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Edition: U.S. Article Comments (0) Save Email Print Reprints Most Popular Most Shared Exclusive: IRS hires "hundreds" for new wealth unit 11 Dec 2009 Google to produce, sell own "Nexus One" phones: report 12 Dec 2009 Houston elects openly gay mayor 12:30am EST "Dead" man wakes up under autopsy knife 17 Sep 2007 Woods wins UK court ban against nude, sex photos 11 Dec 2009 Boeing tanker ally eyes $5 mln per plane Airbus duty 18 Nov 2009 Hardliners: Iran opposition seeks leader's removal 12 Dec 2009 Amazon projects undercut Brazil's new green path Raymond Colitt PORTO VELHO, Brazil Sun Dec 13, 2009 1:04am EST PORTO VELHO, Brazil (Reuters) - Straddling one the Amazon's main tributaries and flanked by dense jungle, a construction pit the size of a small town bustles with bulldozers and nearly 10,000 workers blasting huge slabs of rock off the river bank. World | Green Business While blue-and-yellow macaws fly overhead, a network of pipes fed by a constant flow of trucks pours enough concrete to build 37 football stadiums. The $7.7 billion Santo Antonio dam on the Madeira river is part of Brazil's largest concerted development plan for the Amazon since the country's military government cut highways through the rain forest to settle the vast region during its two-decade reign starting in 1964. In the coming years, dams, roads, gas pipelines, and power grids worth more than $30 billion will be built to tap the region's vast raw materials, and transport its agricultural products in coming years. The Santo Antonio dam in the western Amazon's Rondonia state, which goes online in December 2011, will pave the way for a trade route between the Atlantic and Pacific oceans by making more of the Madeira river navigable. But the behemoth project may also make it tougher for the nation to steer a new course as a leader of the global green movement. Brazil's government says such development is needed to improve the lives of the region's 25 million inhabitants, who remain among the poorest in Latin America's biggest economy. With the economy expected to grow at 5-6 percent annually in coming years and the country preparing to host the 2014 soccer World Cup and 2016 Olympics, the government wants to ensure ample energy and adequate infrastructure. Critics say not all projects make economic sense and many energy-saving measures -- such as switching from electric to solar water heaters -- have not been explored. They also argue that the drive for development in the world's biggest forest highlights a policy contradiction as Brazil tries to play a top role in forging a global deal on climate change at the U.N. climate summit in Copenhagen. Brazil reversed years of opposition to greenhouse gas targets this year, saying it intended to reduce Amazon deforestation by 80 percent and curb projected 2020 greenhouse gas emissions by 40 percent. "They talk about reducing deforestation and boosting controls but they invest in these mega-projects," said Israel Vale, director at the Kaninde environmental advocacy group in Porto Velho, capital of Rondonia. "The rhetoric doesn't fully match reality," he said. President Luiz Inacio Lula da Silva, a pragmatic former factory worker, has acknowledged the importance of tackling climate change and the heavy contribution that destruction of the forest makes to carbon emissions. But he has consistently backed infrastructure projects in the Amazon and hits out at foreigners he says want to preserve the forest like a park, ignoring the needs of its inhabitants. "I don't want gringos asking us to leave Amazon people to die of hunger under the canopy of a tree," Lula said in the Amazon city Manaus in November. He says Brazil needs more international financial aid for sustainable development in the region, something he will push for in Copenhagen. PROJECTING JOBS New shopping malls, supermarkets and hotels reviving the decrepit center of Porto Velho showcase the new wealth the Santo Antonio dam brings to an otherwise impoverished region. Santo Antonio Energia, the consortium building and operating the dam, is made up of Brazilian power and construction companies, a pension fund, as well as domestic and foreign banks. The investment boom has helped many people get their first job with proper benefits. "The people who want to protect the forest have never been hungry or needy," said Antonia Meyrilen, a 27-year-old mother training to be a carpenter. Porto Velho is not new to boom and bust cycles, previously driven by rubber, gold, and timber. The town of Jaci-Parana, halfway between Santo Antonio and a second dam similar in size being built further upstream on the Madeira, shows how wealth doesn't always equal progress. Aside from the pick-up trucks with company logos, the scene is reminiscent of a Wild West boom town during the California gold rush. Bars and brothels hammered together overnight with rough-cut boards line the