Dirty Business in Brazil: Rousseff Backslides on the Environment

March 22, 2012

On December 6, the Brazilian Senate approved controversial changes to the country’s Forest Code. The move sparked a large public outcry from environmentalists, left-wing and center-left politicians, and citizens.

“The text is horrible. . . . It’s a backward agenda,” the former environmental minister and Green Party presidential candidate Marina Silva told the news agency Agência Brasil.1 Greenpeace protested in the capital city of Brasília, calling the Senate approval a “day of shame.” “What was once the most advanced environmental legislation in the world will become another instrument for farmers to turn on their chainsaws,” Greenpeace said in a press release.2

The Senate decision marked the latest step in a tumultuous national debate over Brazil’s Forest Code that began even before Brazil’s Chamber of Deputies passed an early version of the changes in May.

The Senate bill now heads back to the Chamber, and if approved in the coming months, will likely be signed into law by Brazilian president Dilma Rousseff.

The changes to the Forest Code, however, are just the tip of the iceberg—the latest in a series of environmental decisions under the Rousseff administration that exemplify a marked shift away from environmental protection in an effort to further spur development and economic growth.

“Brazil’s environmental laws used to be strong,” says investigative journalist Verena Glass of Reporter Brasil. “But since the Lula administration, they’ve been progressively weakened, especially in the area of project licensing. And Dilma is doing much of the same. It’s a right-wing philosophy: you have to grow the economy in order to redistribute wealth. This is what is changing our environmental laws, and it’s dirty business.”

In addition to the Forest Code, the Brazilian Congress is debating Rousseff-supported changes to the mining code that could gut legislation and open up previously protected zones to exploitation. In an effort to increase electricity generation, largely to spur the development of extractive industries in the resource-rich north of the country, Brazil plans to build over 30 hydroelectric dams in the Amazon by 2020, potentially flooding conservation zones and affecting indigenous peoples such as the Munduruku, the Apiaká, and the Xikrín Kayapó. Twenty-thousand people are set to be displaced by the recently approved Belo Monte dam alone. Meanwhile, Rousseff has stimulated economic growth, principally by investing in infrastructure and commodity export in order to generate cash for government spending, while riding recent waves of high commodity prices and Chinese demand for Brazilian products.

This shift in environmental policy is especially disturbing considering Brazil’s legacy as a champion of the environment. Beginning with the 1988 Constitution, Brazil’s legislative branch has passed some of the world’s strongest environmental legislation. Brazil’s landmark 1998 Law on Environmental Crimes, for example, penalizes crimes against flora, fauna, and environmental quality. The law has been used to prosecute cases of illegal deforestation and animal trafficking. Although environmental compliance has been difficult due to corruption and a lack of resources, Brazil’s powerful legislation has created a benchmark for environmental protection in the country with some of the world’s largest remaining forests, natural resources, mineral reserves, and biodiversity.3

Largely for this reason, Rio de Janeiro played host to the 1992 United Nations Earth Summit in which the UN “sought to help governments rethink economic development and find ways to halt the destruction of irreplaceable natural resources and pollution of the planet.”4

Now, 20 years later, Brazil is readying to host an anniversary Rio+20 Earth Summit in June, but like never before the country appears to be paying lip service to environmental protection while the economy grows at record rates. Deforestation and forest degradation account for 45% of Brazil’s total greenhouse-gas emissions and studies show that deforestation rates have begun to rise again, even without the alterations to Brazil’s Forest Code.5


If passed by the Chamber of Deputies and signed into law, the Senate’s proposed changes to the Forest Code would change how Brazil administers its remaining forest. The entire set of proposed changes is not all bad, but together, the new code would take a step toward gradually eliminating the existing mandate that new land clearings must maintain a certain percentage of their property covered in forest. In the short term, the new legislation would allow private landholders to cut down forested areas on their properties that were previously protected by law. The change would allow for an expansion of livestock and agricultural production, especially beef, corn, soy, sugarcane, and other lucrative export commodities.

In the long term, the new code would likely alter Brazil’s ability to meet its commitment to reduce greenhouse-gas emissions associated with deforestation, land use, and land cover change. At the 2009 Copenhagen climate summit, the government of then president Luiz Inácio Lula da Silva committed to reducing the country’s emissions by 38.9% by the year 2020. Already, 2011 data shows that deforestation in the Brazilian states of Mato Grosso and Pará is at its highest levels since 2007.6 For critics, these proposals are a resounding step backward for the future of the Amazon and a gift to large agribusiness sectors that clamor to expand production into new areas.

