This blog is the conclusion to Chapter 2 of Tim Killeen’s serialised Open Access monograph A Perfect Storm in the Amazon Wilderness. You can read the whole chapter, and Chapter 1, via the Rachel Carson Center Environment and Society portal (PDF) or on our website (PDF or ePub)
The macroeconomic hypothesis that infrastructure investments stimulate economic growth assumes that these physical assets overcome a logistical or systemic constraint on production. In practice, this requires that individual projects are subject to an objective feasibility analysis, are priced fairly, and have been approved after a full evaluation of their social and environmental impacts. Unfortunately, many infrastructure investments in the Pan Amazon have not met these three fundamental criteria. Some are poorly conceived or simply unnecessary, and many are foisted on society by vested interests or corrupt politicians.
Poorly designed or unnecessary infrastructure can create a negative economic impact if scarce financial capital is funneled into projects with limited benefit to society, thus diverting investment from more deserving initiatives. A poorly conceived project may provide a short-term economic boost but fail to provide the long-term benefits of a well-designed asset. In the Pan Amazon, the lack of an economic return from poorly conceived infrastructure initiatives is compounded by their large negative environmental and social impacts.
This chapter focuses on large-scale infrastructure built in the Pan Amazon over the last several decades. Some projects have been poor investments when evaluated using only economic criteria, but many more have been economically successful and politically popular because they benefit the actual (albeit recent) inhabitants of the Amazon. The most controversial have benefited stakeholders who are not residents of the Amazon, particularly companies that cater to extra-Amazonian consumers of energy and commodities. These assets and systems may be profitable, but they are not ‘sustainable’ when they fail to comply with the criteria of sustainable development. Persistent high rates of deforestation, environmental degradation and social inequality are the most obvious manifestations of the failure to incorporate the concepts of sustainability into infrastructure development.
The concept of ‘sustainable infrastructure’ has been around since academic discussions first defined the concept of sustainable development; however, guidelines defining specific criteria for built infrastructure appeared only about a decade ago. The first efforts were little more than a laundry list of high-level standards for loan officers and corporate executives to consider when evaluating a potential investment.[i] More detailed systems that address the multiple and complex challenges required to transform the global economy in the face of climate crisis are now available.[ii] These systems are not, however, particularly applicable to the unique situation of the Amazon, which also has an acute deficit in basic infrastructure.
What might define sustainable infrastructure in the Pan Amazon? First and foremost, it should benefit the inhabitants of the Amazon. Equally important, investments should yield economic benefits over the short, medium and long term, particularly those that contribute to GDP but also others that improve people’s quality of life without generating an immediate increase in income. In some cases, an investment may be uneconomic in conventional terms but justified on humanitarian or ecological grounds and thus worthy of a subsidy.
The infrastructure investments that most obviously meet these criteria are the physical assets that are the foundation of the region’s health care systems. The Covid pandemic of 2020/2021 revealed glaring deficiencies in the health care systems of all eight nations. The impact of the disease was particularly severe in their Amazonian jurisdictions, where it fell disproportionately on marginalised populations. Shortfalls in basic health infrastructure included not just a lack of hospital beds but also of the specialised equipment needed for acute medical conditions.
The Covid-19 pandemic also revealed that a significant portion of Amazonian populations were vulnerable to the coronavirus due to chronic conditions caused by infectious diseases associated with unsafe drinking water and poor sanitation. Public utilities provide water in most large and medium sized cities, but coverage is far from universal, particularly in the peri-urban neighbourhoods that house recent migrants. Investment in basic sanitation in urban areas is abysmal, and even the largest cities have woefully inadequate sewage systems (Table 2.4). Rural inhabitants are left to their own devices.
|City||Population in 2015||% potable water||% sewage system||% sewage treatment||Investment ($R / 5 years)|
Source: Instituto Trata Brasil, http://www.tratabrasil.org.br/estudos/estudos-itb/itb/novo-ranking-do-saneamento-2021
The situation is worse in the Andean Amazon, where administrative decentralisation and revenue sharing mechanisms have just begun to address decades of under-investment by central governments. Cities show radically different outcomes. Pucallpa (~370,000 inhabitants) provides only about 48 per cent of households with potable water, while Iquitos (477,000) approached ninety per cent coverage; neither city has any system to collect and treat sewage. In contrast, Santa Cruz de la Sierra (1.7 million) provides universal coverage for potable water and has extended basic sanitation to approximately half its population.
