Brazil (Part 1) – Natural Resources and Environmental Sustainability

Posted on Mar 5, 2010 | 0 comments

Natural Resources and Environmental Sustainability-

As large as the continental United States, Brazil has vast reserves of natural resources.  Its deep-water ports all along the coast give access to the transportation of these resources to foreign destinations.  Oil, minerals, and agricultural products give Brazil strong economic advantages and a stable foundation for continued growth.  Just about every mineral needed for an industrialized economy can be found within Brazil.  The climate is conducive to many agricultural products.  Brazil does not have extremely cold temperatures, and does not experience hurricanes or earthquakes.  However, floods and droughts are common and have been compounded at times by poor land use and planning.  The climates in Brazil are equatorial, tropical, semi-arid, highland tropical, and subtropical.

Oil

Recent oil discoveries off the coast of Brazil have attracted global attention.  Brazil has actively sought to make considerable progress in the energy sector.  As early as the 1990’s Brazil was producing almost two-thirds of its energy needs through offshore petroleum wells and hydroelectric plants.  Petrobras is a government-owned petroleum company that has produced much optimism with Brazil’s economic strategists.  Huge discoveries recently of untapped oil reserves off the coast of Brazil, has landed Petrobras and Brazil’s economy squarely in the world spotlight.  An investment of over $174 billion over the next five years for the development of new oil reserves can be a catalyst for future economic development of the country.  “By 2020, if all goes to plan, Petrobras and its foreign partners will be producing 5.7m barrels of oil and gas per day, more than half the output of Saudi Arabia”. (Economist, 2009)  The lack of refineries in Brazil for the crude oil it produces has caused a renewed determination to expand domestic refining capabilities so as not to be dependent on imports.    There are discussions to speed the completion of refineries currently under construction as well as cement plans for future refinery projects.

Other Energy Resources

Currently, hydroelectric power is the main source of Brazil’s energy.  Huge hydroelectric plants along the coast have played a dominant role in the country’s energy supply the last several decades.  In the future it is expected that nuclear energy will produce a significant amount of energy for Brazil.  Coal and gas are not widely used for energy production.  Domestic steel manufacturers mostly use coal.

Sugar and Ethanol

When the author of this paper moved to Brazil in 2002 he recalls seeing green sugar cane fields as far as the eye could see.  It quickly became apparent that ethanol was the fuel of choice for many Brazilians.  While Americans struggled with rising gasoline prices, more than 40% of the fuel used in Brazilians cars was ethanol.  As a renewable energy source, sugarcane is very efficient.  Oil must be shipped across the world many times before it can finally be refined into gasoline.   In Brazil, ethanol refineries are often built in the middle of those sugarcane fields.  Even the leftovers from the sugarcane are burned to produce energy for local electricity grids.  The question of infrastructure to get ethanol to the consumer has been the challenge to the United States.  Brazil already offers ethanol at almost all of its 34,000 gas stations.  “Brazil has huge potential and they produce ethanol at a fraction of the cost of American ethanol, plus they have an enormous market”. (Holman, 2008)

Environmental Position

Brazil has taken many steps to curb pollution and be environmentally friendly.  New legislation has been passed and various agreements signed.  The problem is implementation of the legislation or agreements.  This is a common thread throughout Brazil’s legal system.  Brazil actually has a huge amount of laws and measures on the books, but has not been able to enforce those laws on a consistent basis.  To put it simply, many good environmental laws exist, but they exist simply in the books and are rarely if never enforced.  In the early 1980’s many legislative milestones were reached regarding environmental policy.  In 1986 the legal structure of the Brazilian National Environmental Policy (BNEP) was completed and approved.  “The purpose of the law was to preserve, improve and recover environmental quality, to ensure conditions for socioeconomic development in compliance with the interest of national security, and to protect the dignity of human life”. (Kirchhoff, 2006, p.2)  One of the biggest issues Brazil faces is how to handle the Amazon River basin region.  This has drawn the attention of the world, as hundreds of thousands of acres are lost annually to deforestation.  Brazil’s President Lula Inácio da Silva, realizing the importance of the Amazon rainforest, which makes up over half of the world’s remaining rainforests, started a private fund that would allow foreign governments and organizations to donate towards its conservation.  Despite these environmental measures, at its current rate of deforestation, the Amazon rainforest is estimated to be reduced by 40% over the next twenty years.  Indicative of the fierce resistance given by government officials to curb land development in the region was the resignation on May 13, 2008 of the environmental minister of Brazil, Marina Silva.   Marina Silva was a strong advocate for conservation and environmental responsibility in the Amazon.  She herself was a native of the Amazonia region.  Her resignation letter notes the resistance “within the government and society to take the environmental agenda forward”.  (Sanchez, 2008)  Strong economic advocates considered Marina Silva as a radical that hampered the economic development of Brazil.  Other environmental issues that Brazil faces is air and water pollution.  The author remembers trucks belching their thick diesel smoke on every street of every city.  In the gigantic city of São Paulo, many people have developed respiratory problems as a result of this air pollution.  The city of São Paulo only allows certain cars with a license plate number ending on that corresponding day of the week to drive certain days.  Other measures are in place to try and reduce air pollution, but it is still a major problem.  Brazil also suffers from widespread pollution of their water systems caused by unregulated discharge of untreated urban wastewater.

What are your thoughts on Brazil’s natural resources as they relate to business methods?

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