Commodities and Conservation The Need Fo

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Nieston, E.T., R.E. Rice, S.M. Ratay, K.

Paratore, J.J. Hardner and P.M.
Fearnside. 2004. Commodities and
Conservation: The Need for Greater
Habitat Protection in the Tropics.
Conservation International,
Washington, DC, U.S.A. 33 pp.
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Commodities and Conservation:
The Need for Greater Habitat Protection in the Tropics
Editors:
Eduard T. Niesten
Richard E. Rice
Shelley M. Ratay
Kristen Paratore
Center for Applied Biodiversity Science

at Conservation International Contributors:
1919 M Street, NW, Suite 600 Jared J. Hardner
Washington, DC 20036 Philip Fearnside
TELEPHONE: 202-912-1000
FAX: 202-912-0772
WEB: www.biodiversityscience.org
c1c4.indd 1 5/26/2004, 1:47:31 PM

Editors:
Eduard T. Niesten
Richard E. Rice
Shelley M. Ratay
Kristen Paratore
Contributors:
Jared J. Hardner
Philip Fearnside
p1-33.indd 1 5/26/2004, 1:16:29 PM

Commodities and Conservation: The Need for Greater Habitat Protection in the Tropics is published by:
Conservation International
1919 M Street, NW, Suite 600
Washington, DC 20036, USA
202.912.1000
202.912.1030 fax
CI on the Web: www.conservation.org

CABS on the Web: www.biodiversityscience.org
CABS Communications Team

Editorial: Philippa J. Benson, PhD, and Neil Lindeman
Design: Glenda Fábregas and Kim Meek
Information specialist: Daniela Maestro
Photos: Front cover

Background: Soybean plantation next to Emas National Park, Brazil
Left: Cattle grazing in La Amistad Biosphere Reserve, Costa Rica
Center: Coffee cherries from Chiapas, Mexico
Right: A cocoa tree in Ghana
All photos © Conservation International
ISBN: 1-881173-80-1
© 2004 by Conservation International. All rights reserved.
Printed on recycled paper.
Conservation International is a private, non-profit organization exempt from

federal income tax under section 501 c(3) of the Internal Revenue Code.
ACKNOWLEDGEMENTS
Many people contributed their time and expertise to the preparation of the background studies that form the
basis of this paper. We are grateful to Conservation International staff members Keith Alger, Aaron Bruner,
John Buchanan, Gustavo Fonseca, Paulo Gustavo Prado, Matt Quinlan, Jim Sanderson, and Justin Ward
for reviewing drafts and providing valuable feedback. Numerous anonymous reviewers also offered helpful
comments. We extend special thanks to Jared Hardner and Ted Gullison for their extensive input. Finally, we
would like to thank Gordon and Betty Moore and the Moore Family Foundation, whose generous funding of
CABS supported this study.
DISCLAIMER
This document is not a policy statement of the Center for Applied Biodiversity Science (CABS) or of
Conservation International (CI). The views expressed here are those of the authors and not necessarily those
of CABS or CI.
p1-33.indd 2 5/26/2004, 1:16:43 PM

To the Reader
T
his report argues that an increased investment in protected areas is needed to shield biodiversity from the
impact of expanding cultivation of agricultural commodities in the tropics. We recognize that conservation
strategies emphasizing sustainable cultivation techniques and agricultural policy reform are valuable, especially
as long-term strategies for curbing the impact of commodity production. However, our analysis shows that in the
crucial near term we can expect population growth, income growth, and development policy to continue driving
commodity expansion into critical habitat areas for biodiversity in tropical developing countries. Given this reality,
we call for more habitat to be placed under direct protection and describe a number of innovative strategies for
accomplishing this goal. Our conclusions are based on case studies of coffee, cocoa, cattle, plantation timber, and
soybean production in tropical countries.
NOTE: The sections on individual commodities in Chapter 2 are drawn from unpublished reports submitted to
CABS by the following contributors: Richard E. Rice and Shelley M. Ratay (coffee), Jared J. Hardner and Richard
E. Rice (cocoa), Richard E. Rice (plantation timber), Eduard T. Niesten (cattle), and Philip Fearnside (soybeans).
Copies of these reports can be obtained by sending an e-mail request to [email protected].
Commodities and Conservation: The Need for Greater Habitat Protection in the Tropics 3
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4
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Contents
Chapter 1: Introduction......................................................................................................................................7
The Nature of Primary Commodity Production .........................................................................................................7