Amazonian cities have invested in drinking water systems, typically with the assistance of the multilateral banks, but are still dumping nearly all their wastewater into the Amazon and its tributaries, operating under the assumption that the volume of water will provide a level of protection against contamination. Unfortunately, that practice does not protect downstream populations from diseases caused by poor sanitation.
A similar infrastructure deficit exists in the region’s primary and secondary schools, particularly in the public systems that serve rural communities and impoverished urban neighbourhoods. This deficiency is exacerbated by middle-class and affluent families who send their children to private schools, a common practice across South America that encourages under-investment in public school systems.[iii]
Investments in education and health care might not meet the classic definition of built infrastructure (roads and bridges), but few would deny that sustained economic growth is wholly dependent upon a healthy and well-educated populace. Moreover, investments in schools, clinics and sanitation systems are labour-intensive and require significant amounts of concrete, lumber, and hardware, which ensures they meet the short-term objectives of infrastructure investment programmes – job creation and economic stimulus. Since schools and clinics are relatively simple structures, their construction can be contracted to local businesses, creating a positive feedback loop since the proprietors and employees of these spend the proceeds close to home.
Both health and educational systems would benefit from improvements in digital infrastructure, another non-traditional class of investment essential for economic growth and development in the twenty-first century. Technology is an obvious antidote to the long distances and antiquated telecommunication systems that isolate rural communities. Exposure to computer technology would allow rural students to acquire basic information management skills essential for success in modern society, while access to the internet would democratise learning opportunities for tens of thousands of students and teachers. High-speed internet is the gold standard. It would not only allow students to participate in seminars and virtual events via the rapidly evolving ‘zoom’ technology, but would also permit health-care professionals to diagnose and treat many more patients remotely.
Providing high-speed internet to remote areas constitutes a significant technological challenge, and only a limited number of Amazonian cities have internet connections faster than 10 Mbs. Speed is inherently limited because most connections are mediated by geostationary satellites with a response time limited by the speed of light. The cost of extending a fibre-optic network to the far-flung communities across the Pan Amazon would be exorbitant and precludes any attempt to expand high-speed internet service. This is about to change.
In 2020, the Brazilian government launched the Projeto Amazônia Conectada, an ambitious initiative to lay 8,000 kilometres of fibre-optic cable on the bottom of the Amazon river and all its major tributaries (Figure 2.27). The initiative is being coordinated by the Brazilian army;[iv] more importantly, it is being implemented as a public-private partnership with the backing of several large domestic and international telecom companies. This initiative has the potential to provide a digital backbone that extends far beyond the region’s major cities and could conceivably be expanded upstream to include isolated urban areas in the Andean Amazon. It will not, however, provide a solution for thousands of communities that are not located on a major river or connected to a cell phone network that could provide cost-effective internet services to the populace. Fortunately, there is a Plan B.
Two of the most innovative entrepreneurs on the planet, Jeff Bezos and Elon Musk, are competing to launch a network of low-orbit communication satellites with the express purpose of providing affordable high-speed internet services to remote regions. If successful, these will provide an alternative to the fibre-optic backbones and cell-phone towers that constrain the expansion of high-speed internet. Low-orbit satellites will communicate with a receiver that consists of an antenna and router, which will interface with a local area wifi network. The expected cost of a terminal is estimated at about $US 500, with a monthly service fee of $US 99. The business model is based on providing service to marine vessels, remote mine sites, industrial farms, vacation homes and rural communities isolated from fibre-optic networks. The technology represents a step-change in cost and quality; nonetheless, it will still be too expensive for most of the rural schools and clinics across the Amazon. Presumably, the cost is negotiable, and citizens of the Amazon may be able to obtain a discount from the wealthiest men on the planet. Perhaps Mr Bezos could be convinced to donate systems to the communities of the region in compensation for appropriating their regional identity to brand his commercial enterprise.
Roads and bridges can also be sustainable. They are anathema to environmental advocates because of their association with logging, deforestation and settlement. However, these classic examples of built infrastructure contribute to sustainable economic growth when they improve secondary road networks within long-established agricultural frontiers. Almost all farmers lose a portion of their harvest due to spoilage, a problem that is particularly severe in humid tropical climates that accelerate decay and disease infestation. Supply and demand govern commodity markets and, according to macroeconomic theory, post-harvest losses will be replaced by production elsewhere; consequently, spoilage drives crop production onto frontier landscapes. Just as energy conservation should be part of a green energy strategy, so should investments in traditional infrastructure be part of a holistic development strategy when it enhances long-term productivity and profitability on existing farms.
