The Amazon Rainforest and Prince Charles

The Amazon rainforest is a globally recognized brand to which many people have tried to associate their images.  Saving the Amazon is a battle cry for many different segments across society.  However, very few initiative have the legitimacy of working closely with local populations and governments in the Amazon before defending such a cause to the world.  The usual result is an empty argument that often does more damage by increasing the level of misunderstanding about the region.  I would like to point out, amid such confusion, one initiative that stands out: Prince Charles Rainforest Initiative.  Prince Charles and his advisors visited the Amazon, listened to local leaders and populations and design their position based on understanding the region, not on romantic views.  I would like to recommend visiting his website and finding out more about how you can help.

http://www.rainforestsos.org/

Youtube video 

Amazon rainforest news articles from across the world

News on the Amazon rainforest is abundant across channels and countries.  However, there is hardly a place that compiles it all in a non-political fashion.  The site below is an attempt to do so.

http://www.amazonrainforestnews.com

The very best explanation of the financial crisis

http://www.youtube.com/watch?v=Q0zEXdDO5JU

NATURAL PRODUCTS FROM THE AMAZON by Ilko Mintschev Minev

Market report - 2008 


Rosewood Oil 

Export of Rosewood Oil in 2008 was about 16% lower then in the previous year, totaling 21 tons.This was widely expected, because the 2007 production was exeptionaly high. For the first time  the organic Rosewood Oil was responssible for more then 50% of the total production, confirming the trend of the last years. The first half of the year was marked by a strong valuation of the Real against the Dollar and because of it and the rising costs, the FOB price soared well above the US$100.00/kilo mark. After the ouburst of the international crisis in september 2008 the US$Dollar reversed the trend and valuated against the Real, but the price of Rosewood Oil remained unchanged. 
In 2007 we introduced to the market the first Rosewood Oil made out of leaves and green branches. Last year we were able to increase the quantity to 3 drums and certainly hope to be able to produce 5 or 6 drums in 2009. The cost of such oil is  50%to 60% higher then the FOB of regular Organic Rosewood Oil, but despite the higher cost many customers showed interest. As Brazilian environmental authorities are tightening the controls over the activity and are stimulating the increase of managed planted areas, the quantity of oil produceds from leaves and branches tends to rise.We believe that this will guarantee the future of the Rosewood Oil production and that oil from leaves and green branches will be a hot product in the years to come. 
We expect the production in 2009 to remain stable at the levels of last year and certainly hope that the price will remain stable 

Copaiba Balsam 
2008 was another bad year for the export of Copaiba Balsam, while the domestic market remained stable. At the end of the year the FOB price was about US$10.00/kilo, much lower then the previous year, but even so only sporadic small deals were possible. We expect the price to drop even more in 2009 which might improve the business. 

Tonka Beans 
The 2008 crop  was so small that we preferd to stay out of this business. 

Ilko Mintschev Minev

The REDD debates

The global REDD debate rages during this week of meetings in Poznan.  As the latest addition to scholarship on the issue, CIFOR released the report “Moving Ahead with REDD”, which provided a roadmap for where forests may fit into an expanded Kyoto Protocol.  Breakthroughs are announced every day from Poland, yet much of the excitement is more likely due to foreign press with little familiarity with the topic rather than actual breakthroughs.  We, in the Amazon rainforest, remain hopeful that Poznan will lead to enough momentum that Copenhagen in December 2009 can be the crowning moment the world decides to move on a definite path to curb emissions and address head on the troubles of climate change.  

Amazonas state in Brazil remains committed to slowing deforestation rates; we have reduced deforestation in our best preserved of all states in Brazil to below 0.03% of our territory per annum.  Satellite imagery shows that Amazonas has 98% of its forest cover preserved and, at the current rate of deforestation, will retain over 95% preserved by the year 2100.  

Below follows the link to the CIFOR report:

http://www.cifor.cgiar.org/publications/pdf_files/Books/BAngelsen0801.pdf

Amazonas and Marriott: Partnership to Protect the Juma reserve in the Amazon rainforest through REDD

Amazonas recently launched a partnership with Marriott to protect the Juma reserve, a reserve of almost 600 thousand hectares, through an innovative voluntary REDD (reduction of emissions through deforestation and degradation) project.  This project has been incubated over two years and sets a new standard for tropical rainforest protection.  Below are a few of the innovations adopted:

Ø      There is full transparency through audits.  Financially, the foundation responsible for the project (Amazonas Sustainable Foundation – FAS) is audited by PriceWaterhouse.  The financial audit demonstrates that the resources are being spent in the manner originally agreed by the parties.  

Ø      There is the objective of raising enough resources (approximately USD 15 million) to set up an endowment fund from which only the interest would be used, providing the project full long term sustainability.

Ø      The resources are being spent in an extremely decentralized way.  Aside form monitoring and enforcement of a zero deforestation policy in the reserve, the resources are spent on the Bolsa Floresta, a very innovative program that pays out two components:

o        Family Bolsa Floresta – USD25 per month per family, to raise living standards, following a commitment by the family not to deforest.

o        Community Bolsa Floresta – the communities (there are 22 communities with 250 families in the reserve) will receive approximately USD5 thousand per year, which the community has to decide how to spend.  These can be investment in community organization, sanitation, pavement, schools, income generating investments such as fishing equipment, training, forestry tools, etc.  The important thing is that the decision is made at the community level, who take charge of their own future.

 

Below are links to some of the news on the project.