Primary Commodities and Development Strategy ....................................................................................................9
Primary Commodities and Conservation Strategy ..................................................................................................10
Chapter 2: Commodity Case Studies............................................................................................................12
Coffee.......................................................................................................................................................................12
All Coffees Are Not Equal ................................................................................................................ 12
Sun and Shade Coffee Production Compared..................................................................................... 13
Cocoa .......................................................................................................................................................................15
Cocoa Markets, Boom-bust Cycles, and Deforestation......................................................................... 16
Cocoa Cultivation as a Threat to Biodiversity.................................................................................... 17
Plantation Timber.....................................................................................................................................................17
How Much Timber Do Plantations Produce? .................................................................................... 18
Failure of Timber Plantation Products to Replace Natural Forest Products........................................... 18
Persistent Cost Competitiveness of Harvesting Natural Forests ............................................................ 19
Additional Limitations to Timber Plantations ................................................................................. 19
Cattle........................................................................................................................................................................20
Global Market Trends in Beef Production ......................................................................................... 20
Cattle Production Systems and Biodiversity Threats............................................................................ 21
Soybeans ..................................................................................................................................................................23
Environmental Consequences of Soybean Expansion in Brazil ............................................................ 24
The Role of Government Policy in Brazilian Soybean Production........................................................ 25
Other Expanding Commodities ................................................................................................................................27
Chapter 3: Conclusions and Recommendations ......................................................................................28
Recommendations ...................................................................................................................................................29
Protected Areas ................................................................................................................................ 29
Set-Asides and Retirement of Farms .................................................................................................. 29
Conservation Incentive Agreements ................................................................................................... 29
Endnotes ...............................................................................................................................................................30
References ...........................................................................................................................................................31
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6
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Chapter 1:
Introduction
A soy plantation next to Emas National Park in Brazil’s
cerrado region
incurred in hotspots generally is irreversible, yet devel-
T
hroughout the tropics, the expansion of agricul-
tural commodity production threatens native habi- opment planning in these regions continues to rely on
tats and the biological diversity they harbor. In this expanding commodity production at the expense of
report, we examine this threat in an effort to identify natural habitat.
the most promising strategies for intervening in the dy-
namics that drive habitat loss to agricultural expansion. The remainder of this introductory chapter will discuss
We focus on four individual agricultural commodi- the nature of agricultural commodity production and
ties—coffee, cocoa, beef, and soybeans—and also assess the resulting threat to biological diversity. The discus-
the potential for timber plantations to relieve pressure sion emphasizes two trends in commodity prices: a
on natural tropical forests. A variety of conservation in- long-term decline and a boom-bust cycle. Both fac-
terventions have a role to play in protecting biodiversity. tors undermine the economic benefits of commodity
However, we conclude that without expanded efforts to production while exacerbating the threat it poses to
extend direct protection to habitats threatened by agri- biodiversity. In addition to these economic factors,
culture, other strategies, such as lobbying governments government development policies usually are as much
for policy reform or promoting ecologically compatible to blame as market forces for the persistent pressure of
cultivation methods, are likely to offer too little, too late commodity production on natural habitat. Conserva-
to conserve critical habitats across the globe. tion strategies aimed at challenging the global dynam-
ics of primary commodity markets or overcoming the
Aggressive expansion of primary commodity output inertia that characterizes most government policy-set-
continues to appear prominently as a priority in gov- ting face significant obstacles in achieving rapid results
ernment development planning. Ambitious production at a meaningful scale. This constraint underlies the
goals for cocoa in Ghana, palm oil in Indonesia, coffee conclusion, reiterated throughout this report, that di-
in Vietnam, and soybeans in Brazil are a few examples. rect protection of natural habitat is critical.
These countries also fall within the “biodiversity hot-
spots,” 25 regions that collectively house the majority The Nature of Primary Commodity Production
of the species on the planet, but are under imminent As a group, primary commodities exhibit few univer-
threat (Myers 1988, 1990). Various drivers of habitat sal characteristics. Producers range from small-scale
conversion, commodity production prominent among farmers using their own labor as the principal input to
them, have reduced by nearly 88 percent the original behemoth multinational corporations with vast, heav-
extent of these areas. Together, the 25 biodiversity hot- ily capitalized operations. Developing countries in the
spots amount to only 1.4 percent of the world’s surface tropics dominate production of many commodities,
area but support as many as 44 percent of all vascular but the largest producers of beef and soybeans, for ex-
plant species and 35 percent of all mammals, birds, ample, are developed countries. Some commodities are
reptiles, and amphibians (Mittermeier et al. 1998, consumed predominantly in industrialized countries,
Myers et al. 2000). The habitat and biodiversity loss while others are directed mainly toward markets in
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developing countries. Though they often are defined markets open to any producer who can compete on
as homogenous, non-differentiable goods, some com- price. Thus, commodity markets appear uniquely well
modities, such as coffee, are produced in distinct variet- suited to developing countries, where production costs
ies that target different consumers. Despite these many are low due to abundant land and low labor costs. How-
differences, a broad range of agricultural commodities ever, because commodity markets are comparatively
share one important feature, namely, that increased easy to enter, they tend to attract myriad producers,
production, primarily in the tropics, threatens to ac- who act with little or no coordination. Although eco-
celerate the conversion of natural habitat, resulting in nomic theory suggests that a market with many pro-
widespread losses of biodiversity. ducers independently responding to market demand is
likely to be efficient, experience shows that, collectively,
Several factors drive the continued expansion of com- producers of agricultural commodities chronically over-
modity production in developing countries, including whelm demand and severely depress prices. A series of
inexpensive land and labor, government incentives, failed attempts to coordinate global supply of such com-
foreign direct investment, technological advancement, modities as coffee and cocoa through cartels of producer
and the relative openness of certain global agricultural countries reveals the challenges facing management of
commodity markets. Production growth arises from world prices for agricultural commodities.
both enhanced productivity, reflected in yield improve-
ments, and expansion of cultivated area. Over the past The steady downward trend of world commodity pric-
three decades, the area devoted to producing just four es is well illustrated in the real prices for cocoa, coffee,
agricultural commodities—cocoa, coffee, oil palm, and and soybeans, which were about 60 percent lower in
soybeans—has more than doubled from less than 50 1999 than in 1970. Real prices for beef have fallen by
million hectares to more than 100 million hectares, an even more over the same period. An index of real prices
area nearly three times the size of Germany (FAO 2003). reflects a similar trend for agricultural commodities as a
Since 1970, expansion in cultivated area has outpaced group (see Figure 1). Consequently, countries that rely
yield growth for cocoa, coffee, oil palm, and soybeans; heavily on agricultural commodity exports suffer con-
in the case of soybeans, for example, yields have grown tinually deteriorating terms of trade; in other words,
by 45 percent while area cultivated expanded by 145 the prices they receive for their exports are falling rela-
percent (FAO 2003). The case studies presented in this tive to the prices they pay for their imports. Moreover,
report suggest that production of these commodities will efforts to sustain and increase total income levels by
continue to grow rapidly, and necessarily will rely heavily increasing commodity production are undermined by
on the expansion of cultivation into pristine areas. the further downward pressure on prices that results
from increased supply. In 2001, cocoa-producing coun-
The conflict between commodity production and biodi- tries in West Africa provided a stark illustration of these
versity epitomizes the potential tension between environ- conflicting dynamics: while governments were setting
mental conservation objectives and economic impera- national production targets for cocoa higher than ever
tives. Primary commodities form the mainstay of econo- before, producers were burning their crops in an at-
mies throughout the tropics, and strategies for continued tempt to drive up prices (West Africa Market Report
economic development often seek to strengthen and 2001). Meanwhile, as commodity expansion proceeds
expand these sectors. Yet the gains from production with questionable economic benefit, its impacts on the
increases may be fleeting as supply expansion reinforces environment are very real; the habitat conversion that
two trends that broadly characterize commodity produc- accompanies commodity expansion causes steady and
tion around the world: a persistent, long-term decline in irreversible biodiversity loss.
real commodity prices and a boom-bust cycle in which
short periods of high prices fuel a dynamic that, in the Periodic rises in commodity prices further exacerbate
long term, further erodes prices. the perverse dynamic that drives commodity expan-
sion. Though unambiguously declining over the long
These trends are driven by the fact that primary com- term, the commodity price trends displayed in Figure
modities are generally traded in large international 1 also contain temporary upward swings that typify
8 Chapter 1: Introduction
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Figure 1: Index of real prices for agricultural commodities, 1970–1999
Source: World Bank (2000)
a boom-bust cycle. These price spikes spur efforts to burden. Policymakers look to commodity production
boost production through a variety of channels, includ- as a development strategy for a variety of reasons: in-
ing investments in infrastructure and expansion of ternational commodity markets are relatively accessible,
cultivated area. Time lags between initial investments export agriculture generates foreign currency earnings,
and the entry of new production into global markets and the agricultural sector already supports a large
allow price spikes to persist, motivating continued ef- share of the population in most developing countries.
forts to raise output. In other words, the lag between Inexpensive labor and abundant land also appear to fa-
investment and increased production, coupled with the vor commodity production in developing regions. Such
largely uncoordinated nature of commodities markets, factors result in the ubiquitous presence of commodi-
means that prices during a spike may not reflect ongo- ties on government policy agendas. However, relatively
ing investment in future output. As a result, producers little attention is paid to the impacts on biodiversity of
do not receive accurate market signals about pending this focus on commodity production, which has had
increases in global supply and therefore continue to predictable results. Development planners’ enthusiasm
commit further resources to growth in output. The for commodities has motivated an array of policies that
eventual supply increases that result from this dynamic accelerate the conversion of natural habitat, includ-
can flood markets and cause drastic price declines. This ing infrastructure investments, credit subsidies, and tax
phenomenon has been particularly prevalent for tree exemptions for farmers. In some instances where pub-
crops such as coffee and cocoa, because initial crop lic policy might be inclined to follow other priorities,
production lags several years behind initial planting. farmers have formed effective political lobbies to secure
Those first to expand production may enjoy high prices government support. In others, governments desperate
during a brief boom period, but as markets process the to attract foreign investment offer tax concessions to
full impact of investments in production capacity, pro- international corporations willing to invest in large-scale
ducers suffer a bust period characterized by prices that production. In some areas, land-titling provisions have
in some areas may even fall below production costs. also promoted habitat destruction for commodity ex-
pansion by making conversion to so-called “productive
Primary Commodities and Development Strategy uses” a prerequisite for establishing land ownership.
An added component of the commodity cycle is that
many governments politically are locked into poli- The objective of this report is not to propose alter-
cies to protect farmers from income shocks; as market native development strategies. Rather, this analysis
conditions deteriorate, such policies further drive com- recognizes that governments will continue to expend
modity expansion and become an ever-greater financial substantial resources to promote expansion in areas of
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high biodiversity importance. Dismantling expensive, ernment policy, commodity markets and policymakers
market-distorting policies that promote unwarranted may appear to be the natural targets for conservation
expansion of commodity production in the tropics strategy. Certainly, in the long term, market forces and
may decelerate conversion of natural habitat for some policy formulation must be harnessed to promote envi-
commodities, in some places. However, irrespective of ronmentally compatible development trajectories. Do-
government inducements, growing populations and ing so may include the promotion of environmentally
rising incomes will continue to fuel growth in demand compatible production methods as well as lobbying for
for a wide array of commodities. The majority of the reform of inappropriate development policies. How-
people in the 25 biodiversity hotspots, which are home ever, given the current rate of habitat loss in the tropics,
to over one-fifth of the world’s population, are engaged critical habitat must be protected in the short term if
in agriculture. As these populations are increasing at there is to be anything left to conserve by the time agri-
some of the highest growth rates on the planet, the cultural practices and government policies change.
need for livelihoods will continue to drive agricultural
expansion. If this expansion is not managed in ways Agricultural production techniques with reduced en-
that include environmental considerations, commodity vironmental impacts fall under the general rubrics of
growth will exact a high cost in terms of biodiversity. agroforestry and ecoagriculture, and can complement
protected areas by reducing negative impacts such as
Although declining price trends are partially attribut- erosion, chemical run-off, and soil degradation on park
able to chronic over-expansion of supply, they also re- boundaries. In areas where formal protection faces
flect falling production costs and transaction costs due obstacles, environmentally compatible agriculture may
to technological advances and improved functioning preserve some degree of connectivity between protected
of markets. These changes range from falling transpor- areas. Thus, inasmuch as agricultural expansion will
tation expenses and higher-yielding crop varieties to continue, efforts to mitigate its environmental impact
declining trade barriers in world markets. As demand through changes in techniques can offer a valuable con-
growth, research, infrastructure investment, and global tribution. However, despite our best efforts to mini-
tariff negotiations continue, the economic prospects for mize its ecological footprint, agriculture in any form
primary commodity production will change, perhaps still constitutes manipulation of the natural environ-
enhancing the potential of commodities as engines of ment rather than an alternative to habitat conversion;
growth and development and encouraging further in- areas under agroforestry or ecoagriculture harbor far
creases in supply. less biodiversity than natural habitat.
Efforts to increase supply, no matter what their motiva- Ultimately, reduced reliance on habitat conversion will
tion, can take the form of further habitat conversion require that production increases stem from techni-
to increase cultivated area, or of intensification, which cal change in the form of intensification. Whether it
seeks to raise output per unit of cultivated area through is based on environmentally sound practices or not,
adoption of improved techniques. The relative cost of intensification is most likely to take place when expan-
these two options to producers is heavily influenced by sion becomes relatively costly due to reduced access to
government policies; if policymakers focus on increas- cheap land. Countries will arrive at this point sooner if
ing commodity production through intensification, the more natural habitat is put under direct protection in
spatial expansion of cultivated area may be stemmed. the near future. Protecting habitat offers a more secure
However, strong incentives to expand cultivated area conservation strategy than waiting for cheap land to
will persist, posing a continuing challenge for conserva- become scarce enough to make intensification an at-
tion. Moreover, intensification of agriculture and live- tractive alternative.
stock production carries environmental costs of its own.
Timber plantations offer a compelling illustration of
Primary Commodities and Conservation Strategy the perils of relying on indirect measures to ease pres-
Since the commodity expansion that threatens biodi- sure on hotspots. In principle, timber plantations
versity is driven by international market forces and gov- ultimately should reduce the need to harvest timber in
10 Chapter 1: Introduction
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pristine natural forests. In the immediate term, how-
ever, several factors limit the potential for the world’s
timber plantations to significantly reduce timber ex-
traction in natural forests in the tropics. Plantations,
for example, cannot now provide the full range of tim-
ber products that are currently extracted from natural
forests. As a result, the profitability of exploiting natu-
ral forest remains high, even in the face of expanding
plantation output. Given that vast areas of increasingly
accessible unexploited natural forest remain, planta-
tions are unlikely to ease pressure on natural forests
for the foreseeable future. Accordingly, as the case
study of timber plantations in the following chapter
suggests, investments in outright protection of critical
ecosystems are likely to be a more reliable means of
conserving global biodiversity. Indeed, in the absence
of direct protection, the promotion of timber planta-
tions has yielded an additional threat to biodiversity, as
natural forests have been destroyed to pave the way for
increased supplies of plantation timber.
In Chapter 2 we examine in more detail the critical