The changes to the Forest Code were largely the result of pressure from the powerful rural lobby, or bancada ruralista, in the Brazilian Congress. As of 2010, 160 politicians, or 27% of the Brazilian congress’ 594 seats, represented agribusiness interests that lobby to deregulate transgenic crops, lower labor standards, and scale back environmental protection.7 The main authors of the new Forest Code, Tocantins senator Kátia Abreu of the Social Democrat Party (PSD) and São Paulo representative Aldo Rebeldo of the Communist Party (PCdoB), are both members of the Bancada Ruralista. So is Rousseff’s minister of mines and energy, Maranhão senator Edison Lobão.

“There is no longer any political opposition in Brazil. You’re either with the government or you’re not. Aldo Rebelo used to be an icon of the Communist Party. Kátia Abreu used to belong to the opposition. But now they’re both with the government,” says Glass of Reporter Brasil.

On the surface, the proposed changes to the Mining Code appear more benign than the Forest Code reforms, centered on increasing government royalties from the mining sector. A bill has yet to be introduced in either chamber of the Brazilian Congress, but it is expected to come in the first half of this year. Currently, Brazil receives only 2% royalties on mining companies’ earnings—one of the lowest percentages in the world. One of the proposed changes would double this figure to 4% and increase concessions from 30 years to 40, increasing the government’s percentage of the profits of this lucrative industry.8

The proposed changes to the new code, however, also look to expand mining to new areas that are currently off-limits due to environmental and social protections. The most controversial piece of the proposed new code is PL 1610/96, a bill originally introduced in 1996 by PSD senator Romero Jucá. If passed, this part of the legislation would authorize mining on federally protected indigenous lands, an activity that is currently illegal. Approval of such a measure would present serious legal conflicts over indigenous peoples’ right to free, prior, and informed consent (FPIC) over development projects that impact their resources and territory.

Brazil’s indigenous peoples’ right to FPIC is guaranteed under the International Labor Organization Convention 169 and the United Nations Declaration on the Rights of Indigenous People, and Brazil is a signatory to both. Yet Article 231 of the Brazilian Constitution does not clearly protect indigenous peoples’ right to FPIC; it requires only that they be “heard” over development projects that affect them, a loophole that developers often exploit by holding consultations to hear indigenous peoples’ grievances, but approving projects anyway.

Some of the most controversial dams are now being built in the Amazon under Rousseff’s watch. When the Jirau and Santo Antônio dams on the Madeira River in the state of Rondônia were approved in 2008, the Ministry of Mines and Energy said they would be the first “green” hydroelectric dams, causing less impacts than disastrous dams such as Tucuruí and Balbina.

Yet only three years into construction, Jirau and Santo Antônio have already brought social chaos and environmental damage. Construction of both dams has illegally flooded homes and displaced hundreds of families.9 In 2009, the construction of Santo Antônio caused the death of 11 tons of fish in the Madeira River. In March 2011, thousands of construction workers on the Jirau dam went on strike over poor wages.10 By the end of 2011, Construtora BS—the construction company contracted to build the Jirau dam—had been flagged by local authorities for employing 38 workers under debt bondage conditions, while simultaneously laying off 6,000 workers after completing one phase of construction.11

In June 2011, Rousseff approved construction of Belo Monte, what would be the world’s third-largest dam, and Brazil’s most controversial hydroelectric project. The approval sparked an enormous uproar from Brazilian citizens: petitions from the Brazilian chapter of the global rights organization Avaaz.org and the Gota d’Agua Movement started by Brazilian celebrities who oppose the dam, each received over a million signatures. Juruna, Xikrin Kayapó, and Arara tribes that live inside a 60-mile stretch of the Xingu River that would be affected by the dam have promised to continue to fight against the dam construction. The consortium overseeing the construction of the dam, Norte Energia, S.A., claims that it properly consulted the tribes, but indigenous leaders say they never gave their consent to allow the use of their stretch of the Xingu River. In April 2011 the Inter-American Commission on Human Rights (IACHR) called on the Brazilian government to halt construction until consent was achieved. Brazil ignored the demand, and Rousseff threatened to withhold funds from the Organization of American States, the institution that houses the IACHR.

Rousseff has also earmarked finance for 32 dams in the Brazilian Amazon through 2020 alone, including seven dams on the Tapajós and Jamanxim Rivers in the state of Pará, plus at least six more dams on the Teles Pires River also in Pará.The 13 dams are part of a larger Tapajós-Teles Pires Waterway Project, a megaproject that seeks to create a massive industrial waterway to export surplus grain and metals commodities from the Brazilian grain belt to the Atlantic through ports in the state of Pará, toward Europe, the United States, and China. In addition, as a result of the Peru-Brazil Energy Accord signed in December 2010, Rousseff wants to build six hydroelectric dams in the Peruvian Amazon and has stated that Brazil could build two dams in Bolivia, on the Madera River.

