequent effects for the benefit of the climate and the environmental services.

For agents of the social and environmental move-ments in the region, the territorial regulation must take place even before investments are made in health and education. Regularization is, for example, a priority where the paving of the BR-163 (Cuiabá-Santarém) highway is concerned. The sustainable management plan for the works provided for in the PAC – Growth Acceleration Plan calls for environ-mental licenses from Ibama – Brazilian Institute for the Environment and Renewable Natural Resources. This phase is difficult to overcome without identify-ing properties and settling communities living in the area. The work is estimated at $ 1.5 billion.

As of 2003, the Incra – the Brazilian National Insti-tute for Colonization and Agrarian Reform – who is in charge of this complex duty, has been developing a geo reference policy on the publicly-owned land plots – priority to small (up to100 hectares) and me-dium (100 to 500 hectares) plots, which involve indi-viduals. The Public Forest Management Law requires that everything be “crystal clear” before granting the sustainable use to individuals or companies. Thus, the government regains possession of the so called “public vacant land” that had been illegally occupied and was, so far, “no man’s land”.

For the legalization of land and property ownership titles, the land must conform to the environmental-economic zoning rules. In order for the Incra to ascer-tain that the speed of the process is kept in line with the law, which is not limited to the ownership title – an integrated policy is required to be implemented among the various governmental areas.

year of the death of the rubber tree workers’ leader, Chico Mendes, for the Conservation Units to actually become effective, it will be necessary to inspect and prevent the invasion of these areas by farming and cattle-raising businesses. For the forest people, the units must receive federal investments for the land regularization, and the management system must be shared with the rubber tree extraction communi-ties living there.

3.1.1.3 Territorial Zoning in the AmazonThe Environmental-Economic Zoning (ZEE) is the guideline for the planning of the Amazon and the maps which resulted from the work of several pro-fessionals and institutions currently have a norma-tive function. According to its definition by the IBGE, the environmental-economic zoning maps are im-portant because they identify and indicate “alterna-tive sustainable use of natural resources and use of economic and social potential of the Amazon, and respects its cultural and regional diversity”.

The construction of legal tools for the ZEE imple-mentation and social consensus on the subject are required for the multiplication of regional sustain-able development plans. In the case of road opening or infrastructure works, which create deforestation strips, ZEE even included the creation of Conserva-tion Units, protection of Indigenous lands, inspection and development of sustainable activities through territorial management tools used by different sec-tors of the federal and state governments. The En-vironmental Strips, or large expansions of land with priority ecosystem, prevent or reduce the forest frag-mentation to ensure survival of the biodiversity of the species.

The full map shows the Legal Amazon territory di-vision in areas, with a defined productive structure or one to be defined; areas that must be recovered and/or reorganized; fragile areas; areas with forest handling; and areas with existing or proposed envi-ronmental protection. It is also used as the basis for a more ambitious project: the Environmental-Eco-nomic Macrozoning [Macrozoneamento Ecológico-Econômico].

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the past decade. Each year, an independent commis-sion calculates the quantity of carbon that was not emitted into the atmosphere, at a value of US$ 5 per avoided ton. The calculation is of 100 tons of carbon per hectare of forest.

The Fund received the first installment of resources in March, 2009. US$ 100 million, donated by the Nor-wegian government and transferred to the Amazon Fund, are the first installment of the Norwegian do-nation, which will reach US$ 1 billion by year 2015. The fund, which has no expected return, will finance initiatives such as forest handling, forest manage-ment, environmental control and inspection actions, restoration of deforested areas and payment of envi-ronmental services.

The fund will be managed by the Brazilian Develop-ment Bank (BNDES), and transferred to non govern-ment organization (NGOs), companies, traditional communities and government agencies which may request the funds.

Besides Norway, Germany is expected to donate an additional 18 million Euros. The Environment Minis-try informed that 20% of the Fund will be destined to inspect and control deforestation.

3.5 BRAZIL’S NATIONAL PLAN ON CLIMATE CHANGE

At the opening of the United Nations General As-sembly in New York, on September 25, 2008, Presi-dent Luiz Inácio Lula da Silva advanced the National Plan on Climate Change 21 to representatives of more than 150 countries. The Plan has ambitious goals in terms of environmental sustainability for the Ama-zon forest.

The main goal is to achieve a 72% deforestation re-duction by 2017.