points of conflict between agricultural commodity
production and biodiversity, and explore the economic
drivers of this conflict for coffee, cocoa, timber planta-
tions, cattle, and soybeans. The brief presentations for
each of these commodities draw from in-depth analyses
conducted as background studies for this report. In
Chapter 3 we synthesize the implications for conserva-
tion strategy of the case studies presented in Chapter 2.
The broad consensus that emerges is that the principal
response to the conflict between commodity expansion
and biodiversity must be to implement direct protec-
tion in areas of high conservation importance.
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Chapter 2:
Commodity Case Studies
Green coffee beans
tool for intervention in specific localized contexts, as
I
n this chapter, we discuss the impacts of five indi-
vidual commodities on biodiversity. The first two illustrated by CI projects in the El Triunfo Biosphere
sections concentrate on coffee and cocoa, two com- Reserve region in Chiapas, Mexico, and in Santander
modities produced in nearly every global biodiversity and the Chocó-Manabí corridor in Colombia. How-
hotspot in the tropics. The third section discusses ever, as we discuss in further detail below, the nature of
timber plantations. Although plantation timber is not the global coffee market is such that these efforts alone
an agricultural commodity per se, it shares many of the are unlikely to counter the threat coffee expansion poses
features that make agricultural commodities a threat to to habitat in many biologically important regions of the
natural habitat and biodiversity. Our focus then shifts world.
to cattle production which, unlike other commodities,
has a relatively limited international market. Conse- All Coffees Are Not Equal
quently, growing beef demand in tropical developing Two species of coffee, arabica (Coffea arabica) and
countries drives local production increases that threaten robusta (Coffea canephora), account for the majority
natural habitat. Finally, in the fifth section we examine of worldwide consumption. Natural variations in soil,
the spread of soybean cultivation, particularly in Brazil, sunshine, moisture, slope, disease, and pest conditions
where it may be among the most acute threats to bio- dictate which coffee is most effectively cultivated in
diversity. a particular region. Arabica coffee typically grows at
altitudes between 500 and 2,000 meters, and tends to
Coffee be less tolerant of poor soils and diseases than robusta,
The geoclimatic conditions that favor coffee cultivation which grows at altitudes from sea level up to just over
also are important to global biological diversity. Owing 1,000 meters. The growth limitations and superior
to this coincidence of favorable conditions, 19 of the flavor of arabica coffees allow them to fetch higher
world’s 25 global biodiversity hotspots also are major prices than robustas. Most specialty coffees are arabicas,
coffee growing regions. More than 10 million hectares and arabicas are often blended with robusta beans to
of natural habitat have been converted to coffee pro- improve the flavor of industrial coffee blends. Robustas
duction throughout these hotspots (FAO 2003). In tend to yield smaller beans than arabicas, with a weaker
response to concern over biodiversity impacts of coffee flavor, a distinct bitterness, and more caffeine. Unlike
cultivation, a number of NGOs and private producers arabicas, which must be hand picked, robustas can be
have sought to develop a market for so-called “shade harvested by machine. The harsher flavor and greater
coffee,” or coffee grown under a modified forest canopy ease of cultivation results in a lower price for robusta,
or planted trees. Field studies have shown that shade which tends to be used for instant coffee and mass-pro-
coffee systems are less environmentally destructive than duced ground coffees.
other coffee cultivation methods and are superior in
maintaining conservation values (Perfecto et al. 1996). Arabica accounts for approximately 70 percent of
These efforts show promise and can offer a critical world coffee production (NCA 1999), and about 80
12 Chapter 2: Commodity Case Studies
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Map 1: Coffee growing regions and biodiversity hotspots
Biodiversity hotspots
Coffee growing regions
percent of coffee imported into the United States (Di- Overall, world consumption is projected to grow at the
cum & Luttinger 1999). Central and South America relatively low annual rate of 1.7 percent through the
are generally known for growing arabica, while West middle of this decade. In developed countries, demand
African and Southeast Asian countries are known for is forecast to rise 1.3 percent annually, but a higher
growing robusta. However, all of these regions produce growth rate of 2.5 percent per year is expected in de-
both types. For instance, during the late 90s Brazil, the veloping countries, largely due to projected income in-
world’s largest arabica producer, became the second creases and population growth (FAO 2000). Demand
largest producer of robusta after Indonesia (Villelabeitia growth in developing countries will spur production of
2001). Since then, Vietnam has overtaken both coun- inexpensive robustas and low quality arabicas, and thus
tries to become the world’s leading robusta producer reinforce expansion trends in low-cost producers such
(O’Brien & Kinnaird 2003). as Vietnam and Indonesia. The consequences of this
trend are potentially devastating for biodiversity.
Demand for different coffee types depends, in part,
on the maturity of a given market. In relatively mature Sun and Shade Coffee Production Compared
markets like the United States, demand is growing pri- In addition to expansion of coffee into natural habi-
marily for specialty arabicas. Consumers of these cof- tat, conservationists express growing concern over the
fees are not necessarily drinking more coffee, but have progressive loss of habitat from the increased use of
replaced robustas and lower-grade arabicas with supe- more intensive, so-called “sun” or “technified” produc-
rior blends. In emerging economies such as China and tion systems. Technified systems involve the complete
Eastern Europe, as well as in some producing countries removal of the natural forest canopy. As a result, these
(e.g., Brazil), when incomes rise consumers turn first to systems offer far less habitat diversity than traditional
instant and mass-market coffee made from lower-qual- shade production. In the interest of economic develop-
ity robustas. Inexpensive instant is also the first coffee ment, banks, international development agencies, and
widely drunk as countries transition from tea to coffee national governments have encouraged coffee grow-
consumption, as is now happening in Great Britain ers to adopt such technified methods (Rice & Ward
and may soon take place in the huge potential markets 1996). Although technification might have emerged
of China and Russia. even without subsidies, such incentives likely spurred
the dramatic pace of transformation that has occurred.
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Estimates suggest that by 1990, almost half of the area Coffee’s prominence in economies around the world is
under coffee production in northern Latin America attributable to the fact that many developing countries
had been technified. Sun or reduced-shade systems ac- and lending institutions have favored coffee produc-
count for as much as 68 percent of Colombia’s perma- tion as an economic development strategy. Increasing
nent cropland planted to coffee and approximately 86 the scale and efficiency of existing operations appears
percent of the coffee volume (Perfecto et al. 1996). attractive in the many developing economies where
coffee cultivation already is widely practiced. Also, cof-
The negative biodiversity impacts of this trend have fee exports generate foreign currency, which developing
prompted efforts to develop market-based incentives countries need to finance imports. Lastly, commodi-
to reward farmers for not converting to technified pro- ties, including coffee, have large markets by definition,
duction. However, several factors limit the conservation so any coffee producer that can compete on price can
benefits of efforts to promote shade production. To enter the market. Developing countries with low costs
begin, rewarding farmers for maintaining shade systems of land and labor have a particular advantage. For these
does not necessarily halt conversion of pristine habitat. reasons, economic planners often view expansion of
Though less drastic than the habitat changes caused coffee cultivation as an intuitive strategy. For example,
by technified production, shade systems also involve as recently as 2001 the Director of the National Feder-
significant alterations to natural habitat, including re- ation of Coffee Growers (FNC) of Colombia declared
placement of the native forest understory with a coffee his organization was “dedicated to producing specialty
monoculture. Natural forest regeneration cannot take coffee all over the country, even in places where you
place in a shade system where one or a few plant spe- would least imagine it” (Villelabeitia 2001). Since then,
cies dominate in the forest understory. As a result, with the FNC has changed leadership and policies, and ad-
time, the native overstory in a shade coffee agroforestry opted national guidelines for conservation in Colom-
system dies out and typically is replaced with a mono- bian coffee production in recent years, but elsewhere
culture of exotic species (Alves 1990). Moreover, shade in the world intentions to aggressively expand coffee
production in many areas is not particularly threatened cultivation persist. The total land area under coffee cul-
with conversion to more intensive coffee production tivation in Indonesia is approaching one million hect-
systems. Indeed, some studies suggest that shade coffee ares (FAO 2003). Laos, China, and Myanmar also have
cultivation may be more cost-effective per unit of green begun to develop major low-quality coffee sectors.
coffee than its technified counterpart (de Graaf 1986).
These studies find that despite significant increases in The gravity of the threat that this trend in coffee culti-
yield from technified methods, the added costs of agro- vation poses to biodiversity is perhaps best illustrated in
chemical inputs and labor associated with sun coffee Vietnam, one of the fastest growing coffee producers in
cultivation more than outweigh gains in productivity the world. The Vietnamese government has undertaken
per hectare. one of the most concerted efforts to clear natural forest
ecosystems for the purpose of growing coffee. Increased
Finally, incentive schemes that rely on consumer inter- coffee cultivation has boosted the nation to its current
est reach only a small part of the global coffee market. position as the world’s second largest producer, up
Less than one percent of all coffee imported into the from its rank of 37th in 1985 (FAO 2003). Hundreds
US, for example, is certified to meet social or ecological of thousands of growers have migrated to the central
criteria (Buress 2002). A major obstacle to using incen- highlands to establish coffee farms, leading to extensive
tive schemes lies in the segmentation of global coffee forest conversion, including more than 74,000 hect-
markets into quality grades that command different ares in the province of Dac Lac alone (Lang 2001). In
prices and target different consumers. Much of the area the past, Vietnam produced low-quality robustas for
slated for future coffee expansion will concentrate on instant coffee. However, in 1999, the Vice-Minister
less expensive varieties, intended for markets where cer- of Agriculture and Rural Development announced
tification is of little interest to consumers. plans to plant 100,000 hectares of arabica in Vietnam’s
northern highlands, a project funded in part by a $38
million loan from France (NCA 1999). This expansion
p1-33.indd 14 5/26/2004, 1:21:54 PM

is part of an ambitious plan to become the world’s larg- to thwart the threat to biodiversity posed by coffee
est producer of arabica by 2010 and is a central part of throughout the tropics. Developing countries will ac-
the nation’s agricultural development program (Asian count for most of global demand growth in the years
Economic News 1999). Vietnam’s position as the fast- to come, and the bulk of this segment of the consumer
est-growing coffee producer makes this a highly cred- market is unlikely to pay premiums for environmen-
ible threat. tally friendly coffee. Instead, these consumers will spur
expansion of robusta and low-quality arabicas rather
Production volume may be achieved by either increas- than specialty or green-label coffees. Development
ing land under coffee, or by converting shade coffee planners are responding to this trend with produc-
systems to sun cultivation (“technifying” them) to tion targets that may be devastating for biodiversity, as
achieve higher yields. Because cultivation in Vietnam epitomized in the case of Vietnam.
already is largely technified, with yields averaging more
than 1,000 kilograms per hectare (Asian Economic Cocoa
News 1999), further increases in production neces- Two key factors link cocoa production to deforesta-
sarily will be achieved by expanding cultivated area, tion in priority areas for conservation. First, like coffee,
threatening the pristine areas remaining in the country. the climatic and agricultural conditions best suited for
In 1998, Vietnam was still 30 percent forested, mostly cocoa cultivation are found in the world’s biodiversity
in the north—precisely the area threatened by coffee hotspots (Map 2). Second, the farm-level econom-
development (Lang 2001). Even those areas formally ics and ecology of cocoa production drive producers
designated as protected are at risk, as Vietnam is among to seek out new areas of natural forest for cultivation
the countries in which coffee growers have been ob- rather than replant existing aged farms. In 2002, global
served clearing forest for unauthorized coffee planting area harvested for cocoa amounted to about seven mil-
in such areas. Significant levels of such illegal planting lion hectares, and consisted almost entirely of areas
have also been reported in Indonesia, Mexico, Co- that formerly were forested (FAO 2003). Moreover,
lombia, Peru, Kenya, and Nicaragua (Quinlan 1999, this figure does not include the vast forest areas previ-
USDA 1999a, Jarvie 2000, O’Brien & Kinnaird 2003). ously cleared for cocoa cultivation and then abandoned
or converted to other crops. One strategy to stem the
The aggressive spread of coffee cultivation, even into expansion of cocoa into pristine habitat has been to
national parks and protected areas, suggests that pro- focus on improving the long-term productivity of exist-
grams based on certification of shade coffee are unlikely ing cocoa farms, most notably by offering improved
Map 2: Cocoa growing regions and biodiversity hotspots
p1-33.indd 15 5/26/2004, 2:58:09 PM