The agricultural and consolidated frontiers across the Southern and Andean Amazon all suffer from poor secondary road networks. Improved secondary road networks will do more than reduce waste because bad roads delay planting, cause wear-and-tear on farm equipment and add to the cost of moving commodities to market. Small farmers suffer the most because they are more likely to depend on truckers who pro-rate their services based on the quality of the roads. Most small farmers would welcome the option to transport coffee or cacao via truck rather than mule, and the shift might motivate many of them to expand production.
Another underappreciated infrastructure class consists of the airports that support the aviation transportation system. Regional carriers have benefited from investments in airports in larger cities, but the development of smaller airstrips is largely managed ad hoc by the military, loggers and (illegal) miners. The region once had a flourishing air taxi system organised by Evangelical and Catholic missionaries (see Chapter 10), but this has been replaced by commercially motivated operators, many of whom are complicit in the illicit drug trade. Examples in Alaska and Canada show that air taxis can provide a cost-effective transportation solution for a roadless wilderness populated by indigenous villages, settlers and vacation resorts. Key to that system is an airstrip in every village and operating subsidies to ensure the services are affordable for the region’s indigenous inhabitants. The lack of affordable air taxi services is the largest single constraint to the expansion of ecotourism, which is currently clustered around a handful of Amazonian cities with large airports (Manaus, Iquitos, Puerto Maldonado, Leticia, and Coca; see Chapter 7).
Energy systems will continue to figure prominently in future investments in the Pan Amazon. Historically, economic growth has been tightly correlated with energy consumption. As families become more affluent, they buy electrical appliances and consume more energy. Refrigeration is the first type of appliance purchased by families emerging from rural poverty; once they are solidly middle class, they buy air conditioning. The relationship between GDP and energy consumption may change in the next fifty years at the global scale as societies transition from fossil fuels to a low-carbon economy. It is not, however, the path that will characterise development in the Pan Amazon. Energy consumption will grow as the economy expands, because access to affordable and reliable sources of electrical energy improves the quality of the lives of its inhabitants.
The rapid decline in the cost of solar power — and the advantages of distributed solar — provide an interesting option for communities and households that are not connected to the electrical grid. However, the capital cost of solar will hinder its adoption by most Amazonian families, who prefer to be linked into a grid system and pay a small monthly fee. Some electrical utilities have technologies and consumer packages designed to build and expand distributed systems, but the incentive system inherent in their business models continues to favour the expansion of the grid. Utility-scale solar will become more important and the construction of large-scale hydropower plants may become less attractive as an investment due to opposition by environmental advocates and indigenous groups. If so, utility companies may increase their investments in medium- and small-scale hydropower, which will contribute resilience to a diversified portfolio of electricity generation assets.
The pandemic of 2021 highlighted the social and economic inequalities of Amazonian society, but no well-informed observer was surprised by the suffering that Covid-19 wrought on remote indigenous villages, smallholder landscapes and the marginalised neighbourhoods in rapidly growing urban centres. The asymmetric impact was not unlike the scenario that played out in the advanced economies, where other disadvantaged populations suffered disproportionately from a legacy of under-investment. The (promised) response, particularly in the United States, is to implement stimulus and recovery policies that benefit under-served populations. In addition, the Biden administration seeks to channel resources to the long-delayed campaign to invest in renewable energy and other technologies required to avoid a climatic catastrophe.
The same logic of favouring marginalised populations and promoting sustainable production models can – and should – be applied to the pandemic recovery in the Pan Amazon. There is a palpable need to compensate for longstanding inequalities and the need to reform the conventional economy is similarly urgent.
In July of 2020, a progressive think tank launched a petition signed by seven former presidents calling on the International Monetary Fund (IMF) and other multilateral organisations to cancel the external debt of Latin American countries and for bondholders to accept a restructuring of sovereign debt that included a two-year interest-payment holiday. The petition argues that such actions are ‘fair and necessary’ given the extraordinary challenge posed by the pandemic. Multilateral institutions have recognised the need to respond to the crisis but, unfortunately, none has the financial capacity to provide (real) debt forgiveness, much less to allocate the capital resources required to transform the economies of the Pan Amazonian nations. Institutions from China are not capable or inclined to alleviate the debt burden. More likely, governments and their private sector partners will invest in mining ventures and industrial agriculture that can generate export revenues needed to shore up their economies. Consequently, the 2020/2021 pandemic will foster investments that promote another cycle of conventional economic development.