muddy main strip, with pool tables and prostitutes luring customers. Jukeboxes and video games blare into the night and swinging doors reveal back-parlor gambling. Talk abounds that landowners have hired a gunman to kill tenants who could otherwise claim part of their compensation for houses that will be flooded by the dam. "Our town's been turned upside down," said Irene Nascimento, 47, who runs a bar and convenience store. "The price of land trebled in a few months, everything is expensive -- some people gain, others lose," she said. Santo Antonio Energia has donated millions of dollars to philanthropic projects, including blackboards and computers for schools, the revival of an old railway and the installation of a much-needed sewage system in Porto Velho. When the dam is complete, most jobs related to the project will go and financial benefits will be limited to tax payments to public coffers, raising the risk that boom may again turn to bust. "If the residents here don't keep watch and define the public policies they want, they won't get much out of this," said Ricardo Alves, head of sustainable development at Santo Antonio Energia. ENVIRONMENT Santo Antonio and most of the other 10 dams on the drawing board for the Amazon region require a much smaller water reservoir than older dams did and therefore flood a far smaller area per unit of generated energy. The company says it is minimizing environmental impact by treating sewage from the construction site, combating malaria, and relocating affected flora and fauna. It also donated trucks and equipment to government environmental services. Still, on both sides of the river as many as 1,000 families will see their homes flooded and their cemeteries moved. Indians and fishermen fear the land they hunt on and the river they fish in won't be the same. The roughly 200 families that agreed to move to a model housing project with running water, electricity, and an already planted vegetable garden are mostly content. Several of the others prefer their simple but familiar surroundings -- often wood shacks with no amenities. "We have no choice. They want to pull us out, so they have to pay," said Leonardo Fonseca da Cruz, a 63 year-old fisherman who lives along the picturesque Teotonio rapids. His neighbors said the Santo Antonio consortium was offering too little to compensate for lost revenue from fishing. Company officials admit they don't know how many fish species will be made extinct or what impact a growing population will have on the environment. "In order to build a dam, you need to move the river. Of course, it's going to have an impact," said Antonio Cardilli, Santo Antonio Energia's head of employee training. "There are people in society who want to eat an omelet without breaking the eggs," he adds. Throughout the world hydro energy is still an attractive option because it is much cheaper than nuclear or fossil fuel-fired power plants. New technologies, accumulated experiences, and heightened awareness have eased but not eliminated the social and environmental risks in building dams, says Carlos Tucci, who has advised the United Nations, World Bank and others on dam construction for 40 years. "We have the ability to create better projects today but there is always an inevitable local impact and there are still other risks -- design or implementation problems, unforeseen changes in water flow," said Tucci. A series of dams on Brazil's Sao Francisco river and an unexpected change in water volume caused sedimentation problems that led to dramatic algae growth and a 50 percent reduction in fish stock, said Tucci. At Santo Antonio, a different dam design and water quality should avoid such problems, though the impact of heavy sedimentation accumulation is uncertain, said Tucci, adding that the company's original sedimentation and hydrology impact study was poor. Critics say the government pressured the environmental protection agency Ibama into rubber-stamping the environmental license in 2007 and waived the need for certain impact studies. At the time, two Ibama officials resigned over the standoff. "The government used political and not technical criteria," said Roberto Smeraldi, head of Friends of the Earth in Brazil, which sued Ibama for allegedly breaking environmental law in the licensing process. NATIVE INDIANS Leaders of native Indians living on nearby reservations are skeptical, saying government development projects usually make life worse for them. "The arrival of the white man, the road, the time they threw chickens at us and said it was a farming project to ensure us income -- are we better off today?" asked Antenur Caritiana, of the Caritiana tribe. He is concerned that rising water levels of tributaries will flood bridges and roads, and that their women will be drawn to prostitution as their lands are invaded by loggers and wildcat miners. Most Indians in his jungle town understand little of the dams and their