To get there, the following action plan was set:•2009 – reduce deforestation by 23%,•2010 – every 4 years, reduce 30% as compared to the previous period,•2017 – reach a zero rate on forest destruction.

3.3 AMAZON ACCELERATED GROWTH PLAN (PAC)

The Accelerated Growth Plan has R$ 500.9 billions worth of federal, state and private sector funds to implement energy and infrastructure plans in the country. In the Amazon, the construction of power generation projects are prioritized, and sustainabil-ity issues come up in projects such as the power plants in Belo Monte, Pará, and Santo Antônio and Jirau, in Rondônia, which have a social impact on the indigenous population and environmental impacts on fish species and other animals in the region.

The PAC in the Amazon also represents the creation of waterways, ports, highways and railroads, further housing development and sanitation infrastructure works. According to the law, the funds for the in-frastructure in the Amazon need to be awarded to works that meet certain sustainability criteria and hold local development as their priority. Fines and work suspensions are provided for in the environ-mental licenses granted to bidding companies.

Currently, there are three major land circulation and occupation hubs in the Amazon: the Cuiabá-San-tarém highway, the Porto Velho-Manaus road to-gether with the BR-174 highway, which connects the country to Venezuela and the flow of persons from the lower Amazon to Amapá. Amazon highways, which were built by the federal government in the 70’s, were destined to provide access to hydroelec-tric power plant works and mining areas. Under the current federal government’s standpoint, the roads cannot be deemed a cause for deforestation Access must be planned with prior criteria in mind on the socio-environmental issues of prevention and miti-gation of negative effects.

3.4 THE AMAZON FUND

The Fund for the Protection and Conservation of the Brazilian Amazon was created in September, 2008, to offset the non-emission of carbon through reduc-tion in deforestation. In the first four years, the de-forestation reference will be 1.95 million hectares per year, which is the average annual deforested area in

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National Forest of Amapá. Amapá is the best preserved state of the Brazilian Amazon, with less than 2% of

deforested area and more than 70% of its ground surface protected by preservation units.

Wal-Mart Brasil Collection / Photo by Paulo Vitale

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However, if on the one hand the greenhouse effect is beneficial, on the other the excessive concentra-tion of its gases, especially of CO2, eventually forms a barrier which hinders the release into space of the energy reflected by the Earth’s surface. Reports on the climate released in 2007 by the Intergovern-mental Panel on Climate Change (IPCC), foresee a 1.8 to 4 degrees centigrade variance in the mean tem-perature of the planet by 2200. The group of inter-national scientists concluded that a large portion of the global warming observed over the last 50 years is due to human activities. And that, besides the tech-nological alternatives which allow for a reduction in greenhouse gas emissions (GGE), forests are among the most important solutions: these surfaces are the main CO2 sinkholes. A preserved forest preserves the water cycle and supplies rain to Southeastern Brazil.

Biodiversity is another of the planet’s great treasures which disappears when a forest becomes pasture-land and all the carbon which was contained in the forest is released into the atmosphere. It is possible that 20% of the animal and plant species could al-ter their distribution, or even disappear, due to the intensity of the resulting natural phenomena: droughts, hurricanes, floods may increase, according to studies carried out in different parts of the world. In the largest tropical forest in the world, the water and carbon cycles still function naturally.

4.1 WATER CYCLE

The Amazon River discharges one fifth of the fresh water that drains into the ocean from all the rivers in the world22. Its length, from its source in the An-des to its mouth, is 6.850 km – comparable, as the crow flies, to the distance separating Berlin from New York. Recent calculations have confirmed that besides having the largest flow, it is also the longest in the world (180 km longer than the Nile)23. Within Brazil, the Amazon river’s declivity is of only 80 m in relation to the level of the sea.

Rivers are the critical point of the water cycle in the Amazon because they capture the rainwater in the region. Besides the rivers, meandering through the

4. The Amazon and the Global Climate

The climate has always changed and will continue to change due to natural causes. Resulting from the association of a series of gases, the greenhouse ef-fect is responsible for retaining heat released by the Earth, which is generated by solar radiation. Should this mechanism not exist, the average temperature on the planet would be 30 degrees below the present levels. During the Twentieth Century, the average temperature on the Earth’s surface increased some 0.6%; the size of the polar ice caps has shrunk; the level of the ocean has risen by some 10 to 20 cm; and significant changes can be observed in the patterns of rain and extreme temperatures.