 

http://www.marriott.com/marriott.mi?page=green_protecting

http://www.blogs.marriott.com/archive/default.asp?item=2275999

http://www.youtube.com/watch?v=uQ058zrZyTo

http://www.conservation.org/newsroom/pressreleases/Pages/CI_Marriott_green_hotels_announcment.aspx

http://www.alertnet.org/thenews/newsdesk/N16474804.htm

California and Amazonia - partnership to reduce deforestation through payments for environmental services

Last week in California Governor Braga of Amazonas, Maggi of Mato Grosso and Ana Julia of Para gathered with a number of governors from states in the US, Canada, Mexico,  and Indonesia to celebrate the first sub-national agreement to work on climate change and global warming through the reduction of emissions from deforestation and degradation (REDD).  The states, led by California and Governor Schwarzenegger (and including Governors Blagojevich of Illinois and Doyle of Wisconsin), agreed to work on improving measurement methodologies of forest carbon and establishing financial mechanisms to reward carbon sequestration in forests.  

As deforestation accounts for roughly 20% of greenhouse gas emissions, it is an important still missing piece of the fight to mitigate climate change.  It is generally agreed that curbing emissions from deforestation and land use change are a much more cost effective way to reduce overall emissions, especially when compared with industrial activities.  It is hoped that eventually a well functioning system would result in strong funding for the conservation of tropical forests and improvement of living conditions in these regions.  The agreement is focused on both including reduction of emissions from deforestation in the state’s carbon emissions reduction systems and in pushing for the inclusion of tropical forests in the continuation of the Kyoto Protocol which is to be negotiated in Copenhagen in late 2009.

The state of Amazonas, through the Amazonas Sustainable Foundation, has established the mechanism to receive such funds in a transparent way.  PriceWaterhouse does the financial auditing to make sure the funds of the Foundation are applied in the monitoring and enforcement of conservation and in the improvement of living conditions in protected areas; TUV SUD has done the environmental audit of the first major project of the state, Juma, with sponsorship by Marriott Hotels.  

 

Text of the Memorandum of Understanding between the States of California, Wisconsin, Illinois and Amazonas

ACKNOWLEDGING the friendship and excellent cooperation among the governments of the Federative Republic of Brazil/Republic of Indonesia and the United States of America; 

TAKING INTO ACCOUNT the global nature of environmental problems and the ability of joint efforts to enhance joint policies for environmental protection and sustainable natural resources; 

RATIFYING the willingness to promote new mechanisms of dialogue and agreement that lead to the strengthening of relationships and productive mutual action; 

CONSIDERING the opportunities for collaboration between the State of Amazonas/State of Amapa/State of Mato Grosso/State of Para/Province of Aceh/Province of Papua, and the States of California, Illinois, and Wisconsin in combating climate change; 

Recognizing the importance and value of implementing climate mitigation and adaptation actions at sub-national levels, both in their own right and as a means to furthering national and international efforts; 

recognizing further the importance of focusing on issues of common interest between the Parties, such as reducing greenhouse gas emissions in the forest sector by preserving standing forests and sequestering additional carbon through the restoration and reforestation of degraded lands and forest and improved forest management practices; 

EXPRESS their willingness to cooperate, in the search of joint actions that improve environmental quality and optimize the quality of life in the State of Amazonas State of Amapa/State of Mato Grosso/State of Para in the Federative Republic of Brazil/Province of Aceh/Province of Papua in the Republic of Indonesia, and the States of California, Illinois, and Wisconsin in the United States of America. 

ARTICLE 1 

This Memorandum of Understanding is intended to promote broader cooperation regarding environmental issues among the Parties within their respective purview and based on principles of reciprocity, information exchange and mutual benefit. 

ARTICLE 2 

The Parties will coordinate efforts and promote collaboration for environmental management, scientific and technical investigation, and capacity building, through cooperative efforts focused particularly, but not exclusively, on the following priorities: 

a. Reducing greenhouse gas emissions from deforestation and land degradation - otherwise known as "REDD" - and sequestration of additional carbon through the restoration and reforestation of degraded lands and forests, and through improved forest management practices; 

b. Developing rules to ensure that forest-sector emissions reductions and sequestrations, from activities undertaken at the sub-national level, will be real, measurable, verifiable and permanent, and capable of being recognized in compliance mechanisms of each party's state, provincial, regional, national or international programs such as the State of California's Global Warming Solutions Act (Assembly Bill 32), Midwestern Greenhouse Gas Accord, Western Climate Initiative, Regional Greenhouse Gas Initiative, or other initiatives; 

c. Initiating innovative financing between the Parties for the sustainable use of forest resources and biodiversity conservation; 

d. Adapting to future climate change impacts and the mitigation of greenhouse gas emissions; and 

e. Stimulating investment between the Parties to promote sustainable development. 

ARTICLE 3 

In furtherance of the priorities referenced in Article 2, the Parties may develop the following methods of cooperation, among others: 

a. Exchange of information; 

b. Design, implementation and joint financing of studies and projects; 

c. Development and dissemination of publications; 

d. Technology transfer; 

e. Exchange of scholars and experts; 

f. Development of capacity building programs; 

g. Joint development of seminars, workshops, conferences, courses, technical visits and certificate courses; or 

h. Other methods developed between the Parties. 

ARTICLE 4 

The Parties will cooperate in the development of a Joint Action Plan containing cooperative actions or projects and/or specific studies to be developed. 

Each work plan will include all necessary provisions for implementing the cooperation activity agreed upon, including its scope, coordination and administration, resource allocation, expert and professional exchanges, administrative issues, and any other information deemed necessary for achieving the objective of this Memorandum of Understanding. 

Independent of the formalization of work plans the Parties agree that collaboration proposals can be presented that allow the parties to optimize outcomes for achieving the objective of this Memorandum of Understanding. 

For the follow up and implementation of work plans, theme-specific groups will be established. These groups will be led by officials of the Parties and will meet at a minimum of once a year. 