potential impact, despite company briefings. But according to village elder Delgado Caritiana, they won't object if given education, health and farm aid. "The main concern is the problem of monitoring and protecting Indian lands," said Santo Antonio's Alves. Forest guards are to help protect reservations but Indians don't trust the government Indian foundation Funai, which negotiates with Santo Antonio Energia on their behalf. "The Funai doesn't listen to us, they bring their projects ready-made from the capital," said Antenur. The number of Indians over the last two decades has more than doubled to nearly 1 million, out of Brazil's population of 195 million people. Their lands account for 12 percent of Brazil's territory. But whether on a spacious reservation in the Amazon or cramped on ghetto-like reserves in the south, most of their land is under pressure from ranchers, loggers, wildcat miners, or power and construction companies. POLITICAL PRESSURE Such challenges are likely to be multiplied with the planned construction of the much larger Belo Monte dam on the upper Xingu river. The region is home to numerous Indian tribes and the dam would directly impact 120,000 people. The environmental agency Ibama is again under pressure, this time to speed up the Belo Monte approval process. Again, two officials resigned and conservationists cried foul. "They want them to turn a blind eye to technical and legal procedures, and sometimes even to ethics," said Marina Silva, former environment minister and renowned Amazon defender. Perhaps the biggest worry for environmentalists is the planned pavement of the BR 319 motorway between Porto Velho and Manaus, which leads through one of the most pristine areas of the Amazon with a high biodiversity and many endemic species. Satellite images showing fish-bone shaped patterns of deforestation show how roads attract settlers to set up farms and cattle ranches.(See:here &ie= UTF8&ll=-3.899878,-54.165344&spn=1.254997,1.7276&t=h&z=9) Deforestation of the Amazon has fallen to the lowest rate in over two decades, due in part to stepped up controls on illegal ranching and logging but also to weaker global demand for farm products from the region, such as beef, soy and timber. Still, nearly 20 percent of the Amazon has already disappeared and large chunks of the forest are still destroyed every year. In the year through July 2009 an area the size of the U.S. state of Delaware was chopped down. Supporters of the road say it would reduce the cost of merchandise in Manaus but studies show transportation costs to and from Manaus are cheaper by river than road. Jorge Viana, former governor of the Amazon state Acre and a leading voice in Lula's Workers' Party last month sent a letter to Lula along with a group of prominent scholars saying there was "no economic justification that can compensate for the environmental cost" of the road. The government pledges to create new national parks to buffer the environmental impact of the road but experts point to numerous parks in the region that have been invaded by ranchers and loggers. "The road makes no sense. We are not against development and infrastructure but it needs to be intelligent," said Paulo Moutinho, coordinator at the independent Amazon research Institute, Ipam. He said projects like the road could fuel deforestation, which makes up 75 percent of Brazil's carbon emissions. "If the (infrastructure) plan is not changed, it will put at risk Brazil's deforestation and emissions targets." (Editing by Claudia Parsons) World Green Business Add a Comment More from Reuters Goldman Sachs played bigger role in AIG trades: report CHICAGO (Reuters) - Goldman Sachs Group Inc played a bigger role in fueling the mortgage bets that crippled American Insurance Group Inc than has been publicly disclosed, the Wall Street Journal reported on Saturday. Amazon projects undercut Brazil's new green path Houston elects openly gay mayor Iraq aims to power out of war into oil big league | Video Venezuela, Cuba sign $3 billion in joint projects No boon for U.S. firms in Iraq oil deal auction » More Top News Food & Wine: A sommelier's dream For the first time in its 427-year history, Parisian restaurant La Tour d'Argent auctioned off prized vintages in a sale that raised 1.5 million euros. Full Article | Full Coverage Bored with Champagne? 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Full Article Close quarters with a cannibal Being a bird Pictures © Copyright 2009 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Analyst Research Mobile Newsletters RSS Podcasts Widgets Your View Labs Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts.com Buyouts Europe: Buyouts Conferences: Venture Capital Journal ECVJ International Financing Review International Securitisation Report Project Finance International PEhub.com PE Week Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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