THE KYOTO PROTOCOL

The concern for carbon emissions on the greenhouse ef-fect has given rise to several international negotiations in order to revert the increase of CO2 in the atmosphere. The scientific focus has been to promote the absorption of carbon from the atmosphere through the ”carbon trapping” process. During 1990, the United Nations Organization (UNO), set up the Intergovernmental Ne-gotiating Committee for a Framework Convention on Climate Change (INC/FCCC). The text of the Conven-tion was signed in June 1992, at the Earth Summit held in Rio de Janeiro, and became effective on March 21st, 1994. In 1997, the Kyoto Protocol was defined, accord-ing to which industrialized countries should reduce their greenhouse gas emissions by at least 5% in relation to 1990 levels, by the year 2012. Brazil is not included among these countries as its emission levels are not suf-ficient. The Kyoto Protocol set the Clean Development Mechanism (CDM), a set of rules for those countries which emit more carbon to provide financial support to those who emit less, for the conservation and restora-tion of forests and the adoption of clean technologies. This mechanism has created a carbon market through which the industrialized countries may purchase carbon emission quotas (the so called carbon trapping credits or carbon credits) from those countries which emit less. The Deforestation Emission Reduction (see text on page 26) may replace or complement the Kyoto Protocol.

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The Amazon River

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rainforest there are“flying rivers”, which cross the skies carrying the influx of water vapor released by the evaporation of the region’s rainforest. They also carry the atmospheric moisture which derives from the oceans, along the Atlantic Ocean coast, directing the mass from the North to the South of Brazil. These masses of water vapor can reach a size equal to the flow rate of the Amazon River, or 200 thousand cubic meters per second.

The flying rivers, which run from the Ocean to the continent, are sidetracked by the Andes mountain range towards the southeast and south of Brazil. The mild climate found in these regions, which in other latitudes boasts deserts or dry regions, stems from the moisture coming from the Amazon rainforest and from their relation with the remains of the At-lantic Forest. The “flying rivers” project, which veri-fies the route taken by this moisture, began with the pioneering work of the agricultural engineer, Enéas Salatti – 40 years ago at Esalq/USP in Piracicaba, where he studied the hydrological cycles in São Pau-lo’s agriculture.

4.2 THE CARBON CYCLE

The Amazon accounts for over 30% of the carbon reserves in vegetation in the world. Among datings conducted with carbon 14, as well as with growth rings, the conclusion was that the older tree speci-mens could be between 600 and 2,000 years old.

In the cycle of the forest, carbon which is trapped in the biomass of the trees, is freed when the forest is burned or when it is cut down and finally, industrial processes which liberate carbon – CO2 (carbon diox-ide) and CO (carbon monoxide) are two of the gases liberated with the removal of organic materials, and are important in the study of the greenhouse effect.

If we consider that although there is very old tech-nology to capture the CO2 from the atmosphere and re-inject it to earth, we must remember that there is no technology for its commercial use. Furthermore, this recourse is temporary, since the CO2 stored in this way remains lodged for up to 100 to 120 years.

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5. The Standing Forest

The standing Amazon Region provides the so called ‘environmental services’ to Brazil and South Ameri-ca due to its immense stock of carbon. Brazilian sci-entist Carlos Nobre, who took part in the IPCC (In-tergovernmental Panel for Climatic Change of the UN), states that “the Amazon Region is extremely important as a huge reservoir of biomass, the libera-tion of which in the form of carbon gas, would in-crease global warming by 16%”25. Although it has no compulsory targets in the international agreements due to its historically low volume of emissions, Bra-zil emits 10% of the world´s gases by burning green areas for agricultural expansion.

In respect of the warming of the planet, it is not only CO2 and CO which interfere with the greenhouse effect (burning and cutting down of the Amazon forest), but also methane (the gas produced by the decomposition of the forest, is also expelled by the digestive system of livestock), which is responsible for 1/5 of global warming – livestock raising is re-sponsible for about 80% of the deforestation and of the Brazilian greenhouse gases26.

It is interesting to remember that the so called “envi-ronmental services” refer to the capture and retention of carbon, as well as the maintenance of biodiversity and regulation of the ecosystem, protection of the water system and scenic beauty. Therefore, the pres-ervation of the Amazon Region with a radical reduc-tion in the indiscriminate clearings by fire, maintains the biomass in its role as “humidifier” of the planet. Scientific research has established its functions in the hydrological and climatic functions, impacting on the regularization of the rain cycles in the South and Southeast of Brazil and on the temperature of the wa-ters in Central America and the Gulf of Mexico.