ARTICLE 5 

In activities of cooperation and information exchanges, if Parties deem it convenient, private and public sectors may be invited to participate, as well as public, academic and research institutions, or any other organization, as long as they can directly contribute to the achievement of the objective of this Memorandum of Understanding. 

ARTICLE 6 

The Parties will finance activities referred to in this Memorandum of Understanding with resources allocated in their respective budgets, as these resources become available and as stipulated by their own legislation processes. Each Party will pay for expenses related to its own participation, unless alternative financial mechanisms can be used for specific activities, as appropriate and as approved by their respective appointing authority 

ARTICLE 7 

Confidential or protected information, material or equipment will not be subject to transfer pursuant to this Memorandum of Understanding. 

If information, material and equipment is identified to require or to potentially require protection and classification, during the development of cooperation activities as stated in this Memorandum of Understanding, the Parties will inform corresponding authorities and will establish the appropriate protections in writing. Transfer or use of information, material and equipment not protected or classified which is controlled by any of the Parties, shall be done in accordance with applicable laws of each state, province, nation, or institution and must be properly identified. 

ARTICLE 8 

Officials designated by each Party to implement cooperation activities under this Memorandum of Understanding will continue working for the party to whom they belong, and no labor relations will be created with any other Party to this Memorandum of Understanding. 

Cooperative activities under this Memorandum of Understanding will in no way change the original employer/employee relationship of the officials working together under this Memorandum of Understanding. 

The Parties will make all necessary arrangements with corresponding authorities to facilitate customs entrance and exit of participants officially taking part in cooperation projects under this Memorandum of Understanding. These participants will be bound by migration, fiscal, customs, sanitary and national security provisions existing in each respective country and are not authorized to do any other activity without previous permission from the appropriate authorities. 

The Parties will ensure that their official representatives participating in cooperation actions have medical, liability and life insurance, to pay costs related to damage repair or indemnification, in case that an accident may occur as a result of cooperation activities related to the execution of this Memorandum of Understanding. 

ARTICLE 9 

Any differences of interpretation, management or execution of this Memorandum of Understanding will be resolved by mutual understanding of the Parties. 

ARTICLE 10 

This Memorandum of Understanding can be modified by mutual consent of the Parties in writing, specifying the date of the entry into force of any such modifications. 

ARTICLE 11 

Termination of this Memorandum of Understanding can be made by any of the Parties, through written communication directed to the other Parties thirty (30) days in advance. 

ARTICLE 12 

The Parties acknowledge that this Memorandum of Understanding is only intended to provide for cooperation between the Parties, and does not create any legally binding rights or obligations. To the extent any other provision of this Memorandum of Understanding is inconsistent with this paragraph, this paragraph shall control. 

Executed in California, United States of America, on November eighteen of two thousand and eight, in one original in the English language. 

Market Report 2007 of Amazon rainforest natural products by Ilko Minev

Rosewood Oil

Production of Rosewood Oil in 2007 improved and was well above the previous year. In all, between the Organic and Regular kinds, about 25 tons of Rosewood Oil were produced. The apparent reason for such increase is that part of the 2006 production was delayed because of the exceptionally low level of the waters in the Amazon basin in the second semester, which affected logistics in much of the producing region. As a result the actual production was delayed to 2007. Again the organic product was responsible for most of the growth due to the increasing environmental concerns. The year was marked by strong valuation of the Real against the Dollar and in December 2007 the FOB Manaus price for organic oil reached US$ 95 per kilo. As the trend continues it is likely that the mark of US$100/kilo FOB will be surpassed in early 2008 (One USD is now worth 1.90 BRL).  The price in Euro was much more stable and therefore customers from Europe preferred quotations in Euro.  

There was one important fact that happened in 2007: the introduction to the market of the first Rosewood Oil made out of leaves and green branches from the new plantations. The initial production was small, only 2 drums, but we hope to be able to offer more in the following years. As the federal and state environmental authorities are exercising stronger and stricter controls over the activity, the producers are increasing the managed planted areas. This is a slow, but promising process that is likely to guarantee the sustainability of Rosewood Oil production in the future. In 2008 Organic Rosewood Oil will most likely continue its growth, while the regular product will continue its decline. With luck the total production might reach 25 tons, but most likely it will be somewhat lower.  In addition to usual production, we expect to be able to offer 3 drums of oil extracted from the leafs and branches alone in 2008.

 

Copaiba balsam

The year 2007 was not a good year for Copaiba Balsam. The domestic market was somewhat slower then in the previous year, while the export market was really sluggish. Because of the valuation of the Real against the Dollar the FOB Manaus price increased to US11.00/kilo. At this price level it was impossible to find customers. Sellers sacrificed profit margins to close the few deals that were completed. Our expectation is that 2008 will also be a difficult year, as substitutes to Copaiba gain while the exchange rate is unfavorable. All depends on the exchange rate.

 

Tonka Beans

The crop of Tonka Beans was again relatively small. The price at the end of the year was about 7.50 Euros per kilo. Because of the very scarce availability and low demand in the last years we are no longer giving much emphasis on this business.

 

 

Brazil and Amazonas Outlook 2007

 

The Brazilian economy went through another good (not great) year in 2007, posting almost 5% of GDP growth.  Much of this growth is attributable to increases in the volume of credit in the economy, which reached 30% of GDP during the year, and exports which have soared due to commodity prices (mainly soy, sugar, coffee and metals).  

The Amazonas state economy has been doing outstandingly, with annual growth over 10% for the third year in a row.  It is mainly due to growth in two-wheel vehicles production in the Manaus industrial district and growth in services.  Meanwhile, deforestation rates in Amazonas have lowered to less than 700 sq.km, from over 1500 sq.km before 2003.  