prices for organic and environmentally certified cocoa. two years to bear fruit and approximately seven years to
In principle, such efforts could serve to both reduce the reach peak production (Ruf 1995). Consequently, sup-
ecological harm of an advancing agricultural frontier ply changes from new plantings lag behind price signals
and help growers increase farm income. In practice, by several years, which can cause planting to continue
however, sustainable cocoa cultivation may not be suf- long after sufficient productive capacity has been in-
ficiently profitable since it tends to generate low crop stalled. The most recent example of this dynamic is
yields. Another hurdle is the practical challenge of the planting frenzy that occurred in the late 1970s and
coordinating the work of enough small, independent early 1980s, which drove real prices to all-time lows for
growers to effect significant change at the landscape over a decade (Cadbury 1980–2001).
level.
Chronically depressed market prices resulting from
Cocoa Markets, Boom-bust Cycles, and Deforestation cocoa’s boom-bust cycle favor small producers who can
The world’s cocoa is supplied by a number of countries shift cultivation to minimize production costs. The
that form a shifting mosaic of production (Cadbury geographic distribution of small producers results from
1980–2001). In recent years, until the civil conflict responses to the price and availability of land, trans-
that erupted in 2002, the world’s largest cocoa pro- portation infrastructure, and labor. Cocoa expansion
ducer by far was Côte d’Ivoire, which was responsible typically starts with deforestation or forest understory
for 1.1 million tons of cocoa production in 1999. clearing of a newly accessible forested region, followed
Ghana (370,000 tons) and Indonesia (350,000 tons) by cocoa planting and intercropping with shade and
are second and third, respectively (FAO 2003). To- fruit-bearing trees (Ruf 1995). Once the new cocoa
gether, these three nations produce nearly 70 percent trees are established, production proceeds for about 25
of the global supply of cocoa. Compared to other com- years, after which yields begin to fall as cocoa trees age
modity markets, the global cocoa market is particularly and soils become depleted of nutrients. Cocoa cultiva-
dynamic, a fact underscored by Indonesia’s emergence tion will then be abandoned, and the land generally
during the past decade as a major global producer will be converted to other uses. Ruf (1995) observes
and, concurrently, Brazil’s virtual disappearance from that, even in regions where average levels of cocoa
the cocoa export market (Cadbury 1980–2001). Côte production have remained constant, small cultivators
d’Ivoire, Ghana, Nigeria, and Cameroon have all stabi- have been continually abandoning old cocoa plots and
lized or increased production during the 1990s (Cad- encroaching on pristine forests to open new areas of
bury 1980–2001). cultivation.
Like many commodity markets, the cocoa market fol- Tropical forests are crucial to this process for several
lows a boom-bust cycle (Ruf 1995). At the root of this reasons. First, newly accessed forestlands are largely
cycle is the uncoordinated expansion of production unoccupied and thus present an opportunity for ag-
capacity in response to rising prices. Since commodity ricultural expansion. Second, tropical forests provide
markets generally are easy to enter due to limited dif- critical natural functions that make cocoa cultivation
ferentiation between producers, they typically result in economically viable, such as soil fertility, weed and pest
a large number of producers whose output can be diffi- control, protection from water and wind erosion, and
cult, if not impossible, to coordinate. Consumers often moisture retention. As cocoa forests age, however, their
enjoy lower prices as a consequence of the market gluts ability to provide these functions diminishes. After this
created by commodity over-supply, but these price occurs, cocoa growers typically seek out new forests in
declines can be devastating for producer regions. The which to plant because the costs of replanting within
boom-bust cycle in the cocoa market has brought great existing cocoa-growing areas (e.g., higher plant mortal-
but transitory riches to certain regions (e.g., Ghana ity and additional weeding) become prohibitive (Ruf
in the late 1970s), and economic collapse to others, et al. 1995). For example, Hardner (1999) documents
especially high cost producers (e.g., cocoa producing that in Bahia, Brazil, replanting existing cocoa stock
areas in Malaysia and Brazil). This cycle is further ex- would require a doubling of the region’s peak produc-
acerbated by the fact that cocoa trees require at least tivity (500 kg per hectare) to cover costs.
p1-33.indd 16 5/26/2004, 1:22:20 PM

Disease also drives the shifting cultivation of cocoa of the country’s total area. Cocoa also has consumed
by forcing producers to seek out new areas for plant- much of Ghana’s original forest habitat, currently cov-
ing rather than incur the costs of disease management ering as many as 2.4 million hectares or 10 percent of
through labor-intensive pruning and costly chemical the country’s total area. Ghana’s production peaked
fungicides and pesticides. Cocoa production in many earlier than Côte d’Ivoire, and by now virtually all of
regions of the world, including Java, Central America, its forest has been exploited. Cocoa also has caused
and Ecuador, has been completely obliterated by widespread deforestation in Brazil. During its cocoa
disease, and new infestations are common (Cadbury economy boom of the 1970s, the total area planted
1980–2001, Evans 1998). Cadbury’s Cocoa Growers in cocoa in southern Bahia reached 600,000 hectares.
Bulletin frequently documents outbreaks of patho- This greatly exceeded the area appropriate for cocoa
gens such as cocoa swollen shoot virus (CSSV) and production, as high cocoa prices drove landowners to
black pod disease (Phytophthora spp.) in West Africa, plant cocoa on marginal lands that exhibited neither
witch’s broom (Crinipellis perniciosa) and watery pod proper soil nor moisture conditions. This expansion
rot (Moniliophthora rorei) in South America and the was a leading cause of the decline of Brazil’s endan-
Caribbean, and vascular-streak dieback (Oncobasidium gered Atlantic coastal forest ecosystem, of which only
theobromae) in Malaysia, Indonesia, and Papua New about 10 percent survives (SOS Mata Atlantica 1993).
Guinea. Some diseases can be controlled through costly Little land in Bahia remains under active cocoa produc-
measures involving chemicals and the destruction of tion today as farms have succumbed to price declines
infected specimens, but the limited means and disor- and disease outbreaks. Cocoa agroforests, beginning
ganized nature of small producers make these measures with those planted in marginal soils, are being con-
difficult to implement on a regional level. verted to full sun robusta coffee plantations and other
non-traditional crops that require complete forest clear-
Cocoa Cultivation as a Threat to Biodiversity ing (Hardner 1999).
In most regions where it is produced, cocoa is a major
cause of deforestation. In West African nations like The combination of agriculture and forestry known
Ghana and Côte d’Ivoire, the spread of cocoa cultiva- as agroforestry, which is suited to cocoa production
tion has left behind only small remnants of the origi- because cocoa must be grown in the shade of forest
nal forest cover. In Indonesia, rapid growth of cocoa trees, may be ecologically preferable to homogenous
production is opening previously inaccessible tropical agriculture. However, it is not a replacement for natural
forests to settlements and deforestation in Sulawesi and habitat. Ekanade (1987) documents that cocoa agro-
possibly Irian Jaya and Central Sumatra (Akiyama & forestry in Nigeria results in far less biomass and lower
Nishio 1996, Ruf et al. 1995). Worldwide deforesta- soil fertility than natural forest. In addition, studies of
tion caused by cocoa production amounts to well over forest mammals and herpetofauna (i.e., reptiles and
seven million hectares, and because most cocoa culti- amphibians) show a decline in populations and spe-
vation relies on a continuous supply of natural forest cies diversity in agroforestry plots (Estrada et al. 1993,
for new plantings, remaining forests throughout cocoa Heinen 1992). Furthermore, soil exposure that results
producing areas in the biodiversity hotspots are under from the removal of forest vegetation exacerbates forest
imminent threat. deterioration from cocoa cultivation, and the export of
soil nutrients from the forest via the harvest of cocoa
Indeed, the spread of cocoa cultivation in several bio- fruits affects the natural nutrient cycle. These dynamics
diversity hotspots has already left behind a remarkable inexorably feed the cocoa cycle where cocoa plots are
path of forest destruction. In West Africa, for example, abandoned rather than replanted when productivity
cocoa has served as the vanguard for deforestation over falls after about 20–25 years.
the last several decades. As a result, remaining forest
habitat amounts to less than one-fifth of its original ex- Plantation Timber
tent. A conservative estimate of the cumulative amount Deforestation driven by demand for wood products has
of forest affected by cocoa cultivation in Côte d’Ivoire led to extensive habitat destruction, particularly in the
is approximately two million hectares or 16 percent tropics (Dudley et al. 1995). Persistent growth in global
p1-33.indd 17 5/26/2004, 1:22:32 PM

demand for timber products maintains strong pressure 2000. This means that, although plantation production
on natural forests and other sources of wood supply. may be substantial and growing, natural forests con-
Weiner and Victor (2000) examined forecasts of global tinue to supply the majority of global timber produc-
timber demand for industrial roundwood1 to the year tion. This situation may change in the future. Carneiro
2050, and report an average projected annual growth and Brown (1999) estimate that sustained growth in
in demand to 2050 of one percent. Average forecast total plantation area will raise the plantation share of
demand is two billion cubic meters in 2010, and 2.6 global industrial roundwood supply from 25 percent
billion cubic meters in 2050. A recent FAO assess- in 1995 to about 33 percent by 2050. As noted above,
ment (2001) forecasts a more dramatic increase—FAO FAO (2001) states that the contribution already sur-
predicts that global production and consumption will passed this level by 2000. ABARE-Jaakko Pöyry (1999)
expand by 1.7 percent per year and reach approximately estimate that the plantation share may reach 44 percent
2.5 billion cubic meters by 2010, 40 years sooner than as soon as 2020. Although expansion in plantation pro-
the average forecast reported in Weiner and Victor duction of these magnitudes would be impressive, these
(2000). projections also imply that more than half of global
timber supply will continue to be derived from natural
In the face of the growing demand for timber, debate forests for decades. So, although the potential for tim-
has intensified about the extent to which the expansion ber supplies from plantations is encouraging and may
of large-scale industrial timber plantations is a positive alleviate some pressure on natural habitat in specific
development for biodiversity conservation (Kanowski regions, it does not guarantee relief for natural forests
1997). Some observers (see, for example, Tropical at a global level.
Forest Update 2001) argue that wood products from
plantations will reduce the need to harvest native for- Failure of Timber Plantation Products to Replace
ests, and that therefore much larger investments in Natural Forest Products
plantations should be a conservation priority. Others Timber plantations can reduce pressure on natural
note that land for new plantations often comes at the forests only if there is substantial overlap between the
expense of natural forests or other ecosystems, and ar- types of products derived from plantations and natural
gue that more plantations will have little impact on the forests. If plantations fail to replace natural forests as
pace or scale of logging in natural forests. In an effort sources of supply for particular wood products that are
to illuminate this issue, in this section we discuss three in high demand, then pressure on natural forests for
aspects of plantation production that currently limit those products will persist. Indonesia, a country critical
its value as a tool for biodiversity conservation. First, to biodiversity conservation in the tropics, provides a
plantations are not producing enough industrial wood telling example of how plantation production has done
products of commercial quality to significantly reduce little to reduce pressure on natural forests. Indonesia
the amount of timber extracted from natural forests. has a huge plantation estate used primarily for pulp
Second, sufficient overlap does not exist between the production, but most of the fiber it consumes has come
type of products produced from plantations and those from clear-cutting natural forests, resulting in about
coming from tropical forests. Third, production of 835,000 hectares of deforestation. Plantations supplied
roundwood from natural forests continues to be cost only eight percent of the 100 million cubic meters of
competitive despite the growth of timber plantations. wood consumed by the pulp and paper industry be-
tween 1988 and 1999 (Matthew & van Gelder 2001).
How Much Timber Do Plantations Produce? The species-rich nature of mixed tropical forests makes
If plantations are to alleviate pressure on tropical for- them a costly source of raw material for paper produc-
ests, they must produce enough industrial roundwood tion compared to the much more homogeneous and
to replace a substantial proportion of natural forest uniform fiber available from plantations. But the pulp
harvests.2 Carneiro and Brown (1999) estimate that industry in Indonesia has shown that a combination
in 1995 plantations supplied about 370 million cubic of cheap raw materials and government subsidies can
meters, or 25 percent of global industrial roundwood. create a viable industry based on supplies from natural
FAO (2001) reports a contribution of 35 percent in forest (Barr 2000, FWI/GFW 2002). Indonesian tim-
p1-33.indd 18 5/26/2004, 1:22:44 PM