Concluding all considerations, the forest is an impor-tant actor in international agreements regarding the emission of gases into the atmosphere: ceasing to burn or removing certain predatory activities (felling for timber and extensive cattle rearing, for example), would drastically reduce emissions of gases which cause the greenhouse effect.

4.3 FIRE

Fire is a traditional practice in the Brazilian Amazon Region for the introduction of cassava plantations by small producers, or for the formation of pastures by the large land owners. Although this is part of the lo-cal rural culture, it must be fought against from the point of view of the climate: fire is one of the tools which has the greatest participation in the destruc-tion of native forest and today represents the great villain of the climate of the planet, because the clear-ance fires are the principal emitters of carbon diox-ide and other gases, raising Brazil to the 4th position in the world list of emitters of greenhouse gases.

Today, the total annual burning of the forest corre-sponds to 250 million tons of carbon thrown into the atmosphere. One hundred hectares of burned forest is equivalent to the emissions of 6,820 gasoline cars circulating for one year24.

“The environmental services of the Amazon Forest it-self, are the best alternative for the development of the region. Services with which much more is to be gained than by destroying the forest. This whole for-est is avoiding the greenhouse effect, is maintaining the water cycle as well as supplying rain to the South-eastern region. The forest renders an important ser-vice to the world and nobody pays anything for this. Biodiversity is another great value, but it disappears when it is transformed into pasture and all of the car-bon which was in the forest goes up into the air. So, it is necessary to attribute value to the whole service which the Amazon Region provides to the planet.”

Philip Fearnside, researcher of the Department of Ecology of the National Institute of Research of the Amazon Region (Inpa),the second scientist most cited in the world, accord-ing to the Science Citation Index, when the subject is global warming.

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A view of the Amapa National Forest

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2009, in Copenhagen (Denmark), with the creation of an international mechanism of compensations for environmental services – and its sharing with local communities, should the Forest-Assistance (Forest Assistance Program) be implemented in the Amazon State.

There begins to be a consensus between govern-ment and Brazilian environmentalists, that the forests should receive voluntary funds for reduc-ing deforestation, and not simply make a financial exchange in the carbon market. Regarding REDD (Reduction of Emissions through Deforestation and Forest Degradation), which proposes to mitigate the effects of world warming, there are doubts: in the credits market for forests, the price of carbon would drop by 75%, resulting in disadvantages for coun-tries such as China, Brazil and India.

5.1 ENVIRONMENTAL SERVICES

The planetary dimension of the forest gives Brazil geopolitical importance in global forums. Payments for ‘environmental services’ existing in international protocols for fighting global warming, gain promi-nence at the beginning of this century.

According to Joseph E. Stiglitz, Nobel Prize for Eco-nomics in 2001, Brazil could receive US$ 500 million if it were to negotiate a reduction in carbon emissions equivalent to a 10% drop in the rate of deforestation in the 1980 decade. Deforestation does neither ben-efit nor sustain the population and gives a minimal contribution towards the Country´s economy.

The new global agreement covering the fight against climate changes, which will replace the Kyoto Proto-col as from 2013, will be negotiated in December of

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Scientists connected with the IPCC and to the Am-azon Region have already estimated values for the benefits which reduction in deforestation would have on the planet. A reduction by half in the rate of deforestation of tropical forests from 1990-2000, would save 50 billion tons of carbon, more than 10% of the cuts required to maintain atmospheric con-centration of carbon dioxide at 450 parts per million (IPCC). On the other hand, a reduction in the rate of annual deforestation of 15% would mean stabilizing the situation of the 50 million hectares already de-graded in the Amazon Region, equivalent to 50% of the current target of the present Kyoto Protocol.

In spite of the doubts about how much a stretch of standing forest may be worth, any utilization which may be made today will be poorer than the manage-ment of its biodiversity. Or less profitable than its sustainable usage.

One example is the productivity of livestock, whose data indicates revenues five times greater in areas managed under models of sustainability, than under extensive models27.

In Brazil, the ‘Proambiente’ – Program for the Social/Environmental Development of Rural Family Produc-tion, created in 2002 by the Federal Government, provides public resources for the payment of envi-ronmental services to small and medium sized pro-ducers, technical support and the costs of sustain-able conversion.