 

For more information regarding Amazon natural products, please contact Ilko Minev at ilko@bemol.com.br

Regional Products from the Amazon rainforest - 2006 Market Report by Ilko Minev

Brazilian economic and political scenario at a glance.

       In 2006, Brazil's economy grew at a moderate 3% within a stable macroeconomic environment. Inflation was a mild 3% for the year as a result of responsable fiscal and monetary policies. The exchange rate fluctuated slightly around BRL $2,20 for one U.S. dollar. Brazil's commercial surplus was about US$40 billion despite exporter's complains of an "overvalued" currency. And interest rates were reduced, but currently still stand at a rather high level of 13%/year.

       President Luis Inácio Lula da Silva was reelected for a second term for which he has promised to accelerate growth to about 5% a year by encouraging domestic and foreign investment and by raising the income of the poor. Mr Lula has managed to obtain a volatile congressional majority by forming a center-left coalition of several parties.Because the long awaited reforms in the tax system, labor laws, social security and political system have not been included in the political agenda, we believe that Brazil will not improve its global competitiveness and we are, therefore, skeptical about our growth prospects for 2007. A repeat performance of 2006 seems more likely in our view.

        In the State of Amazonas, were we are located, the economy moved at a much faster 8% rate in 2006, due to the growth of ouput in industries such as celular phone, eletronic equipment and motorcycle which comprise the core production of the Free Trade Zone of Manaus.

      In 2006, for the second year in a row, Brazil managed to reduce deforestation in the fringes of the Amazon region by 30%, by fighting ilegal lumbering and enforcing environmental laws more strictly. This positive trend is expected to continue in 2007.

      Regarding the three main forest products we export, we offer the following comments:

Rosewood Oil

       Production of Rosewood Oil in 2006 remained in the range of 19 tons for the year. Despite the rising costs and the further devaluation of the Dollar against the Real (One USD is now worth 2.14 BRL) the export price rose only a little and for Organic Oil it is now US$86.50/kilo FOB Manaus. The demand for Organic Rosewood Oil continues strong specialy in Europe.The year 2006 was marked by changes at IBAMA, new procedures were introduced, which in theory should result in better and more eficient controls over production and distribution. This remains to be seen in 2007 ! 
        Recently we improved our packing and now we only use stainless steel drums. Given the very corrosive nature of rosewood oil this is further guarantee that our customers will receive a high quality product. 
       Our expectations for the new year are that total pruduction should slightly surpass 20 tons and that the demand will continue to be strong. Chances are that the price for Organic Rosewood Oil will rise moderately to US$88 or 89/kilo FOB. The exchange rate is still the most decisive factor and we can only hope that the current trend of further valuation of the Real will come to an end.

Copaiba Balsam

        The domestic market for Copaiba Balsam continued to expand and the price did not stop rising during the entire year. It is now slightly over US$9.00/kilo FOB Manaus and we can not buy enough to satisfy the demand. Last year it took some time for the international market to adopt to this new level of price, but it seems that now we have overcome the problem. At the end of 2006 demand from Europe and USA was rather strong, despite the higher price. The Organic Copaiba Balsam is still struggling, but the existing market is steady and probably will grow more this year. We have good expectations with regard to Copaiba and our bigger concern is availability. We expect the export price to stay on hold for some time during 2007.

Tonka Beans

        As a result of the prolonged dry season in 2005 the new 2006 crop was very, very small. There will be no Tonka Beans in our market until the new 2007 crop is harvested in september, october. The last export price was over US$9.50/kilo FOB, but anyway there is no availability at all since end of november. We expect that the 2007 crop will be much better and that the market will return to normality. 

For more information and current quotes, please contact Ilko Minev at ilko@bemol.com.br

A bet on Sustainable Development for the Alto Solimões region in the Amazon

It was signed on the 12th in Tabatinga, the agreement of financing between the World Bank and the State Government of Amazonas with sights on the development of the region of Alto Solimões. The loan comes with the technical endorsement and supervision of the bank, which certainly has greater value than the amount itself, US$ 24 million. The project prioritizes three main segments: sanitation, sustainable development, and health.

We search for innovative solutions of high-impact that can be applied on all three segments. In sanitation, the supply of clean water will be the priority, the main subject in the nine contemplated cities; with a project-model aimed towards the sanitary infrastructure and sewer. In health, the focus is mainly management and not new investments. In the area of sustainable development, the root is the search for an economic model in four fronts which can balance a sustainable use of the forest, versus the sad but efficient deforestation alternative.

 The region of Alto Solimões is especially sensitive; because in this vast territory there are controversial issues such as questions involving aboriginal policy, national defense, environmental preservation and anti-trafficking. Also it is possible to identify the increasing, but still low level of social development, and the multiplicity of efforts directed towards the development, since the introduction of forest handling and fisheries.

Tabatinga is one of the few economically vibrant cities of the State that has the capacity to, given a development time and an adequate model of sustainable growth, replicate it through private initiative. The region has a strong potential for local consumption and exportation to neighboring countries, not to mention the easiness of navigation during the whole year to Manaus and the Atlantic.

 In the subject of sustainable development in particular, it is sought to reach high productivity through the best existing technologies and size growth in four priority segments:

·         Forest handling: not yet has great productivity been reached by the sector, to a large extent due to existing technology directed at the cultivations of eucalyptus or pine, and not to the vast Amazonian biodiversity;

·         Non-lumber forest products: from oils and essences to fibers and chestnut, increasing efforts exist for production that must be supplemented by robust financing and assistance with modern technical support;

·         Handling of lakes: although not all of the region is abundant in lakes (they are especially prominent in Jutaí, from river Solimões and below), the handling of fishing and animal resources can be extended;

·         Fisheries: in Benjamin Constant many efforts have already been made in fisheries, including a ration plant that should be reactivated by the private initiative. The region is advantageous to the establishment of fisheries due to the fact that it is relatively plain and easily accessible, through the recently inaugurated road connecting Northern Atalaia with Benjamin Constant.

