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Assessing South America’s “Interoceanica” Highway

New York Law Journal

August 28, 2009

With the international community focusing on the critical U.S. and Chinese commitments needed for December’s Copenhagen conference on climate change, it is easy to overlook the role of other nations’ development projects on the environment and the need for strengthened environmental institutions and enforcement at regional and national levels.

The tendency to see climate change in isolation from other development, environmental, and human rights priorities threatens to undermine the growing recognition that climate change threatens both developed and developing countries and that Copenhagen must produce meaningful global action rather than platitudes and wishful thinking. This makes it essential that climate change plans be integrated with on-going development plans and that such plans, in turn, take into account their potential climate change impacts.

One example of this problem that has largely escaped public notice (at least outside of Brazil) is the “Interoceanica” highway being constructed in Brazil’s and Peru’s Amazon regions. The Interoceanica—colloquially known as Brazil’s “road to China”—is a proposed highway across the Amazon and the Andes to link Brazil’s Atlantic coast with the Pacific in Peru.

Interconnected Network

The Interoceanica is the centerpiece of a much larger project known as the Initiative for the Integration of Regional Infrastructure in South America (IIRSA), a coordinated effort begun at a conference of South American presidents convened by Brazil in 2000 and assisted by funding from the Inter-American Development Bank (IDB). The stated goal of IIRSA is to develop an interconnected network of roads, dams, airports, and other projects throughout the South American continent in order to connect the region’s major cities, ports, and resource hubs, with the hope that such integration will facilitate economic growth and shared prosperity.

For Brazil, IIRSA and the Interoceanica offer the prospect of permanent economic (and thus political) leadership of South America by combining its existing Atlantic access for its raw materials and industry with expanded access to China, India and Japan across the Pacific.

Formally, IIRSA envisions ten “axes” in which its infrastructure projects will be centered: the Andean Axis (Venezuela, Colombia, Ecuador, Peru and Bolivia); the Amazon Axis (Colombia, Ecuador, Peru and Brazil); the Central Inter-Oceanic Axis (Peru, Chile, Bolivia, Paraguay and Brazil); the Capricorn Axis (Chile, Argentina, Paraguay and Brazil); the Guyana Axis (Venezuela, Brazil, Suriname and Guyana); the Mercosur-Chile Axis (Brazil, Uruguay, Argentina and Chile); the Southern Axis (Chile and Argentina); the Southern Amazon Axis (Peru, Brazil and Bolivia) and the Atlantic and Pacific Maritime Axis (all countries). The majority of these projects propose a connection between the Pacific and Atlantic oceans, opening land (and, in some cases, water-based) corridors for resource development and transport across the continent. The total costs of the IIRSA projects is expected to exceed $37 billion, a figure that seems unrealistically low for the range of improvements proposed.

The Interoceanica, financed in part by the Development Bank of Brazil, the Andean Development Corporation, and the IDB, will link Peru’s southern coast with the Amazonian state of Acre in Brazil and is only one of many proposed projects that form the IIRSA initiative. Because Brazil has already developed an extensive road network in parts of Acre, most new construction is expected to take place in Peru. That construction is already underway and the primary road is expected to be complete by the end of 2010.

Environmental Concerns

Although there has been little publicity about the IIRSA or Interoceanica outside of South America, the Interoceanica poses a number of environmental and social threats to both Peru’s and Brazil’s Amazon regions. The principal environmental concerns include habitat fragmentation and consequent loss of biodiversity, deforestation, water pollution and adverse impacts on indigenous Amazon communities. In a recent article for Americas Quarterly, Bruce Babbitt, the former U.S. Secretary of the Interior, argues that, beyond these environmental problems, the Interoceanica is not economically viable because overland transport of most goods, even from central Brazil, is significantly more expensive than transport by sea through the Panama Canal.[1]

Although construction of the Interoceanica would assist pipeline construction to serve an ongoing oil and gas boom in the Amazon region, the Interoceanica is not necessary, even for that purpose, because delivery of the pipeline facilities now relies on helicopters instead of trucks. Babbitt contends that the only way to make the billion-dollar investment in the Interoceanica cost-effective is if it is used for timber extraction—an ecologically disastrous possibility that Brazil and Peru have repeatedly denied and that would run counter to Brazil’s highly-publicized efforts to reduce deforestation in order to slow climate change.

The Interoceanica will also cut through designated forest preserves in Peru and threaten traditional cultures and tribes living in those preserves. Major roadways through the Amazon region have already exposed indigenous communities to commercial exploration, water and air pollution and disease. Although both Brazil and Peru have enacted laws designed to protect indigenous communities from the adverse effects of mining, petroleum exploration, timber harvesting and ranching, in practice highways through such areas have compromised the habitat, health and culture of many indigenous communities.

No Environmental Review

In addition to the Interoceanica, IIRSA plans include two other highway routes from Brazil to the Pacific, IIRSA Central and IIRSA Norte, both of which present their own environmental and social concerns. Unfortunately neither the Interoceanica nor IIRSA Central or Norte appears to have undergone any meaningful environmental review. Although construction of the Interoceanica is nominally subject to the environmental reviews required by national laws, the presidential executive orders implementing IIRSA appear to have circumvented the normal legislative and regulatory procedures in both Brazil and Peru.