ber companies typically log natural forest to exhaustion 1999). This technical barrier includes a lack of even
first, and only then establish alternative wood supplies basic knowledge regarding lifecycles of tropical species
from plantations (FWI/GFW 2002). Thus, the portion and the ecology that supports them. Because of these
of the timber industry that may be the most suitable many barriers, governments have had to play a central
for plantation supplies—the pulp industry—has prov- role in plantation promotion either directly by estab-
en to be devastating for Indonesia’s forests. lishing plantations or indirectly by subsidizing private
sector investments (ABARE-Jaakko Pöyry 1999, Brown
Persistent Cost Competitiveness of Harvesting 2000).
Natural Forests
Finally, to reduce pressure on natural forests, plantation Additional Limitations to Timber Plantations
production must become cheap enough to lower wood A number of other factors, in addition to those de-
prices such that harvesting natural forests becomes scribed above, limit the extent to which timber planta-
unprofitable at a global level. Currently, however, the tions can be expected to replace natural forest harvests
persistent availability of cheap industrial roundwood in the near future. One limitation is that many planta-
from native forests forestalls investments in plantations tions do not produce commercially usable timber. In
in many areas. Indeed, the conventional cycle for pro- Asia and Africa, for example, 60 percent of plantations
ducing industrial roundwood has been to first deplete fail to produce commercially viable products due to
native forests and then invest in plantation production low productivity, poor management, and inappro-
only when roundwood supply from native forests falls priate species selection. Indeed, because of quality
below needs. Examples of this cycle, in addition to the considerations, as much as 20 percent of the world’s
Indonesian case noted above, include New Zealand, plantation area does not contribute to the global tim-
which in the 1930s created a Pinus radiata plantation ber supply (ABARE-Jaakko Pöyry 1999). The current
industry only after native forests had been depleted age structure of the global plantation estate also limits
(FAO 1999b), and aggressive plantation programs in the near-term relief that plantations can offer natural
Thailand (Hammond 1997) and Vietnam (Van 1997), forests. Overall, more than half of plantations are less
where natural forests have already been harvested ex- than 10 years old, and 80 percent are less than 20 years
tensively. old (Carneiro & Brown 1999). Plantations typically
require 7 to 10 years of growth before harvesting for
In some cases, plantations remain costly relative to pulp, and as many as 15 to 20 years before harvesting
natural forests because of barriers that often confront for sawlogs. Thus, much of the global plantation estate
private sector investment in plantation forestry, par- will not contribute to timber supplies until well after
ticularly in tropical countries (ABARE-Jaakko Pöyry 2010, which may be too late to reduce pressure on
1999). These barriers include the high risk and cost of highly threatened forests in many areas.
financing, the cost and complexity of processing facili-
ties, high initial establishment costs ($1,500 to $2,500 Finally, because the bulk of wood consumption in
per hectare for softwood and $1,800 to $4,200 per many countries is met by domestic production, and
hectare for hardwood plantations), and relatively mod- because timber plantations are predominantly located
erate rates of return. Such disincentives to investment in developed countries, demand in the developing
in plantations are exacerbated by the long lag (any- world will continue to be met through the harvest of
where from 8 to 25 years) between initial investment natural forests. Pandey and Ball (1998) estimate that
and resulting cash flow, and the need for a large criti- 58.5 percent of the global timber plantation estate,
cal quantity of production before processing facilities which totals around 139 million hectares, is located in
become viable. Developing regions also are relatively the developed world.3 Tropical developing countries
unattractive investment targets due to poor regional account for only 19.8 percent of global plantation area.
infrastructure. Finally, timber plantation establishment Moreover, only three countries—Indonesia, Brazil, and
in the tropics faces the problem of inadequate informa- Thailand—account for the majority of plantations in
tion on appropriate species and cultivation techniques the tropics (FAO 2001)(see Table 1). Thus, temperate
suitable for tropical ecosystems (ABARE-Jaakko Pöyry regions dominate global plantation production, and
p1-33.indd 19 5/26/2004, 1:26:05 PM

Table 1: Top 10 country shares of the global plantation the eve of a global Livestock Revolution. Even in areas
estate (2001) with muted prospects for per-capita income, popula-
Share of Global tion growth and urbanization will continue to spur
Rank Country
Plantation Area (%) growth in demand. Only a small share of total beef
1 China 24 production is traded internationally, suggesting that the
2 India 17 preponderance of future demand for beef will be met
3 Russian Federation 9 through increases in local supply, with attendant local
4 United States 9 environmental consequences. Cattle production already
5 Japan 6 has caused extensive damage to biodiversity, through
6 Indonesia 5 deforestation in tropical areas and overgrazing in semi-
7 Brazil 3 arid regions. Growth in beef production fuels habitat
8 Thailand 3
destruction in two ways. First, expansion of grazing
lands to accommodate larger herds often requires con-
9 Ukraine 2
version of natural habitat to pasture, acting as a direct
10 Iran 1
driver of deforestation and environmental degradation.
Rest of World 21
Alternatively, intensification of production supports
Source: FAO (2001) larger herds and yields (carcass weight per animal) on
fixed areas by increasing supplies of external inputs, es-
pecially feed grains. Increasing demand for feed grains,
just three countries dominate what little plantation in turn, presents a strong force for conversion of natu-
production takes place in the tropics. Therefore, do- ral habitat to monocultures of maize, wheat, barley,
mestic demand in developing countries for commercial and soybeans.
timber and fuelwood, as well as international demand
for tropical timber, will continue to drive deforestation Global Market Trends in Beef Production
and habitat degradation throughout the tropics. Trends in the output and consumption of cattle
products indicate that the global herd inevitably will
Taken together these findings suggest that, in the near increase in size. The world today holds more than 1.3
term, plantations will play a limited role in reducing billion head of cattle, up 32 percent since 1965 (FAO
pressure on tropical forests. Plantations may currently 2003). Asia, Latin America, and Africa, home to most
yield large quantities of roundwood, but natural forests of the world’s biodiversity hotspots, have seen their
continue to contribute more than half of the global shares of the global herd rise, while shares in Europe
timber supply, and plantations are limited in their and North America have fallen. Currently Asia holds
ability to produce wood types and qualities that sub- more than one-third of the world’s cattle stocks, and
stitute for natural forest products. Moreover, logging Latin America about one-quarter, while Europe and
in natural forests remains cost-competitive even where North America hold about 10 percent each.
plantation products are viable substitutes for natural
forest products. As these conditions are not expected Developing countries account for the bulk of antici-
to change in the foreseeable future, the promotion of pated growth in global consumption of cattle and dairy
plantations, in and of itself, is unlikely to be an ad- products. In the early 1990s, developed countries con-
equate strategy for protecting biodiversity from the sumed about five times more beef and milk per capita
impacts of timber production. than developing countries (Delgado et al. 1999). The
gap, however, is shrinking rapidly because beef and
Cattle milk consumption are growing at least three times fast-
Over the past few decades, global consumption of beef er in developing countries than in developed countries.
has climbed steadily as a consequence of worldwide In developing countries, consumption increased by an
income growth, population growth, and urbanization. average of 3.2 percent per year between 1982 and 1994
Indeed, Delgado et al. (1999) anticipate a dramatic while remaining virtually stable in the developed world
surge in beef demand, arguing that the world stands on (Delgado et al. 1999). Over the past two decades, per-
p1-33.indd 20 5/26/2004, 1:26:18 PM

capita meat and milk consumption has expanded most link extensive deforestation in the Amazon in recent
rapidly in Asia. In China, for example, consumption years to a five-fold increase in beef exports between
has doubled. Over the same period, per-capita con- 1997 and 2003 (see Figure 2).
sumption stagnated in Africa and West-Asia, but total
consumption grew due to high population growth. In Cattle Production Systems and Biodiversity Threats
sum, the combined forces of income growth, popula- The impact on biodiversity of growing demand for
tion growth, and urbanization in the developing world cattle products will depend on the production systems
portend a strong surge in global beef consumption. By used to generate increases in supply. Cattle production
2020 meat and milk consumption in developing coun- systems operate on three principal models: extensive
tries are projected to increase by 87 and 75 percent, grazing, mixed farming, and industrial (or intensive)
respectively (Nicholson et al. 2001). livestock production. In extensive grazing systems,
cattle herds subsist on inputs readily available from pas-
Most countries produce most of the meat that they ture areas. These systems occupy about one-quarter of
themselves consume. Global trade in beef and veal the world’s land, yet yield less than 10 percent of global
accounts for less than four percent of world production meat production. In this type of system, production
(FAO 2003). Even for the 10 leading exporters, exports growth primarily is achieved by opening new grazing
only account for about four percent of production areas (Steinfeld et al. 1997). Mixed farming systems
as a group, although some individual producers do integrate livestock and crop production, whereby each
maintain higher export shares. Since international trade provides inputs used in the other: livestock consume
accounts for such small shares of production, countries crop residues while manure contributes to crop fer-
expected to experience rapid growth in demand for tilization. When input requirements for production
beef also are likely to experience rapid growth in growth overwhelm on-farm capacity to supply feed,
production. Therefore, the surge in beef consumption expansion depends on increased supplies of external
anticipated in the developing world also implies a surge inputs, especially feed grain (Thomas & Barton 1995).
in production in precisely those areas that house the The intensive production model relies on inputs im-
bulk of the world’s remaining biodiversity. However, ported from outside, particularly concentrate feed
Brazil is an important exception where beef exports grains with high nutrient densities, and therefore can
play a large role: although growth in domestic demand be sustained on small units of land. Extensive graz-
fueled pasture expansion and deforestation from the ing accounts for 9.3 percent of global meat produc-
1970s until the mid-1990s, Kaimowitz et al. (2004) tion, mixed farming for 53.9 percent, and industrial
Figure 2: Growth in Brazil beef production, consumption, and export (1997–2004)
Source: Kaimowitz et al. (2004)
p1-33.indd 21 5/26/2004, 1:26:31 PM