 

The project has its roots in the principal of stimulation of experimentation by private and communitarian initiative, instead of seeking to increase the state structure. There will be 20 chosen private projects in conjunction with the World Bank receiving financing of up to R$500.000. These resources are much like investments made in research and development, because they will serve to ensure that private entities find (at low risk and using the best existing technology) the most suitable solutions for the region.

The Alto Solimões, during the arrival of the first Europeans, was a region of great prosperity that used the available natural resources with sustainability. It is a rich region in black earth, which indicates its use by the Indians for centuries on agriculture. When Orellana passed through Tabatinga, he described the great wealth of the local aboriginal kingdoms, especially with regards to the the enormous fisheries of turtles and manatees from which the proteins of the local people came, a beautiful example of ancient sustainable handling.

With the European presence, much of this sustainability was destroyed with the establishment of the ideal that the forest was impeding development. We hope to make another step in the search for the harmony that will bring the balance to the equation that unfortunately still sways towards the value of the fallen forest.

 

 

Development Alternatives for Amazonas State, Brazil

Interview granted to the magazine Empório, regarding the challenges and alternatives of development for the State of Amazonas.

 

1 – What are the biggest challenges for the Free Zone of Manaus?

The Free Zone of Manaus is going through a very positive time of growth. However, we still have a long way to go to link the economic strength of the FZ with the rest of the economy of the state, principally with respect to the countryside. The Green Free Zone is a strong initiative under this direction, where we seek to increase the productivity of the countryside in some commodities such as oils, essences, foods, wood and other products, as rubber.

            The technological convergence also reveals itself to be a great challenge and opportunity. Each day it becomes more difficult to differentiate between the many electronic devices. Products that before were separate are now together; storage medias change; the legislation of the Free Zone needs to follow these changes, under the risk of becoming obsolete within the past technology.

Moreover, we face serious challenges concerning the workforce and infrastructure. Due to the sped up growth, we live in a time that I believe is similar to a “blackout” of the workforce. There are many initiatives, governmental (as UEA, CETAM) and private, but the average growth of the GDP of about 9% per year in the last five years has been more demanding than the available workforce supply.

 Our infrastructure has also improved but still leaves something to desire. In transportation we have the recent announcement of a new modern port in Manaus and the possibilities of geographic growth that the bridge to Iranduba brings. Our airport already demands augmentation, specifically to fulfill the increased demand for international flights and cargo. There is still a lack of a land connection between Manaus and Porto Velho, which can be taken care of by the BR-319 or, in a more productive manner and environmentally appropriate, by a railroad. In the field of energy, natural gas is our great strength, in the search for stability of resource and lower prices. In telecommunications, amplifying the reach of the cellular network with the third generation should be a priority in the next years, as well as the broadening in offers of internet providers, causing a reduction in the prices, which are amongst the highest in Brazil.

2 - The perpetual fiscal war with São Paulo in regard to the ICMS will be perpetual or can be solved between the two states?

The fiscal war will only be reduced with an ample reform in taxes. The current proposal of the Federal Government seeks exactly that. The commitments assumed by the President with Governor Eduardo Braga guarantee that the Free Zone will be preserved and that no other state will be able to grant similar fiscal incentives.

 

3 – Is the possible creation of Zones of Exportation Processing (ZEPs) in the northeast a threat to the Free Zone of Manaus?

The important factor is to guarantee that the ZEPs are designed in such a way not to compete directly with the FZ. For example, the limitation of sales in the domestic market is a good measure. It is necessary to equate the interests of a new national industrial policy with the implementation of a success model.

4 - For a company that intends to establish itself in the FZM, what are the advantages offered by the State Government?

The State Government not only has interest in new companies establishing themselves in Amazonas, but that the companies that are already here remain and prosper. We seek to offer equality of competition to the companies of the FZ and advantages that differentiate Amazonas from the other states. Also, we search for a good enterprise environment, in which the investor/entrepreneur is respected as a creator of jobs, actuator of growth, and payer of taxes. For this, the State Government has been searching to simplify the relationship with companies; we are still far from the ideal, but we are heading in this direction.

 

5 – You defend the creation of economic alternatives for the state. Is there any project elaborated in this direction?

We identified six sources of development for the Amazonas: The FZ, Natural Resources, Tourism, Energy, Services and Environmental Services. On the SEPLAM website we have a more detailed presentation. Basically, beyond the FZ that attributes for more than 50% of the state economy, we must take better advantage of:

·         Natural Resources: the Green Free Zone program seeks the development of our natural resources in a sustainable way. These resources include wood, rubber, products of agriculture or extraction, fishing (ornamental and for consumption), minerals, and water, amongst others.

·          Tourism: we have enormous potential. This is an activity that has been growing considerably, but still with a contribution of less than 2% of the state economy.

·         Energy: we have many opportunities arising out of the arrival of the gas-line of Urucu, improving the generation of energy and creating new companies. Moreover, biodiesel and cellulosic ethanol rise as great possibilities in improving the economy in the countryside, for consumption and possibly for exportation.

·         Services: we still need to search for improvements in many service areas. For example, we need cheaper and more abundant telecommunications (cellular and Internet mainly). We need more air routes and links, cargo and passenger, to better stimulate the competition and lower the prices. Also, we should seek for a greater availability of private health and education, due to the increasing demand. Moreover, there are possibilities of customer servicing through Call Centers, and we can stimulate the companies in the FZ to lease these services in Manaus, for example.

