Amazon deforestation delaying and reducing vital rainfall in damaging ‘feedback loop’ threatening crop yields

Brazil’s economy is increasingly dependent soy and maize exports, with the loss of the rainforest becoming a growing concern for investors

Harry Cockburn
Environment Correspondent
Thursday 16 September 2021 17:47
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Deforestation in the Brazilian Amazon is driving a negative feedback loop, changing rainfall patterns and ultimately shortening rainy seasons, bringing serious risks to farming and the wider economy, new research reveals.

According to the new report by financial think tank Planet Tracker, in the state of Rondonia, in the west of the country, the beginning of the annual rainy season has shifted, on average, 11 days later over the last three decades.

But the researchers said that where heavy deforestation has not occurred, the onset has not shifted as significantly.

Brazil’s economy is increasingly reliant on agriculture, and in particular its soy and maize exports, with the two crops comprising almost one fifth of total exports in 2018 – equivalent to 2.6 per cent of GDP.

In order to meet this growing demand, since 2008, farmers have widely used a technique known as double-cropping.

This process uses the same land to grow two different crops at the same time and harvest them consecutively.

It is an efficient use of space which has yielded increased returns for Brazil’s farmers and enabled the country to maintain its position as a leading soy and maize exporter, Planet Tracker’s No Rain On The Plain report said.

But the practice also leaves farmers more vulnerable. Any delay in harvesting the first crop means the second crop has less time from planting to harvest – increasing the risk of a failed crop caused by the changing rainfall patterns in the region.

“If deforestation continues, Brazil’s ability to double-crop could be impaired, harming farmers’ incomes and losing the country billions in export revenue from soy and maize,” said Peter Elwin, the head of the Food and Land Use Programme at Planet Tracker.

This creates additional risks for investors supporting companies across Brazil’s economy, and for those investing in Brazil’s sovereign bonds, he said.

“For Brazil’s sovereign bond investors, and equity and debt investors supporting any Brazilian companies – but especially agribusiness companies – deforestation-induced regional climate change creates significant environmental-related financial risk.”

The study also warned against further expansion of agricultural land to make up any shortfalls.

“While expanding the amount of land used might seem like the obvious answer to reduced yield caused by climate change, this would require further deforestation,” the researchers said.

Cutting down yet more trees would not only be illegal, but there is also a significant risk that it would exacerbate the negative feedback loop, further reducing the rainfall which is essential for Brazil’s agriculture, as well as for its hydro-electric power and river transport systems.

The authors warned the loss of the trees is also linked to increased frequency of extreme temperatures, which impact workers’ health and productivity across the whole Brazilian economy.

Planet Tracker said it was calling on investors in Brazil’s sovereign bonds to put pressure on the Brazilian government to stop illegal deforestation by reversing cuts to the Ministry of Environment and other enforcement agencies, and by demanding more government investment to prevent illegal deforestation.

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