livestock production for 36.8 percent (Steinfeld et al. mixed farming systems form the most visible threats
1997). Of the three main production systems, output to biodiversity attributable to cattle production. Cattle
from industrial or intensive livestock production is ranching can take place on land unsuitable for crops, so
growing at the fastest rate (4.3 percent per year versus governments have been eager to see ranching expand to
2.2 percent for mixed systems and 0.7 percent for ex- “idle” land under natural habitat (Delgado et al. 1999).
tensive systems) (Sere & Steinfeld 1996). In contrast, industrial production systems seemingly
alleviate pressure on areas of high biodiversity value
To date, intensification has proceeded more rapidly because they do not rely on extensive grazing lands
in developed countries than in developing countries. (Delgado et al. 1999).
Between 1982 and 1994, the amount of beef produced
per animal increased by .9 percent per year in the de- However, although intensive systems may reduce direct
veloped world, and by only .5 percent per year in the pressure on natural ecosystems from deforestation, they
developing world (Delgado et al. 1999). Over the same nevertheless pose an indirect threat to biodiversity by
period the number of animals fell by 12 percent in de- increasing the demand for feed grains and thus driv-
veloped countries while stocks increased by 16 percent ing the expansion of cultivated area for crops such as
in the developing world (FAO 2003). Thus, in the de- soybean and maize. For example, the proliferation of
veloping world, production increases relied heavily on soybean operations in Brazil has resulted in widespread
larger herds rather than intensification, as opposed to conversion of forests and grasslands to large-scale
the developed world where intensification allowed pro- monoculture (Fearnside 2000). About 21 percent of
duction growth despite declining total herd size. the world’s arable land is used to produce grains for
The difference between developed and developing livestock feed, and grain fed to livestock represents
country cattle production trends largely reflects the around 40 percent of total global grain production
fact that, in many developing countries, the cost of (Brown 1995). In developed countries, concentrate
importing feed grain for intensified production has feed grains account for 40 percent of livestock feed,
exceeded the cost of expanding grazing land. For many but in developing countries they account for only 12
countries, intensification of feed input per unit of meat percent. As continued intensification in the developing
output would imply increased reliance on international world shrinks this gap, sustained growth in global de-
trade in feed grain. Thus, a country’s ability to import mand for feed grains will spur expansion of cultivated
feed grain will exert a strong influence on the evolu- area in South America as well as South and East Asia
tion of livestock production systems and their impact (Delgado et al. 1999). Increased supply of soy meal will
on biodiversity. In countries where ability to import is come largely from South America, especially Brazil, Ar-
constrained (for example, by foreign exchange short- gentina, and Venezuela, where cultivated area for soy-
ages), output growth will intensify grazing pressure beans is expected to grow dramatically over the coming
on existing pasture and rely on continued pasture decade (USDA 1998). Southern Brazil lost virtually all
expansion into increasingly marginal areas. Especially of its remaining forests by the mid-1980s to soybean
in developing countries with abundant and therefore cultivation. Much of this production is exported to the
inexpensive land, clearing of forests for pasture may United States and Europe, demonstrating how intensi-
appear more economically viable than intensification. fied beef production in developed countries contributes
Given anticipated demand growth, extension to further to biodiversity loss in the tropics. This dynamic can
marginal areas and conversion of forest areas to pasture only grow stronger as intensification of livestock sys-
continues to threaten vulnerable ecological resources. tems proceeds throughout the world. Perversely, in the
case of Brazil, deforestation due to increasing soybean
The impact of future cattle production on biodiver- production for feed grain exports is accompanied by
sity partly will depend on the extent to which rising continuing loss of forest to expanding pasture for beef
demand for beef is met by greater intensification or exports (Kaimowitz et al. 2004).
by expansion of grazing to areas currently occupied by
important native habitat. Deforestation and habitat
degradation caused by expansion of both extensive and
p1-33.indd 22 5/26/2004, 1:26:47 PM

The Livestock Revolution anticipated by Delgado et al. tivated area for feed grains such as soybeans may prove
(1999) portends strong growth in demand for beef in to be the greatest threat to biodiversity attributable to
the coming decades. International trade comprises only cattle.
a minor portion of beef consumption in most parts
of the world, and therefore supply responses primar- Soybeans
ily will involve increases in local production systems. Over the past three decades, soybean cultivation has
Production growth will rely on expansion of pasture in become one of the most prominent threats to tropical
some areas of the world, but elsewhere will depend on biodiversity. Between 1961 and 2002, global produc-
increasing use of feed grains. Indeed, expansion in cul- tion increased from 27 million to 180 million metric
Map 3: The cerrado and Amazon regions in Brazil
Produced by Conservation Mapping Program, GIS & Mapping Laboratory, CABS. Cartography: M. Denil.
p1-33.indd 23 5/26/2004, 1:26:57 PM

tons per year, and the total area harvested for soybeans Environmental Consequences of Soybean
increased from 24 million to 79 million hectares (FAO Expansion in Brazil
2003). Until the late 1960s, most soybean cultivation Expanding soybean cultivation and related industries
was concentrated in temperate countries, but since results in a wide array of direct and indirect environ-
then production has rapidly expanded in tropical mental impacts. In Brazil, the indirect impacts of
countries with abundant, inexpensive land and high soybean production have been particularly damaging,
concentrations of biodiversity, such as Brazil, Bolivia, especially those stemming from improvements in trans-
and Paraguay. The United States accounts for about 40 portation infrastructure that seek to reduce the cost of
percent of world production, and Brazil ranks second moving soybeans from farms to ocean ports (Nepstad
with more than 23 percent, followed by Argentina and et al. 2001). Improved infrastructure also benefits such
China. Smaller producers include India, Paraguay, the industries as ranching and logging, and expansion of
European Union, and Indonesia. Long-term projec- these industries in turn contributes to deforestation di-
tions by the FAO anticipate world production of 239.8 rectly and also spurs further associated settlement and
million tons per year by 2020, when the global area clearing along the improved roads and waterways: more
under soybean cultivation will have grown to at least than two-thirds of deforestation in the Amazon has
87.5 million hectares (Holt et al. 1997). occurred within 50 kilometers of major paved high-
ways (Nepstad et al. 2001, Alves 2002). Infrastructure
Here, we focus on Brazil as an illustration of the im- projects motivated by soybean expansion are likely to
pact soybean production is likely to have as it expands reinforce this trend, and thus lead to deforestation and
in other tropical countries rich in biodiversity. Soybean habitat conversion over areas much larger than those
cultivation in Brazil began to cause widespread conver- directly planted with soybeans themselves.
sion of pristine areas as of the late 1960s. Over the next
three decades the total area under soybean cultivation At present, soybean cultivation is expanding more
in Brazil grew by 13 million hectares, an area 2.5 times quickly in the cerrado than in any other region of Bra-
the size of Costa Rica (Brazil CNPSO-EMBRAPA zil. Agricultural activity began there in the late 1960s,
1999). Today, nearly 16.5 million hectares are devoted and by 2001 about two-thirds of the region had been
to soybean production in Brazil (FAO 2003). Much of converted to agriculture. As a result, the cerrado has
this expansion has occurred in an area of low scrub and suffered the most habitat loss of any region of Brazil
savanna in south central Brazil known as the cerrado (Nature Conservancy 2001). Hecht (1998, 1999) aptly
(See Map 3; Klink 1995, Klink et al. 1994, The Nature calls this area a “development sacrifice zone” because
Conservancy 2001). At present, the Brazilian soybean for many years—partly in response to international
frontier continues to shift northward through Mato pressure regarding environmental impacts—developers
Grosso and into Amazonia. A major driver of Brazilian focussed on the cerrado for soybean cultivation rather
soybean expansion has been the dramatic worldwide than clear Amazonian rainforests. However, those parts
increase in the use of soy products as feed supplements of the cerrado that have not yet been converted to ag-
for domesticated animals, coupled with increases in riculture contain biodiversity rivaling that of the Ama-
global consumption of animal protein driven by in- zon (Dinerstein et al. 1995). The cerrado harbors 837
come growth, population growth, and urbanization species of birds, 180 species of reptiles, and 113 species
(Delgado et al. 1999). Soybean cultivation in Brazil of amphibians (Mittermeier et al. 1997). Yet, despite its
will continue to expand because the country’s produc- biological richness, the cerrado is one of the least pro-
ers are internationally cost-competitive, and because tected ecosystems in Brazil, with only 1.5 percent of its
of strong potential for increased domestic demand. area in federal reserves (Ratter et al. 1997).
Consequently, the government of Brazil has dedicated
much development planning and infrastructure invest- In contrast, several factors have limited the direct im-
ment to soybean expansion. pacts from soybean production in the Amazon. One
limitation is that existing soybean strains are ill suited
to the continuous rainfall characterizing much of the
p1-33.indd 24 5/26/2004, 1:27:14 PM