·         Environmental Services: with the Foundation for Sustainable Amazonas, we took a great step towards the establishment of a market of environmental services. We seek to show the value of the present forest by the services it naturally provides to Brazil and to the world. The first step is to remunerate the guardians of forest through the Bolsa Floresta. The next steps will be drawn by the State Government and the Foundation Council, which is composed of some of the most prominent entrepreneurs, leaders and thinkers of current Amazônia.

 

 

Science contributing to the economy in the Amazon

The Brazilian academy traditionally always feared working with private initiative. Research conducted for the development of economic interests was always seen as inferior to that focused in the pure knowledge. I believe, also, that this view explains the absence of private resources applied in research, which, in general are diverted to sectors where they are more welcome.

This traditional belief has been changing and I believe that the Fapeam has a fundamental role on breaking this paradigm. Successive administrations of the Sect have sought to develop lines of research directly linked to the sustainable economic exploitation of potentialities in the region.

It is in this spirit that we today have one of the most important projects of Amazonas subsidized by scientific knowledge. The project Reserve of River Juma, that is being implemented for the Foundation for Sustainable Amazonas and sponsored by the hotel chain Marriott, rises as a window we have been searching for many years in the Amazônia. My grandfather, Professor Samuel Benchimol, has for many years already stated that the solution for Amazônia would undeniably reveal itself to be preservation instead of remuneration. Successive international negotiations seem to follow in the route of mechanics of remuneration of REDD (Reduction of Emissions of Deforestation and Degradation) in new negotiations of the Kyoto Protocol, that will begin in 2013.

So that we may be remunerated, we need to pass through four phases: determination of a focus area, determination of the probability of deforestation of this area annually, gauging of the volume of carbon storage in that area, and determination of the effects that the implementation of a project that aims for the reduction of deforestation would have. A few years prior, this project would be impossible due to the lack of knowledge that we had of our forest. Today, finally, we can establish, approximately, how much carbon is in storage in one determined hectare. Also we can establish which areas of Amazônia would probably be deforested in the next years, due to extensive studies, also published in the magazine Nature.

With all these phases, proven and audited by an internationally recognized firm, we will have the financial instrument, in the form of VREs (Voluntary Reduction of Emissions), to get resources directed towards preservation. It is the first step in the remuneration of the Amazônians through preservation. It is possible, thus, that we re-equalize the equation of the economic value of the standing forest, with regards to the cut down forest. It is an equation that makes Amazônia poor and threatens the world; to change it is a priority for all.

How to rebalance the equation of deforestation in the Amazon - Part I - Environmental Services

The possibility of valuation of environmental services provided by the forest is the biggest economic opportunity of Amazônia today. In the past we had rubber, in the future we will probably have the technology to use the natural laboratory to our advantage, on the extent of which is unimaginable today; presently, for the region as a whole, environmental services can be the solution. Amazônia small rivers give the environmental services of maintenance of the climate and water cycle, prevention of global heating, and conservation of biodiversity, amongst others. With only one pertinent difference: without compensation.

Taking a step in this direction, Amazonas in conjunction with the Foundation for Sustainable Amazonas celebrated a partnership with the chain of hotels Marriott to preserve an area of 5 thousand km ², seeking the improvement of the living conditions for the local population (approximately one thousand inhabitants) and having as a counterpart the conservation of the area and subsequent provision of environmental services. This reserve, located on the River Juma, is situated in the arc of the deforestation, in such a way that, in a “normal” scenario, would be deforested in the next years.

This project is based on an initial donation on the part of the chain of hotels and, subsequently, the contributions of guests who opt on paying an additional small amount to contribute to the reserve. The project destines itself to implement improvements in monitoring and the Bolsa Floresta program, lead by the Foundation for Sustainable Amazonas, presided over by former-Minister Furlan and former-Secretary of the Environment of Amazonas Virgílio Viana. With respect to monitoring, the main actions include the use of satellite in conjunction with the presence of well equipped points of monitoring by land. The Bolsa Floresta program, aside from a payment of R$50 monthly to the families who do not participate in deforestation, also disperses payments of approximately R$750 per year for families of the small communities. This additional expense must be spent through a communitarian organization (R$50 per family), sustainable economic activities (R$350 per family) and social improvements (R$350 per family, aiming at education, health, transport and communication).

Two factors of the project are in disagreement with the rolls of policies of development previously attempted in the country.

·         The financing does not come from the public budget and yes, in this case, from the donation and income obtained by the Foundation.

·         The communities decide on how to better use the resources, and not bureaucrats separated by thousands of kilometers of distance.

The project is seeking to be compensated with VREs (voluntary reductions of carbon emissions) following CCB methodology (the main standard for forest carbon projects), due to the estimated reduction in deforestation. The CCB methodology is emerging as the standard means of evaluation of REDD projects (Reduction of Emissions based on Deforestation and Degradation), which is of extreme relevance for the Amazonian region.

Amongst the many positive factors in this example, it is of great importance the advent of the economic initiative swaying in favor of the standing forest. Thus begins the change in the economic equation “the standing forest vs. the fallen forest.” Only this re-balancing can permit the creation of a sustainable economy on Amazônia of which we will be proud of.

            With partners such as Marriott and Bradesco, the State of Amazonas will be able to reach a scenario in which the deforestation, already at a low level (of about 750 km ² or 0.05% of the state per year), will be reduced to zero. The necessity of the magnifying of these efforts is evident, leaving doubts only as to how to complete the task.