In all, the seven reservoirs of the dams on the Tapajós and Jamanxim Rivers are expected to flood nearly 2,000 square miles of land, including 13 federally protected conservation areas. This is illegal under the Brazilian National System of Conservation Units (SNUC), which prohibits developers from flooding conservation areas. However, Rousseff has found a way around the law. On January 6, she proposed a provisional measure that would eliminate the protected status of 870 square miles of forest that would be flooded by the dam’s reservoirs (The measure is now awaiting approval by the Chamber of Deputies). By redesigning the status of the forests, she could evade potential environmental lawsuits. It would not be the first time that Rousseff had found a loophole around environmental legislation in order to quickly approve a large-scale hydroelectric project.

In 2004 Rousseff was serving as Lula’s Minister of Mines and Energy. Lula had a mandate to overhaul the country’s electricity-regulation system due to the political legacy of the crise do apagão, blackouts in 2001 and 2002 that severely diminished the popularity of Lula’s predecessor, Fernando Henrique Cardoso. In order to quickly approve hydroelectric plans and increase electricity output, Rousseff pressured the Lula government to scrap its more cumbersome methodology for assessing the environmental impact of development projects and create a more streamlined approach. Rather than study the cumulative impacts of multiple dams in a river basin as the Lula administration’s preeminent environmental adviser, World Bank scientist Juan Quintero, had advocated, Rousseff pushed for basin-wide licenses to be quickly approved covering several projects at the same time, without the time-consuming cumulative analysis.

This new methodology, called the Integrated Environmental Assessment, was tested for the first time in the Uruguai River Basin in 2004, where the Barra Grande dam had earlier flooded one of the remnants of Atlantic Forest. The assessment promoted the idea that dams could be expanded as long as impacts on biodiversity were avoided and minimum river levels were maintained. The Movement of Dam-Affected People, however, claimed that the model was partial to the hydroelectric sector. Despite the assessment’s failure to truly assess the basin-wide impacts of dams, the model was quickly embraced to justify the construction of multiple dams in other basins.

The same year, while Rousseff pushed for a project that would expand electricity production, Lula passed the New Model of the Electrical Sector law with the help of the conservative former Brazilian president José Sarney and his allies in Congress, who sought increased profits in the hydroelectric sector. The law offered government subsidies to help reduce the cost of electricity and established non-market rates for industrial electricity consumption. It also fast-tracked the licensing and construction of hydroelectric projects. By saving costs for both consumers and industry, it was widely approved. Electricity consumption has increased across the country, especially in the mining industry, which consumes 23% of Brazil’s electricity for the production of metals such as aluminum and iron ore.12

The subsidized prices and fast-tracked timelines have allowed developers to cut corners. According to environmental law, developers are mandated to carry out an environmental-impact assessment for their projects. This is then sent to technicians at the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA), who are responsible for approving the assessment and issuing project licenses. However, better analyses cost more money, so developers often omit crucial information or submit erroneous data. As a result of the new, accelerated timelines, IBAMA is pressured to grant licenses faster, leaving the technicians with less time to correct developers’ errors. When they are corrected, IBAMA superiors often eliminate information that could create a liability or a delay in the project timeline. IBAMA staff are left with no recourse but to grant the license and mandate that the developer mitigate the impacts caused by their faulty impact assessment while they develop the project. Of course, developers rarely fulfill this responsibility. Once IBAMA has granted the license and the project is in construction, it becomes a fait accompli. Complaints about impacts are left to the courts.

Grave social and environmental violations often occur as a result of flawed impact assessments. In one case, the massive Brazilian conglomerate Odebrecht dynamited a cemetery of the Cinta Larga tribe in Mato Grosso during construction of the Dardanelos dam in 2010.13 The company apparently had no knowledge of the cemetery because it was not included in the dam’s impact assessment. The Cinta Larga and seven other tribes responded by taking 300 construction workers hostage and threatening to burn the project down. In 2011, Odebrecht settled on paying the tribe a monetary compensation.

Largely as a result of this dysfunctional system and the overwhelming political pressure to weaken IBAMA’s minimal capacity for environmental regulation, Marina Silva resigned as Lula’s minister of the environment in 2008. Since then, two IBAMA presidents have stepped down after also facing pressure from the Ministry of Mines and Energy to approve licenses for the contentious and high-profile Santo Antônio, Jirau, and Belo Monte dams. The latter of the IBAMA resignations was in January 2011, during Rousseff’s first month in office. It is clear that the conflicts of interest remain, and the Rousseff government is unlikely to introduce meaningful reforms anytime soon.


The motives behind Rousseff’s steady campaign against environmental legislation and protection are clear. She has consistently chosen to embrace development and economic growth over conservation. And her macroeconomic policies reflect this. However, in many ways, her policies are simply a continuation of the Lula model—which she promised to maintain during her 2010 electoral campaign.