REED – PAYMENT FOR THE STANDING FOREST

REED (Reduction of Emissions through Deforestation and Forest Degradation) or Reduction of Emissions through Deforestation and Forest Degradation, also known as payment for avoided deforestation, is a fi-nancial compensation mechanism for the initiative in preserving forest areas, and as such, promotes a reduction in the emission of GEEs (Greenhouse Gases Effect) and combats global warming.

REED may be formally approved in the CoP-15 (inter-national meeting where countries debate the con-ventions regarding climate) which will be held in De-cember of 2009 in Copenhagen and if approved, may come into force after 2012 when the current mandates of the present Kyoto Protocol expire. (learn more on page 22).

The basic idea is simple: avoiding deforestation gener-ates a collective benefit in terms of global warming and preservation of biodiversity and for this reason everyone should contribute to this cause. The propos-al itself seems to have been accepted, but countries are divided with respect to the manner in which this should be done. Some countries believe that this fund-ing may be carried out in the context of the credits market which already exists, whilst others propose that this should be done through the creation of a specific fund. This second line of thought, proposed by Brazil in the CoP-14 in Poznan in 2008, received the support of the European Community, where 27 coun-tries of the block decided in favor of the creation of environmental funds instead of using the mechanism of the carbon credits market.

Brazil is working on the second proposal and has in fact created the ‘Fundo Amazonia’ (Amazon Fund) which could be counting on donations from foreign countries – a donation of US$ 1 billion has already been received from Norway, which will be made avail-able up to 2015, should Brazil succeed in keeping de-forestation below 19.500 Km2, the index for 2005.

Monitoring trees in the Forest Management area.

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6. Opportunities for SustainableDevelopment

Over 90% of the Gross Internal Product of the Bra-zilian Amazon Region is made up of unsustainable activities. And, if Brazil wishes to lead the develop-ment of the new economy of the forest, there are nu-merous studies on how to utilize the natural wealth of the region. As scientist Antonio Nobre well said, “the forest is a library with books which do not have a value for the carbon they contain, but for the infor-mation they convey on their pages.”

The formula goes through various steps: territo-rial organization, with adequate utilizations for each area of the Amazon Region; legislation applied to policies of real regularization of land ownership; ef-fective monitoring and inspection; support for tra-ditional populations and respect for their customs and knowledge; strengthening of scientific research; support for and dissemination of existing sustain-able economic alternatives (forest management, ecotourism and agro-ecology); fair agreements on biodiversity; ethical and sustainable partnerships between companies and local suppliers; and enroll-ment of the conscientious consumer.

In order to overcome the challenges and increase the potentials of the eco-markets of the forest, it is nec-essary to invest in transforming the predatory model which for almost 40 years has advanced over the Amazon Region. Creating a favorable environment so that society may operate, is not only the role of the Federal Government. This objective requires a broad vision where sustainable services, with the ab-sorption of carbon and the reduction in the emission of global warming gases, be accounted for in the construction of a global and green economy.

6.1 ECONOMICS OF THE FOREST

A standing forest has an enormous economic and scientific potential still to be discovered. New fibers, oils, wood, fruit, seeds, animals and medicinal herbs are potentials of the Amazon Region. The integration

Brazil Nut: one of the value added resources of the extractivism in the Amazon

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of technology with the ancestral knowledge of local and indigenous populations is a fundamental part in the creation of a new economy of the forest.

Examples of forest businesses impress by creating a balance between economic viability, social justice and environmental responsibility.

Cases such as the sustainable exploration of assai for beverages and ice creams, the consumption of which has exploded in the USA and in other parts of the world, are recognized today as opportunities in the direction of a model for sustainable development of a nation. To invest in agro/forestry systems – with crops inspired on the cycle of the forest itself, where various species are cultivated in one same area, each flourishing in its own time – is to support a process which dispenses with the use of fire and does not al-ter the climate.

The use of leading technologies for sustainable de-velopment is one of the ingredients which the bio-cosmetic industry uses to transform assets depos-ited in fruit, barks and tree resins, with a high degree of valued added to their products in demand in hun-dreds of countries. The Amazon Regions is a natural pharmacy. There are over 1.300 known medicinal plants and many others still to be discovered. Dis-coveries should increase enhancing the utilization of this genetic, natural and cultural asset.

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forest resources non related, there is a strong pres-ence of national and foreign companies operating in every link of the production chain.