Although the hope and expectation exists that more responsible citizens and companies will voluntarily extend their contributions to similar projects (in case you are one of them, visit the site www.fas-amazonas.org), almost a thousand similar projects would be necessary to cover all of Amazônia. The accurate solution to protect all of the 4,3 million km ² of Brazilian Amazônia can occur by a new international regimen of valuation and payment for environmental services. Today, this regimen is contemplated to assume the gap following the conclusion of the Kyoto Protocol that will end in 2012; Amazonas proposes that we receive credits from carbon (for the storage of carbon) or credits for any other environmental processes (to a large extent covered in CCB methodology) in exchange for the conservation. Knowing that the benefits will be enjoyed by all, nothing more just than sharing the costs with all.

            Let us remember the rules of social justice, political balance, economic viability and environmental adequacy (Prof. Benchimol). The conservation of the forest ceases to be a sign of absence of men and economic inactivity to become a sign of humanity and regional strength.

Improvement in the public administration with ISO 9000

This week marked the first certification of ISO 9000 obtained by the present state administration; the first of what we expect will be many. The IPEM (Institute of Weights and Measures of the Amazonas) was recommended for the certification without exception, after one year of arduous work, certainly recognizable by those who already worked on implementing a quality system.

The ISO provides a framework of three practical applications that, given they do not guarantee good management, at least give the certainty that an effort has been made to demonstrate a continuous commitment to improvement that may eventually, in itself, be classified as good management. The three practical applications are:

·         Management of talent: the ISO requires that a manager pays close attention to the qualifications and training of its servers. Hours of training and an adequate graduation are basic requisites for the attainment.

·         Indicators: as Peter Drucker, the father of modern management, has already said: “What gets measured gets managed.” The ISO requires the establishment of indicators at the principal levels of the organization. For example, an organization should measure: productivity of a sector (number of concluded processes), the average delay of processes (always searching for faster possibilities), and quality (in how many cases repetition is necessary).

o       An indicator of special importance, and still not yet regarded as such in the field of public service, is the satisfaction of the public with the provided services. For example, IPEM takes precise care of important items to the economy, such as taximeters, scales, gas pumps, and others. In this process, it makes frequent contact with consumers as well as with entrepreneurs. The IPEM now measures the satisfaction of these users and gets audited to verify accurate treatment of possible claims.

·         Continuous improvement: the ISO demands the mapping of processes and verification of possible bottlenecking and difficulties in the execution of tasks. After this mapping, of course there will still be problems existing. The ISO disposes of a tool, the Treatise of Non-Conformity, which ensures that every time a significant problem is discovered, there will be a search for a lasting solution. The external auditor, while performing the audit, searches for evidences that the organization is always searching for these improvements.

These simple practices are of unquestionable effectiveness in private or public administration, if implemented with vigor. The ISO simply systemizes the adoption of these practices and guarantees the continuity of them. Today, we operate with more than ten state agencies with implementation, with probable certifications soon of SEPLAN, CIOPS and CGL, and will be initiating more shortly.

I would like, finally, to make a suggestion to those that agree with the principles of the above mentioned practices. Those that know public managers, in any spheres, question them on what they are doing in each of these items. Is there research being done of satisfaction of your clients, the public? What are the policies involved in the valuation of servers, of training, of recruitment? What system do you adopt in your search for continuing improvement? It is only with a demanding society that we can have some hope of a better future.

Interview concerning mining in Amazonas

Below follows the interview granted to the magazine In the Mine, with a focus on mining. Interview granted on the 22nd of August of 2008.

 

- What is the current panorama on the field of mining in the state?

The mining sector is of great importance for the State of Amazonas. Today, we have in operation a large mine in Pitinga, which generates a large volume of jobs, economic activity and royalties to the state. This mine alone accounts for 80% of the nation’s necessities of tin, which gives Brazil the position of exporter of the metal. The same mine still provides good potential as a tantalum resource. We also have important oil and gas lines in Urucu and Silves, with the potential of finding new deposits, caused by the large state investment in this segment. We also have a great deposit of silvinita, which has the potential of, in average time, allowing Brazil to become self-sufficient in potassium. We also have great potential in the harvesting of kaolin, bauxite, gold, and niobium, amongst others. We welcome any investors interested in the state and understand that the competition in the segment is essential for sustainable development.

 

- What are the main projects in progress?

The current focus is the project of silvinita in Nova Olinda do Norte. We worry about the current contractual situation, which causes uncertainty and can raise the risk perceived by investors in Brazil and Amazonas.

From other angle, the arrival of the gas-line of Urucu in Manaus is also considered a priority. We have these two projects in first place due to the high degree of private interest on both. Not hindering however, in the presence of interested investors, the State to seek out other possible investments.

 

- How has the government, through its Secretary, contributed to stimulate the leverage of these projects and the sector, in general?

We have sought to understand the real potential of our reserves of silvinita and the necessities and risks associated. For example, we already understand the great energy necessary for the mine to work and we are searching for possible solutions. We also must address the environmental question which needs to be equated before any investments in Amazônia. Our secretary, in both cases, will aim to eliminate impediments and to find economically viable solutions which are ecologically adjusted.

Moreover, we have studied incentives to stimulate the formation of production chains which integrate mining with industry. Industries such as paper can benefit in the near presence of kaolin harvesting, there are also possibilities in the areas of civil construction and ceramics, which can integrate the strong tax incentives of the Free Zone of Manaus with the local mineral production. In fertilization, we can integrate the potassium of Nova Olinda with natural gas for the formation of a new strong local industry directed at supplying the field of agriculture.

More than everything, however, we have sought to keep a good enterprise environment in the state, in which private investment is well regarded and in which the profit is not seen as crime or sin, but instead, as merit and remuneration for the risk taken. Contracts preservation is also essential and the state has a tradition of respect for the contracts that have arisen since the first incentives granted in the Free Zone of Manaus.