Amazon. Other barriers include a scarcity of essen- received a guaranteed minimum price regardless of their
tial soil nutrients and the consequent need for lime, location (Goldin & Rezende 1993). Though intended
fertilizers, and other expensive soil enhancements. to protect farmers from price swings, the price guarantee
Moreover, the Amazonian soils most suited to commer- encouraged expansion to distant frontiers where market
cial-scale agriculture are usually associated with sloping forces otherwise would have rendered soybeans unprofit-
topography, making mechanized agriculture, which is able. During the 1980s soy production in remote loca-
most effective on level land, difficult to implement. tions also benefited from fuel subsidies that maintained
a uniform price for petroleum products throughout the
However, despite these barriers, demand and improved country. Soybean farmers in Brazil receive highly subsi-
technology continue to facilitate the expansion of dized agricultural credit for the purchase of inputs such
soybean cultivation in the Amazon. Many observers be- as seeds, chemicals, and especially tractors and other
lieve that, much as agricultural research reduced obsta- machinery. Moreover, large-scale soybean farmers enjoy
cles to soybean expansion in the cerrado, research will privileged access to credit because they have secure land
ultimately open vast areas of the Amazon to agriculture titles and collateral and therefore require lower bank
(Paterniani & Malavolta 1999). In fact, this process is transaction costs than small-scale farmers of other crops
already well underway in parts of the region. In 1996, (Helfand 1999). The federal government’s Program
for example, only 1,800 hectares in the Amazonian for Development of the Cerrados (POLOCENTRO)
state of Rondônia were devoted to soybeans. Over the distributed $577 million in subsidized loans between
following three years this area nearly tripled to 4,700 1975 and 1982, enabling the conversion of 2.4 million
hectares, and then in a single year it tripled again to hectares of savanna to agriculture (Mueller et al. 1992,
14,000 hectares. Similarly, in the northeastern state of cited in Kaimowitz & Smith 2001). Price fluctuations
Maranhão, a portion of which lies in Amazonia, the and production shortfalls due to bad weather, pests, and
amount of land in soy production grew from 89,100 other misfortunes often make such loans difficult to re-
to 140,000 hectares between 1996 and 1999 (Brazil, pay, but on several occasions, the government has simply
CNPSO-EMBRAPA 1999). canceled agricultural debts, further encouraging farm-
ers to continue expanding harvested land. For instance,
The Role of Government Policy in Brazilian in 1999, pressure from the farm lobby led to a partial
Soybean Production amnesty of the year’s agricultural debts (Provisional
Market forces and advances in agricultural technology Measure No. 1918). Although the exact amount of this
are not the only drivers of soybean expansion in Brazil. amnesty remains undisclosed, there is little doubt that
An additional factor is the country’s strong agricultural it amounted to considerably more than a similar previ-
lobby, which has succeeded in convincing the govern- ous agreement with the farm lobby that cost $4 billion
ment to provide continued support to agricultural (Folha de São Paulo, 20 October 1999).
expansion (Kaimowitz & Smith 2001). Price cycles and
weather conditions simultaneously affect all farmers, Government infrastructure investments may be the
reinforcing cohesion among farmers in a strong, vocal largest driver of soybean expansion today. As noted
front to lobby for concessions from the government earlier, roads act as a principal cause of deforestation by
at state, municipal, and federal levels. Government facilitating the expansion of a wide range of activities
support for soybean cultivation includes subsidies for that require clearing of land. In Brazil, planners refer to
prices, credit, and infrastructure. Such policies exacer- these secondary impacts as the “dragging effect” or the
bate the environmental destruction caused by soybean stimulation of private investment as a result of public
cultivation by making expansion of soybeans far more expenditure in a project. Thus, the total investment gen-
attractive than otherwise would be the case. erated by government expenditure can greatly exceed the
initial government outlay, in what is more commonly
Price and credit subsidies have played a strong role in known as a multiplier effect. According to José Paulo
the expansion of soybean cultivation in Brazil. In the Silveira, head of the federal government’s Brazil in Ac-
mid-1980s, Brazil’s federal government maintained the tion program, the Madeira River Waterway, extending
Minimum Price Guarantee Policy, under which farmers from Porto Velho, Rondônia, to Itacoatiara, Amazonas,
p1-33.indd 25 5/26/2004, 1:27:31 PM

is expected to have a dragging effect of 3:1 (Fearnside es of more than 40 percent of the cargo’s value. The
2002). This may seem like a considerable advantage Waterway reduced transport costs such that the share
to government investment planners, but it also im- of the soybean price captured by farmers in Rondônia
plies that public infrastructure expenditures will cause rose to 75 percent of the national average. Over $100
substantial additional pressure on natural areas. Much million invested in water transportation services on
of the Amazonian initiative within the federal govern- the Madeira River Waterway reflects an anticipated
ment’s Brazil in Action program is devoted specifically increase in barge traffic from an initial 300,000 tons
to soybean infrastructure (Consórcio Brasiliana 1998, per year to 3 million tons per year (Blumenschein et al.
Brazil, Programa Brasil em Ação 1999). Generous allo- 1999). This ten-fold increase can only mean dramati-
cations for this infrastructure are also an important part cally accelerated conversion of forest to soybean culti-
of the federal government’s 2000–2003 Avança Brasil vation. Comparable investments in other waterways,
or “Forward Brazil” Program (Brazil, Programa Avança roads, and railroads to promote soybean production
Brasil 1999). The Brazilian government intends to throughout the Amazon promise a widespread assault
invest on the order of $40 billion in infrastructure de- on biodiversity (Fearnside 2001).
velopment in the Amazon over the next few years, and
the planned roads, railways, hydroelectric facilities, and The future expansion of soybean cultivation will be
power and gas lines are certain to contribute to various driven by growth in demand, advances in agricultural
drivers of deforestation, including soybean cultivation technology, and additional government policies aimed
(Fearnside 2002, Laurance et al. 2001). Soybean trans- at supporting development. Farmers with privileged
port is the principal justification for several road and access to credit and other subsidies, regional authorities
waterway development projects, of which the Madeira hoping to cultivate the “dragging effect” of infrastruc-
River Waterway is a particularly telling example (see ture development, and national governments locked
Map 3). into traditional support for the agricultural sector will
ensure that soy expansion proceeds. Thus, the scope
The Madeira River Waterway has reduced soy transport for intervention and effective conservation responses is
costs by a factor of three, by enabling the direct transfer shaped by the wide array of parties who have a vested
of soybeans from trucks in Porto Velho, Rondônia, to interest in continued aggressive expansion.
barges bound for a major soy terminal in Itacoatiara,
Amazonas. Before this river improvement project, road
transport over 2,400 kilometers incurred freight charg-
Subsidized Agriculture in Developed Countries

This report identifies several ways in which governments in the tropics support the expansion of commodity production at
the expense of biodiversity. This support, however, is dwarfed by the amounts expended to support agriculture in developed
countries. Early in 2002, the US government approved a farm bill that included about $180 billion to be spent over 10
years in various forms of support for farmers (Economist 2002). Collectively, developed countries as represented by the
Organization for Economic Cooperation and Development (OECD) spent an average of nearly $250 billion per year in sup-
port of agricultural producers over the period from 1999 to 2001, and more than $55 billion on indirect support such as
research and development, infrastructure, marketing services, and the like (OECD 2002). On a per hectare basis, OECD
government support for the agricultural sector between 1999 and 2001 averaged about $200 per hectare per year, ranging
from $122 in the US to $722 in the European Union and over $10,000 in Japan. Much of the resulting excess production
of a wide range of commodities is dumped on global markets, depressing prices and thus compelling governments in
developing countries to enact policies to support their own agricultural sectors. This relationship between agricultural
policy in OECD countries and agricultural policy in developing countries will frustrate efforts to achieve policy reform in
the tropics until agricultural trade issues are comprehensively addressed at a global level.
p1-33.indd 26 5/26/2004, 1:27:44 PM

Other Expanding Commodities support encourages intensive olive farming in Greece,
Coffee, cocoa, plantation timber, cattle, and soybeans Italy, Spain, and Portugal, expanding irrigated produc-
certainly are not the only commodities that threaten tion in areas with severe water shortages (Economist
biodiversity. Throughout the tropics numerous other 2001). Other environmental pressures take the form of
agricultural commodities are expanding into vital habi- clearing of habitat for intensive plantations and heavy
tats. Among the most aggressive of these is palm oil. reliance on chemical fertilizers, herbicides, and pesti-
Consumed primarily in developing countries, it has cides. Such measures have produced record harvests,
become the world’s most popular food oil; global con- and olive oil prices have tumbled. Yet farmers continue
sumption is increasing by six to seven percent per year, to face incentives to boost output even further due to
which is double the average for all edible oils and fats generous production subsidies, which claim almost the
(Glastra et al. 2002). Population and income growth in entirety of the European Union’s Common Agricultural
developing countries that are major palm oil consum- Policy annual olive budget of about $2 billion.
ers, such as India, Indonesia, and Nigeria, are driving
demand growth. Consequently, environmental concern As noted above, Malaysian rubber production is mov-
among consumers in developed countries offers little ing to other parts of Southeast Asia as well as West
leverage. Africa, fueling deforestation. Groundnuts, food grains,
cotton, sugar—biodiversity throughout the hotspots is
Malaysia and Indonesia together contribute more than at risk as habitats are converted for the production of a
80 percent of global supply of palm oil (Timmermans long list of agricultural commodities. The diversity of
& Templeman 2001). Malaysia is scaling back do- threats in and of itself suggests that direct protection of
mestic rubber production to make way for oil palm habitat against conversion in general may prove a more
plantations—rubber activities are being relocated to manageable task than designing strategies tailored to
other countries such as Thailand, Guinea, and Liberia each individual commodity.
to exploit lower labor costs. Meanwhile, Malaysian in-
vestors also are driving oil palm expansion throughout
the tropics, including Guinea, Nigeria, the Philippines,
Papua New Guinea, and Indonesia (WRM 2001).
In Latin America, oil palm also is expanding rapidly,
notably in Colombia and Ecuador (WRM 2001). Oil
palm already claims 2.5 million hectares in Indonesia,
and another five million hectares are under develop-
ment (Scotland et al. 1999). Additionally, the Indone-
sian government has targeted in excess of nine million
more hectares for oil palm, mostly in eastern parts of
the country, including 5.6 million hectares in West
Papua (Irian Jaya) (Casson 1999). The oil palm explo-
sion in Indonesia is attributable to burgeoning demand
and generous government support, despite a limited
amount of land well suited to oil palm. Combined
with inefficiencies in production methods, the poor
resource base implies that production increases neces-
sarily will rely on continued deforestation to make way
for plantations.
Olives represent another agricultural commodity identi-

fied as a major threat to biodiversity, particularly in the
Mediterranean biodiversity hotspots. European Union
p1-33.indd 27 5/26/2004, 1:27:59 PM