6.3 SUSTAINABLE CONNECTIONS – THE PRODUCTION CHAIN AND CONSUMERS

Advances in the debate regarding social and envi-ronmental responsibilities of companies, created at the end of 2007, a forum bringing together com-panies, NOG´s and social movements, to establish dialogue and cooperation. Sustainability is on the working agenda of many local companies, both na-tional and international. The Sustainable Amazon Region Forum28, whose mission is to “mobilize lead-erships in various segments of society, promoting dialogue (between parties who differ) and coopera-tion for constructing and articulating actions aimed at a fair and sustainable Amazon Region”, saw in the Amazon Region a unique opportunity to imple-ment an innovative and sustainable model of sus-tainable development.

As a first action, the Forum proposed to bring togeth-er the principal ends of the production, distribution and consumption chain for products of the Amazon Region. The movement “Sustainable Connections”29 was launched in São Paulo on October 14 and 15 of 2008. As from there, those involved started a move-ment to call the attention of the population, of other companies and of the authorities to the responsibil-ity of all sectors of society towards the preservation and valorization of the forest, local communities, products and services. São Paulo is the largest con-sumer center in Brazil of resources from the Amazon Region; for this reason, the Forum, together with “Our São Paulo Movement”, presented for signature, the Pacts of the Production Chains of Timber, Soy Bean and Cattle.

Brazil nut, babassu, andiroba, copaiba, buriti palm, rubber latex, piassava palm, carnauba palm, pequi and assai are the top ten extractive products which already have their minimum selling prices estab-lished by Law nº 11.775, of 2008. Their trading values were defined by the Ministry of the Environment and by Conab – ‘Companhia Nacional de Abastecimento’ ( National Supply Company). They are to be found in various eco-products which are successful among consumers who today try to take home goods which are in line with sustainability.

Among the business alternatives for the good of the forest and the sustainability of the planet, there are the extractive production under the system of forest management, the design and sustainable tourism, offered as an international standard of quality.

6.2 RESPONSIBLE ACTIONS OF PRIVATE INITIATIVE

New models of development must be proposed for the Amazon Region, since successful models are a show-case for the world. The bases of sustainable changes are in the hands of hundreds of initiatives which offer solutions for the subjects of deforesta-tion and poverty, and whose economic wisdom at-tracts support, investment and multiplication. A great number of them include partnerships with ac-tions from the Social Responsibility areas of Compa-nies. Responsible actions from businessmen must be in harmony with public policies, without becoming a substitute for the role of the State.

Some companies which invest in the Amazon Region and remove from it a large part of the wealth which they generate, have compensation programs for en-vironmental and development obligations.Biodiversity is becoming a strategic value and at-tracts a number of investments. Science imposes for itself a double challenge: that of describing and quantifying the situation and biological processes, and that of attributing a value to nature, which up to now has been economic. This area has interested companies with special businesses directed towards sustainability – in the areas of cosmetics, food and

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The Amapa National Forest is the best preserved of the Brazilian Amazon state, with less than 2%

of its total area deforested and more than 70% of its surface protected by conservation units.

Wal-Mart Brasil Collection / Photo by Paulo Vitale

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7.1 SUSTAINABLE AMAZON REGION FORUM

Since 2007, Wal-Mart Brazil is a member of the Sus-tainable Amazon Region Forum and is part of its Executive Committee, participating in the construc-tion and coordination of various activities directed towards the Amazon Region. One of the activities of the Forum, is the Sustainable Connections program which has accomplished the sectorial pacts concern-ing Cattle Breeding, Soy Bean and Timber.

Sustainable connections

In October 2008, Wal-Mart signed company agree-ments for the control of the production chains for timber, cattle breeding and soy bean, committing it-self to distribute and sell only certified products (or which are in the process of certification) and which are received from suppliers which are not on the black list of slave labor or on land embargoed by Ibama. The signatories of these pacts also agreed to increase the number of participants, through information cam-paigns among their consumers and suppliers.

The Wal-Mart chain participates actively in this movement and is ensuring that its suppliers do not utilize protected areas to develop their activities in the Amazon Region. At the end of 2008, the chain included the commitments of the pacts into its com-mercial contracts and also suggested to its suppliers that they should adhere to them. In the event of ir-regularities, the supplier will be given time to fall in line, otherwise he will run the risk of cancelation of the contract.

The company also carried out a campaign to collect signatures for a change in legislation regarding slave work. This initiative produced 103.841 signatures out of a total of 147.071 obtained by the movement up to March 2009. In addition to not maintaining com-mercial relationships with companies who employ this type of labor, Wal-Mart defends the expropria-tion of these areas of land.