 The goal of sustainable development is the long-term stability of the economy, which is only achievable through the integration of economic, environmental, and social concerns throughout the decision-making process. Source: the Brundtland Commission, http://www.un-documents.net/wced-ocf.htm
 Santa Cruz has the highest population growth in the Western hemisphere, averaging 5–7% annually between 1970 and 2000 and 2–3% after 2000. Water and sewage are managed by an independent cooperative (SAGUAPAC) owned by the city’s inhabitants, but the phenomenal growth motivated real estate investors to develop neighbourhoods with full services while SAGUAPAC and the municipal government coordinated investments to provide service to ‘barrios populares’. For example, streets were not paved until sewage systems were installed to avoid wasted expenditures on street repair.
 The concept ‘dilution is the solution to pollution’ dominated waste-water treatment for decades. It is now widely questioned by environmental scientists but continues to be taught in engineering schools and employed widely across the planet.
 In advanced economies the consumption of electrical energy has forced the tech sector to purchase renewable energy to operate their power-hungry server farms so as to avoid high GHG emission from conventional power grids.
 Until 2020, Manaus, Belem, Cuiabá, Porto Velho and Rio Branco were connected through fibre-optic cables mounted on the electrical transmission grid. Source: Electronorte 2017.
 Oi, a Brazilian telecom company emerging from bankruptcy, has adopted a business model that will focus on fibre- optic networks; Huawei, the Chinese telecom giant is seeking to introduce its 5G technology into Brazil. Source: https://www.datacenterdynamics.com/br/not%C3%ADcias/huawei-fornece-infraestrutura-para-conectar-a-amaz%C3%B4nia/
 Starlink is a subsidiary of SpaceX Corporation (Elon Musk is CEO); Project Kuiper is a subsidiary of Amazon (Jeff Bezos is the chairman of the board).
 In 2018, there were 33,000 public schools in the Brazilian Amazon (source https://cidades.ibge.gov.br), and there are similar numbers of basic health clinics (Unidad Básica de Saúde). The Andean Amazon has about a quarter of the population and, presumably, health and educational infrastructure. A ‘back-of-the-envelope’ calculation for the cost of outfitting each school and clinic with a Starlink system would sum to only $US 25 million, and the monthly fees would sum to about $US 55 million annually. However, outfitting schools and clinics with computers to make the system functional would cost between $US 500 million and $ 1 billion.
 Starlink is providing free internet to a limited number of Native American communities in Canada and Alaska; see https://nativenewsonline.net/business/rural-alaska-natives-hope-elon-musk-s-starlink-internet-service-can-level-playing-field
 The IIRSA programme has supported investments in Ecuador (2) and Peru (2); the Programa de Aceleração do Crescimento supported improvements in Amazonas (9), Pará (3), Rondônia (3), Acre (1), Mato Grosso (3), Amapá (2), Tocantins (1); the Ex-Im Bank of China financed work in Bolivia (1), Guyana (1), and Suriname (1).
 All are associated with socialist or progressive political parties: Dilma Rousseff (Brazil), Evo Morales (Bolivia), Rafael Correa (Ecuador), Ernesto Samper (Colombia), Jose Luis Rodriguez Zapatero (Spain), Fernando Lugo (Paraguay), Luis Guillermo Solis (Cost Rica)
[i] World Bank Group. 2008. World Bank Group Sustainable Infrastructure Action Plan (SIAP)
Washington DC: World Bank Group.
[ii] The Sustainable Asset Valuation (SAVi) developed by the The International Institute for Sustainable Development (IISD) and the ENVISION rating system developed by the Zofnass Program for Sustainable Infrastructure at Harvard University.
[iii] Alves, F., G. Elacqua, M. Koslinki, M. Martinez, H. Santos and D. Urbina. 2015. ‘Winners and losers of school choice: Evidence from Rio de Janeiro, Brazil and Santiago, Chile’. International Journal of Educational Development 41: 25–34.
[iv] Ministerio de Defensa. 12 Dec. 2021. Projeto Amazônia Conectada: avanços em fibra ótica beneficiam comunidades afastadas: https://www.gov.br/defesa/pt-br/centrais-de-conteudo/noticias/projeto-amazonia-conectada-avancos-em-fibra-otica-beneficiam-comunidades-afastadas ; DCD – Data Center dynamics. 14 Aug 2020. Huawei fornece infraestrutura para conectar a Amazônia: https://www.datacenterdynamics.com/br/not%C3%ADcias/huawei-fornece-infraestrutura-para-conectar-a-amaz%C3%B4nia/