 

- The logistics for the harvesting of minerals is almost always a crucial point. How has this been addressed?

We understand that transportation is crucial in the field of mining. Of course, in each case, it must be treated individually. For example, in the case of silvinita of Nova Olinda, the deposits are located in the proximity of the Amazon and Madeira rivers, in areas where the depth of the rivers allows large ships to navigate. In the case of using the delta of the Amazon river, we can supply the entire Brazilian coast; in the case of using the Madeira river, we can reach the city of Porto Velho and from there supply the center-west, a great purchaser of fertilizer. Each case is a different case, and we must understand the necessities of each investment to better address it.

 

- What are the projections of investments in mining in the state for the next years?

There is much interest in bauxite, tantalum, kaolin and gold, beyond the already pursued silvinita, tin, gas and oil. We have all the interest in making possible the investments that follow the three basic premises of investments in Amazônia: it must be socially just, economically viable and environmentally sound.

 

Denis Minev is the Secretary of Planning and Economic Development of the State of Amazonas.

Letter of Cuiabá - in search of productivity and sustainability

Below is the text of the Letter of Cuiabá, signed by all the Governors of the Amazônia Legal, in search of a unified voice of the region. It focuses on three items in particular: a) agrarian regulation, b) science and technology and c) incentives to priority segments.

The sentiment of the letter is the viability of a formal and healthy economy which should supplant the current lack of formality and sustainability. Agrarian regulation is essential in the generation of capital that makes investment and financing possible. Science and technology must seek new forms of economical exploration that have as principle sustainability and productivity. The incentives to priority segments, as education, can indicate to private initiative the way to tread in the search of sustainability and productivity. Below follows the text of the letter:

II Forum of the Governors of the Amazônia Legal

Cuiabá, 08th of August 2008

We, governors of the States which comprise the Amazônia Legal - Acre, Amapá, Amazonas, Maranhão, Mato Grosso, Pará, Rondônia, Roraima and Tocantins, representatives of the larger dimensions that derive the popular mandate, affirm our responsibility in the conduction of the fate of the region.

We understand the importance of the environmental variable in the development of Amazônia that propagates and is present in all the subjects in a transversal form, understanding that socio-economic aspects are equally relevant.

To give materiality to the actions of the development of a sustainable region, the Forum creates the Council of Governors of the Amazônian Legislature and dispatches therewith the priority agenda:

1.      To immediately install the Managing Commission of the Plan for Sustainable Amazônia (PSA);

2.      To reaffirm the importance of Ecological and Economic Zoning (EEZ) as strategic tool for planning and regional integration, considering that the conclusion of the State EEZs and the macro-zoning of Amazônia is a priority and should be reached by a cooperative financing agreement between the State and the Union;

3.       To assure, by means of delegation, the independent participation of the states in the formularization of environmental policies (legislation, control and monitoring) so that they reflect the interests of Amazônia;

4.      To reconstruct and/or to fortify the Institutos de Terras or correlated structures in the states, seeking to establish policies of agrarian regulation, agreed to by the Amazonian states, by means of a cooperation of technique and financing between the federate entities and the Union, giving to the States the power of sovereignty in the scope of territorial order;

5.      To institute the shared strategic planning of the infrastructure actions of transportation, communications, energy and water resources, aiming for regional integration.

6.      To add to the investments of the Program of Acceleration of Growth (PAG) the complementary workmanships of the structural axis, such as: road accesses, viaducts and arcs;

7.      To approve, by the National Congress, a Project of Constitutional Amendment (PCA) that allows for the collection of ICMS in the generation, transmission, and distribution of energy, as well as in the final consumption;

8.      To implement a joint emergency program of the States and the Union to supplement regional imbalances in the sector of Science, Technology and Innovation, by establishing goals of expansion and consolidation of the infrastructure of research, production of social technologies and formation of human resources, including the duplication of the number of doctors in the stated period of five years;

9.      To introduce a differentiated model of financing for the region, being aimed at the promotion of health, that takes into account the great demographic void, distances, the precariousness of transport routes, the costs generated by procedural maintenance, and the specific endemic pictures of the region;

10.   To accomplish the proposed actions in the Green-Arc Operation, in tune with actions of the state governors;

11.   To reorganize the model of implementation and operation of the Program of Acceleration of Growth (PAG), in the scope of the Ministry of the Cities/Caixa Econômica Federal (Federal Savings Bank) aiming at autonomy for the States in order to simplify the procedures for speeding up the execution of sanitation workmanships and habitation;

12.   To promote the revision of the Program of Fiscal Adjustment (PFA), aiming to assure, within the scope of the current Law and in symmetry with the other states, access to the credit for the States of Tocantins and Amapá;

13.   To fortify the agencies of regional planning, especially the SUDAM, so that the Regional Plan of Development of Amazônia (RPDA) is effectively elaborated with the States, redesigning the Legislation that refers to the   priority economic segments;

14.   To speed the voting of the National Congress concerning the Law Project that creates the Participation Fund of the States (PFS) - Green.

15.   The resolutions signed during the meeting compose the annexes.

 

This act is set forth in the search of sustainable development of Amazônia for those who live within it.

 

Governor Blairo Maggi – Mato Grosso
Governor Ana Júlia Carepa - Pará

Governor Eduardo Braga - Amazonas
Governor Binho Marques - Acre
Governor Ivo Cassol - Rondônia

Governor Marcelo Miranda - Tocantins

Governor Waldez Góes – Amapá

Governor José de Anchieta Júnior - Roraima
Vice-Governor Luís Carlos Porto - Maranhão