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7. Wal-mart and the Amazon region

The importance of the Amazon Region for the planet is a fact. Also, the impacts which the Region suffers with commercialization of the products resulting from the production chains of meat, soy bean and timber, are well known.

Wal-Mart Brazil is conscious of the role which the re-tail market has in this chain and has already included the Amazon Region in its sustainability program. Its actions consist of organizing discussions, active par-ticipation in social movements, participation in vari-ous sectorial pacts for sustainable production and investment in the area of environmental protection.

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The Cattle Breeding Pact

The signatories are committed to promote the sus-tainable financing, production, use, distribution, com-mercialization and consumption of products from cattle breeding produced in the Amazon Region and destined for the City of São Paulo. The concept of sustainability excludes cattle breeding products pro-duced by companies which are included in the black list of slave labor by the Ministry of Labor and Employ-ment (MTE) and that which originates in areas which are included in the list of areas embargoed by IBAMA. The signatories are also committed to inform on the invoice or official document which accompanies the product, that the source or sources of the raw materi-als used also respect these criteria.

In addition, Wal-Mart has requested its suppliers to sign a specific Term of Commitment in which it de-clares that they do not purchase cattle breeding prod-ucts from areas and properties witnessed as utilizing labor conditions similar to slavery and from areas em-bargoed by IBAMA. Each supplier has also completed a questionnaire about its policies and practices aimed at guaranteeing the origin of the cattle breeding products which culminated in the beginning of a con-structive dialogue in the direction of seeking better sustainability practices in the cattle breeding chain.

The Pact against Slave Labor

The National Pact for the Eradication of Slave Labor in Brazil was proposed by the Federal Government in May of 2005 based on an Administrative Ruling of the Ministry of Labor in respect of the existence of a list of employers and/or their intermediaries, which ex-plored slave labor in the country. The Pact proposes, among other initiatives, to define specific targets for the regularization of labor relationships, commercial restrictions for companies or individuals identified as carrying out abusive practices, supporting actions of social and productive re-integration, informing and training vulnerable workers and the monitoring of these actions.

SOCIAL/ENVIRONMENTAL PACTS

The Soy, Timber and Cattle Breeding pacts were for-malized in October 2008 during the “Sustainable Con-nections: São Paulo-Amazon” Forum held by Our São Paulo Movement and the Sustainable Amazon Region Forum, which debated the role of the City of São Paulo in the preservation of the Amazon Region. The signa-tories – companies, public entities and civil society organizations – voluntarily committed themselves to conditions of sustainability in the financing of pro-duction or commercialization of Soy, Timber or Cattle products – and in all of them, the question of Slave La-bor has been included. The Pacts include “mobilizing the companies in the value chains of the signatories”. Up to date information may be found in the ‘Instituto Ethos – Conexões Sustentáveis’ site.

The Soybean Pact

The signatories are committed to promote the sus-tainable financing, production, use, distribution, commercialization and consumption of soy beans (in their natural state or processed) produced in the Amazon bio-region and destined for the City of São Paulo. The concept of sustainability includes only soy beans located in the areas permitted by the “Soy Moratorium” and excludes soy beans produced by companies which are included in the black list of slave labor by the Ministry of Labor and Employment (MTE) and that which originates in areas listed in those ar-eas embargoed by IBAMA

The Timber Pact

The signatories are committed to promote the sus-tainable financing, production, use, distribution, com-mercialization and consumption of products from the Amazon forest destined for the City of São Paulo. The concept of sustainability covers the supply of forest products from certified sources – and in its absence, “to purchase forest products from participants in programs of inspection of modular implementation which has the objective of achieving forest certifica-tion of its area in the medium term”.

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7.2 GT SUSTAINABLE CATTLE BREEDING

Wal-Mart also participates in the Executive Commit-tee of the Sustainable Cattle Breeding Work Group. The group is made up of NGO´s, companies, slaugh-ter houses, producers and government and was formed to define directives for a more sustainable production of cattle.

The Group is focused on reducing the social and envi-ronmental impacts of the cattle breeding activity in the whole Country. Wal-Mart is a member of the ex-ecutive secretariat of the Group, formed in 2008 with medium and long term objectives. Among the ad-vances achieved in the year, there is the definition of the structure of governance and the principles which will guide the statute and methodology of work.