Chapter 3:
Conclusions and
Recommendations
A logging depot in Suriname
A
gricultural activities exert pressure on biodiversity the capacity to ensure that land conversion takes place
through several channels, including habitat loss with a minimum of biodiversity loss. Moreover, in ad-
due to uncontrolled fires, chemical run-off (e.g., dition to enforcement vacuums and a dearth of land-
herbicides, pesticides, fertilizers), introduction of exotic use planning capacity, natural habitat throughout the
species, degradation of soil and water resources, and hotspots is jeopardized by government subsidies that
land clearing. This report focuses on habitat conver- favor commodity production, land entitlement criteria
sion for commodity production, one of the leading that base property rights on extractive use, and eco-
contributors to biodiversity loss throughout the world’s nomic development paradigms that favor conversion
biodiversity hotspots. Even in instances where land is over conservation.
not particularly well suited to production, a host of fac-
tors may motivate conversion, at a great environmental Building capacity, changing harmful government poli-
cost but with dubious economic justification. cies, and rethinking economic development strategies
may offer some relief, but these actions still do not
Responses to this ubiquitous threat that are typically offer a guarantee against habitat conversion. Expand-
recommended range from changes in farming practices ing populations and income growth augur persistent
to the promotion of sustainable agroforestry as an al- pressure on natural habitat throughout the biodiversity
ternative land use. However, the case studies presented hotspots. Growing incomes and populations will ex-
here suggest that, in many situations, biodiversity will pand markets for commodities and encourage further
only be maintained if direct measures are taken to sta- conversion, while population growth will supply cheap
bilize the frontier between cultivated area and natural labor in search of employment in the agricultural sec-
habitat. Various environmental benefits may accom- tors of developing country economies. In many biodi-
pany changes in agricultural practices, but a halt to versity hotspots, these dynamics are unlikely to change
further encroachment into natural habitat is not neces- in the near future, and therefore they delineate the
sarily one of them. Where agriculture or conventional context for long-term conservation strategies.
agroforestry exert negative impacts on nearby natural
habitat, changes in cultivation methods surely are war- Ultimately, natural habitat would remain at risk even
ranted. But critically important ecosystems require in the absence of the inexorable forces of popula-
outright protection if they are to be assured a chance tion expansion and income growth. It has long been
for survival. understood that the underlying threat to biodiversity
stems from the lack of market values for the various
The urgent need for direct protection stems from the environmental services supplied by natural ecosystems.
rapid pace of land conversion for commodity produc- This absence of markets leaves developing countries
tion in regions with high biodiversity. In many biodi- with no way to capitalize on the value of, for example,
versity hotspots, governments and official environmen- the carbon sequestration, watershed protection, or
tal institutions often express good intentions but lack biodiversity maintenance that their habitat areas offer.
28 Chapter 3: Conclusions and Recommendations
p1-33.indd 28 5/26/2004, 1:28:54 PM

The difficulty of translating these services into tan- ment of formal protected areas presents legal, political,
gible financial benefits implies that natural habitat will and financial difficulties, and the process of creating
remain vulnerable to conversion, even for marginally a new national park may take an inordinate amount
productive agricultural activity. Rationalizing popula- of time. Given the alarming rate at which commodity
tion growth, correcting perverse policy environments, production is destroying habitat in some biodiversity
recasting economic development paradigms, or adjust- hotspots, other means for rapid implementation of
ing agricultural practices may all reduce the threat to direct protection also will be necessary, in some cases as
some degree, but will not eliminate it altogether. The an interim step towards creating permanent protected
threat of conversion will persist until the missing mar- areas.
ket for biodiversity services is squarely addressed. The
lessons from the commodities examined in the preced- Set-Asides and Retirement of Farms
ing chapter confirm this overarching conclusion, as The declining profitability of many primary com-
emphasized below. modities suggests that negotiating deals directly with
landowners and farmers may offer a means for mitigat-
Recommendations ing habitat disturbance on agricultural frontiers. Such
As stated throughout this report, production will deals can be used to secure set-asides, in which farmers
continue to expand for most commodities. Given this agree to forego habitat conversion on specified por-
fact, options to mitigate the environmental impact of tions of their property, or retirement of farms in their
commodity production can take two forms. One set entirety. In exchange, farmers receive compensation for
of measures seeks to change how commodities are pro- the conservation services they provide. For example,
duced, to reduce the ecological footprint of agricultural coffee and cocoa cultivators struggling in the context
activity. Another set of strategies seeks to influence of low and falling world prices for their produce may
where commodities are produced, to avoid conversion respond positively to programs designed to compensate
of habitat. Our overriding message is that, even if ef- them for foregoing production. Compared to creating
forts to promote low-impact production methods are formal protected areas, instruments like set-asides and
successful, direct protection will be necessary to pre- farm-retirement deals offer a relatively rapid interven-
vent conversion of pristine habitat. Moreover, given the tion, as they involve negotiated agreements between
challenges of promoting environmentally compatible private parties rather than nationally legislated changes
production methods for many commodities such as in land-use designation. Moreover, in addition to
oil palm and soybeans, habitat protection is an urgent achieving conservation, set-asides and retirement of
priority. ailing farms offer an attractive financial alternative to
farmers struggling at economic margins. Friedenburg et
Protected Areas al. (2004) note that for most of the world’s 25 million
In most contexts, formal protected areas remain the coffee farmers, prices have been below production costs
optimal mechanism for safeguarding natural habi- for the past four years. A long-term contract that remu-
tat. Although national parks face many management nerates them for environmental services may generate
challenges, they generally are an effective form of greater and more reliable income than a declining com-
protection against hunting, logging, grazing, fire, and modity market.
especially land clearing (Bruner et al. 2001). Despite
ubiquitous shortfalls in park budgets and a daunting Conservation Incentive Agreements
array of land use pressures, formal protected areas have Set-asides and retirement of farms are examples of
proven to be the single most reliable instrument for the conservation incentive agreements, a general model of
prevention of agricultural encroachment on habitat. direct payments for environmental services (Hardner &
Therefore, changing the land-use status of an area to Rice 2002, Ferraro & Kiss 2002). Under a conservation
habitat protection in perpetuity and then enforcing incentive arrangement, an investor pays for the right
that status is the most direct way to protect priority to have an area managed for environmental protection
areas that lie in the path of expanding agricultural fron- rather than destructive exploitation. Such an arrange-
tiers. However, there are contexts in which establishment can be established with an individual farmer, a
p1-33.indd 29 5/26/2004, 1:29:16 PM

community, a company that holds rights to an area, cesses are booked, the risk of relying on such models is
government at the local, regional, or national level, or too great; direct protection of critical areas is the only
a combination of some or all of these stakeholders. By way to mitigate that risk.
paying for habitat conservation, a conservation incen-
tive agreement represents the most direct means to
address the missing market for biodiversity protection.
Agricultural expansion and habitat destruction often Endnotes
are deemed unavoidable due to income requirements;
1
a conservation incentive agreement offers an income- Quantities of wood production and consumption are typically
generating alternative based on biodiversity protection. stated in terms of cubic meters of “industrial roundwood,” a
catchall category that includes sawlogs (used in making lumber
Our emphasis on direct protection does not suggest of standardized dimensions), veneer logs, and pulpwood (the
that efforts to remove perverse subsidies and to per- raw material for making paper). Sawlogs and veneer logs ac-
suade governments to change policies are unwarranted. count for the greatest proportion of the world’s annual industrial
Endeavors in these arenas remain critically important, roundwood volume, amounting to approximately 1 billion cubic
and not only for environmental reasons. The eco- meters per year. Pulp follows with approximately 400 million
nomics of commodity production, in addition to its cubic meters, and other miscellaneous uses with about 200 mil-
environmental impact, provide a strong rationale for lion cubic meters (FAO 2003).
policy reform. Expensive government support pro-
2
grams to buttress commodity sectors that generate little This discussion focuses on industrial roundwood because,
economic benefit should be dismantled for reasons although a significant percentage of plantations in developing
of efficiency and equity as well as biodiversity. Cor- countries are used for wood fuel, the overall contribution of
rection of the policy environment does not guarantee plantations to fuelwood supply is very small (about 5%) (FAO
protection of critical habitat, but at least will rationalize 2001). Natural forests continue to supply the vast majority of
expansion trends and reveal a better approximation of fuelwood in most regions of the tropics (FAO 1999a).
the opportunity cost of conservation. However, lobby-
3
ing efforts and policy reform are time consuming, and Estimates of the global extent of plantations vary considerably,
the outcomes are uncertain. Given the speed at which in large part due to the poor availability of information (Pandey
biodiversity is succumbing to expanding commod- & Ball 1998). As a result, available production data contain a
ity production, rapid deployment of direct protection wide margin of error.
measures may be the only way to ensure that anything
remains by the time the policy environment improves.
In the foreseeable future, economic development will

remain an overriding priority for countries that house
much of the world’s biodiversity, and the agricultural
sector will feature prominently in economic develop-
ment planning. Commodity production will thus con-
tinue to expand, and the form, location, and impact of
this expansion are impossible to predict in their entire-
ty. Therefore, areas that are not explicitly protected will
continue to be threatened. Several decades of searching
for ways to make exploitation and conservation com-
patible, including ecofriendly agriculture, sustainable
agroforestry, and sustainable timber management, have
yet to yield successes on a scale sufficient to lay to rest
fears about biodiversity loss. Until real, replicable suc-
30 Chapter 3: Conclusions and Recommendations
p1-33.indd 30 5/26/2004, 1:29:30 PM

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p1-33.indd 34 5/26/2004, 1:30:49 PM
p1-33.indd 34 5/26/2004, 1:30:49 PM
Editors:
Eduard T. Niesten
Richard E. Rice
Shelley M. Ratay
Kristen Paratore

at Conservation International Contributors:
1919 M Street, NW, Suite 600 Jared J. Hardner
Washington, DC 20036 Philip Fearnside
TELEPHONE: 202-912-1000
FAX: 202-912-0772
WEB: www.biodiversityscience.org
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Nieston, E.T., R.E. Rice, S.M. Ratay, K.

Conservation International, Washington, DC, U.S.A.

Center for Applied Biodiversity Science

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CI on the Web: www.conservation.org

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The Nature of Primary Commodity Production .........................................................................................................7

Chapter 2: Commodity Case Studies............................................................................................................12

Chapter 3: Conclusions and Recommendations ......................................................................................28

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incurred in hotspots generally is irreversible, yet devel-

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Source: World Bank (2000)

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In Chapter 2 we examine in more detail the critical

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tool for intervention in specific localized contexts, as

12 Chapter 2: Commodity Case Studies

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Coffee growing regions

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14 Chapter 2: Commodity Case Studies

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Map 2: Cocoa growing regions and biodiversity hotspots

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16 Chapter 2: Commodity Case Studies

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18 Chapter 2: Commodity Case Studies

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20 Chapter 2: Commodity Case Studies

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Figure 2: Growth in Brazil beef production, consumption, and export (1997–2004)

Source: Kaimowitz et al. (2004)

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22 Chapter 2: Commodity Case Studies

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Map 3: The cerrado and Amazon regions in Brazil

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24 Chapter 2: Commodity Case Studies

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Subsidized Agriculture in Developed Countries