The financing scheme also enables the project to bypass normal review channels because, rather than being funded directly by the national governments, the Interoceanica will be paid for through revenue bonds that will, theoretically, be amortized by Interoceanica tolls. The bonds for the Peruvian portion of the Interoceanica are, however, guaranteed by the Peruvian government. This indirect financing has allowed the Interoceanica to bypass the planning and budgetary constraints that would normally be imposed by the Peruvian government, even if, as seems highly likely, the bonds are not fully amortized by toll revenues.

Although IIRSA has developed its own Environmental and Social Evaluation Methodology (known as EASE), to evaluate the environmental and social effects of its projects, this methodology does not mandate any of the features typical of environmental review procedures, such as open or formal avenues for public participation, an evaluation of project costs and benefits, or an in-depth evaluation of alternatives.[2] Instead, consideration and mitigation of the Interoceanica’s environmental and social effects, as well as those of IIRSA Central and IIRSA Norte, appears to be left to whatever efforts can be pieced together in the non-profit sector.

One significant contributor to this effort is the Moore Foundation, which recently approved a $2 million grant to the Amazon Conservation Association for the design and consolidation of a 210,000-hectare conservation corridor to mitigate the Interoceanica’s adverse impacts. This corridor is intended to constitute one of the largest areas of continuous forest in the southwestern Amazon and is an effort to protect the area from deforestation, cattle ranching, mining, and slash-and-burn agriculture. But while such a large-scale effort, if implemented and enforced, may help to mitigate some of the Interoceanica’s impacts in the corridor area, it is not a substitute for long-term publicly accessible impact analysis, mitigation commitments by IIRSA itself and meaningful examination of alternatives.

It is not entirely clear why the Interoceanica has escaped public environmental review. The IDB, which provided a portion of IIRSA’s funding, has well-established environmental and impact assessment procedures, including mandatory public review, review of alternatives and mitigation commitments, for large-scale projects in environmentally sensitive areas. The apparent failure to carry out such an assessment for the Interoceanica, IIRSA’s premier project, seems incongruous and particularly unfortunate in view of the broad range of likely environmental and social impacts from the Interoceanica and its proposed IIRSA Central and Norte companion routes.

The irony of this failure to consider IIRSA’s environmental impacts—particularly those of the Interoceanica and its companion IIRSA Central and Norte routes—is striking in view of the apparent conflict of these projects with both Brazil’s and Peru’s climate change policies.

On the Brazilian side, the government has committed, at least on paper, to reduce its rate of deforestation by 50 percent by the year 2017. To achieve even this goal (which is only a fraction of the reductions required), Brazil will have to ensure that neither the Interoceanica nor IIRSA Central or Norte is used for timber exploration or other forms of legal or illegal deforestation. This will necessitate not only coordinated policing by the Brazilian and Peruvian governments, but also a limited number of Interoceanica exits, ancillary development restricted to small, concentrated areas around those exits, and elevated portions of the Interoceanica (or frequent vegetated underpasses) to enable free movement of wildlife.

Because construction of the Interoceanica is already well underway, it may be too late to make such changes. However, funds collected from tolls should be used, before bond repayment, to fund mitigation measures in the regions so that the IIRSA bears not only the financial cost of the Interoceanica, but its environmental and social costs as well.

Conclusion

The Interoceanica, and possibly even IIRSA Central and Norte, may well be useful in the long-term economic development of Brazil and its neighbors in South America. These benefits may even be sufficient to outweigh the inevitable environmental or social impacts, which might also be mitigated through carefully implemented design of the project, vigorous long-term enforcement of land-use and other controls and significant investment in health, education and environmental protection measures in affected communities. However, these issues have not been systematically and cumulatively assessed or subjected to meaningful public review. For a program of this hemispheric significance to escape that review, which is now an established part of most domestic laws and international practice, reveals a major gap in regional environmental institutions and, unfortunately, an avoidance in practice of the very commitments that Brazil and other nations are urging as part of a new climate agreement at Copenhagen.


Stephen L. Kass is a partner at Carter Ledyard & Milburn and directs the firm’s environmental practice group. He is an adjunct professor of International Environmental Law at Brooklyn Law School. Elizabeth Black, an associate of the firm, assisted in the preparation of this article. 


Reprinted with permission from theAugust 28, 2009 edition of the New York Law Journal  © 2009 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited. Reprint information for the legal properties relative to content searches and copyright clearance is available at www.imreprints.com. For questions contact, reprintscustomerservice@incisivemedia.com or 347-227-3382.


Endnotes


[1] See Bruce Babbitt, “Manifest Destiny: The Planned Trans-South American Highway Will Wreak Massive Damage on the Fragile Ecosystems of the Amazon and the Andes.” 2009 AMERICAS QUARTERLY 28-34 (Summer 2009).

[2] See IIRSA, “The Environmental and Social Evaluations With Strategic Approach as Planning Instruments for the IIRSA: Methodology, Components, and Phases (February 2008),” available at http://www.iirsa.org/BancoMedios/Documentos PDF/plan_eae_metodologia_eng.pdf.



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