7.3 FLONA AMAPÁ: THEORY PUT INTO PRACTICE

The non-governmental organization ‘International Conservation of Brazil’ and Wal-Mart Brazil entered into a partnership agreement in March of 2008 amounting to R$ 5 million to be invested in the Na-tional Forrest (Flona) of Amapá, north of the Amazon Region. The initiative aims at preserving biodiversity and the social/economic benefits related to its tar-gets of sustainability.

With a duration of five years, the project will bear the cost of activities in three distinct but inter-connected areas:a) improvement of the physical infra-structure and

forest management personnel,b) preparation of a management plan for the unit,

andc) elimination of non-sustainable activities through

business plans for products from the forest, timber merchants or non-timber merchants.

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RESOURCES

(1) “Amazon Brazil”, Eugenio Scannavino Netto, José Arnaldo de Oliveira (2008). (2) “Amazon Brazil”, Eugenio Scannavino Netto, José Arnaldo de Oliveira (2008). (3) The estimate of 20% of world reserves of fresh water is from the National Water Agency and the program Proarco / Brazilian Institute of Environment. (4) Source: ISA - Socioenvironmental Institute.(5) Source: IBGE / PNAD 2005.(6) Source: Federation of Industries of the Amazon.(7) Source: “The advance of the Amazon frontier - from Boom to Collapse”, Adalberto Veríssimo and Danielle Celentano / Imazon - Institute of Man and Environment of the Amazon (2007).(8) Source: “Brazil: the state of a nation,” IPEA - Institute for Applied Economic Research (2005).(9) The term “occupied land” is used meaning the land already cleared for any economic activity (wood, cattle, grain, etc.). The total land unresolved almost coincides with the total area deforested in the Amazon.(10) The area is the size of the Baltic Sea.(11) Source: CBERS / INPE(12) “Hitting the Target 2: consumption of Amazon wood and forest certification in the state of São Paulo”, Leonardo Sobral / Imazon (2002).(13) Source: Imazon.(14) Source: João Andrade de Carvalho Jr. / Unesp, in “The Golden Book of the Amazon”, João Meirelles (2005), p. 160.(15) Source: IBGE - Brazilian Institute of Geography and Statistics.(16) Learn more about the actions of Greenpeace on soybeans in [www.greenpeace.org/brasil/amazonia/moratoria-da-soja].(17) The Map of Social Conflicts of the Legal Amazon was launched on 29/01/2008. (18) Mobile Group of the Slave Labor MTE - Ministry of Labor and Employment, established in 1995, is responsible for the release of workers in situations of slavery on farms. See the “dirty list” of slave labor[www.reporterbrasil.com.br/pacto/listasuja/lista]. (19) Launched in early 2008, the “dirty list” of the government is formed by the municipalities considered as priorities for actions of prevention and control of deforestation of the Amazon. The list was updated in 2009 with the figures occurred in 2008. (20) See the entire plan in [www.presidencia.gov.br/casacivil/desmat.pdf].(21) Learn more at [www.forumclima.org.br/].(22) Source: WWF-Brazil.(23) Measurement of the Scientific Expedition of the Amazon river 2007 - INPE (National Institute for Space Research), IBGE (Brazilian Institute of Geography and Statistics), ANA (National Water Agency) and representatives of the IGN (Instituto Geográfico Nacional) of Peru, in [www.inpe.br].(24) Source: João Andrade de Carvalho Jr. / Unesp, in “The Golden Book of the Amazon”, João Meirelles (2005).(25 & 26) Carlos Nobre is one of the people responsible for the study of the scenario for the Amazon in 2050, which alerts against the danger of part of the rainforest becoming savanna, depleted by high temperatures. The great drought which struck the region in 2005 was, in part, caused by this.(27) Source: João Andrade de Carvalho Jr. / Unesp, in “The Golden Book of the Amazon”, João Meirelles (2005), pág.163.The excerpt indicates that the certified alternative of the same area of pasture can yield U.S. $ 3.1 billion, five times more than the current U.S. $ 660 million. (28) Sustainable Amazon Forum [www.forumamazoniasustentavel.org.br/].(29) Sustainable Connections [www.ethos.org.br/sistemas/ConexoesSustentaveisNovo/].

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Wal-Mart Brazil

Corporate AffairsAv. Tucunaré, 125 - Tamboré - CEP 06460-020 - Barueri, SP Brazil

Tel: (55 11) 2103.5800sustentabilidade@wal-mart.com

www.walmartbrasil.com.br