During his time in office from 2003 to 2010, Lula sought to achieve economic growth and social equality. To do so he built relationships with powerful center-right businessmen and politicians, including Sarney and the rural lobby. In office, Lula increased spending on infrastructure for the hydroelectric, agribusiness, and mining sectors, which allowed for private and state-owned companies to increase commodity exports, particularly to China. His government leveraged tax revenues and increased its participation in the private sector creating domestic jobs, improving social services, and enacting other programs to help reduce poverty.

The policies paid off. Brazilian GDP grew at an average of 4% per year between 2004 and 2011. While high-income countries reeled from the global recession, Brazil grew anti-cyclically at rates of 6.1%, 5.2%, and 7.5%, respectively, in the years 2007, 2008, and 2010.14 Chinese demand began to drive the growth of Brazilian exports, and in 2009, China supplanted the United States as the top importer of Brazilian goods.15 By 2010, China consumed the largest share of Brazilian agricultural exports—14%, double the U.S. share—while also becoming the top importer of Brazilian iron ore, bauxite, nickel, and copper.16 Thanks to Chinese demand and high commodity prices, the Brazilian Treasury has raked in large amounts of foreign capital, which the government regularly injects into the Brazilian National Development Bank (BNDES). BNDES then subsidizes the cost of energy, export infrastructure, agricultural commodities, and other sectors by offering lucrative long-term loans below market rates to national champions such as the state electric utility Eletrobras, the state energy company Petrobras, construction firms Odebrecht and OAS, and others.

The model made Lula into a hero, with over 80% public approval as he passed the presidential sash to Rousseff on New Year’s Day 2011. She has followed in his footsteps, continuing to achieve economic growth and expand Lula’s social welfare programs such as Bolsa Família, a grant to now more than 11 million families.

However, as the Brazilian economy grows, Rousseff has begun to weaken environmental laws jeopardizing the credibility of this economic success. To return its environmental policy to the global benchmark it once was, the Rousseff administration must adopt real reforms. The government institutions could adopt stronger planning tools for river basins and forests, such as strategic environmental assessments, integral electricity resources planning, and binding social and environmental loan safeguards. The government could open development and energy matrix planning to greater public oversight by establishing meaningful processes of participation for isolated stakeholders such as indigenous people, ribeirinhos, quilombolas, and other traditional communities, in order to negotiate with industry for equitable use of shared resources, such as water. Finally, Rousseff could better protect the social and environmental rights of affected people by assuring that developers who violate the law are swiftly punished by a truly independent judiciary.

Yet if Rousseff continues to prioritize economic growth over meaningful protection of the environment, her administration risks being recognized at this June’s Rio+20 conference not for its contributions to sustainable development but for the steps it has taken to backtrack on the country’s previously strong environmental legislation. The uproar over Rousseff’s environmental record suggests that as economic growth continues, the challenge to protect the environment may only become greater.




Zachary Hurwitz is the Policy Coordinator of International Rivers, a human rights and environmental organization that protects rivers and defends the rights of communities that depend on them. He blogs about policy, finance, law, and the Amazon at internationalrivers.org/en/blog/zachary-hurwitz.




Dirty Business In Brazil



1. Luana Lourenço, “Marina diz que texto do Código Florestal aprovado na última semana está péssimo,” Agência Brasil, November 16, 2011, available at agenciabrasil.ebc.com.br.

2. Greenpeace Brasil, “Dia de Vergonha,” December 6, 2011, available at greenpeace.org.

3. Empresa de Pesquisa Energética, Governo do Brasil, “Plano Decenal de Expansão de Energía 2020,” available at epe.gov.br.

4. United Nations, “UN Conference on Environment and Development (1992),” available at un.org

5. Christophe De Gouvello, “Brazil Low-Carbon Country Case Study,” the World Bank (2010).

6. Instituto Nacional de Pesquisas Espaciais, “Sistema de Detecção de Desmatamentos em Tempo Real,” available at obt.inpe.br.

7. Mário Coelho and Edson Sardinha, “Bancada empresarial será quase metade do Congresso,” Congresso em Foco, December 30, 2010, available at congressoemfoco.uol.com.br

8. Eduardo Rodrigues, “Código de mineração irá ao Congresso em fevereiro,” O Estadão (São Paulo), January 12, 2012, available at economia.estadao.com.br.

9. Rondonia ao Vivo, “Usina Abre Comportas e Força das Águas do Rio Madeira Derruba Barrancos e Pode Arrastar Residências,” January 3, 2012, available at atrondoniaovivo.com.

10. Ministério Público Federal, Procuradora Geral da República, “Violações de Diretos Humanos nas Hidrelétricas do Rio Madeira,” 2011, available at pfdc.pgr.mpf.gov.br.

11. Imagem News, “Jirau na Lista Suja de Trabalho Escravo,” December 31, 2011, available at imagemnews.com.br.

12. Ministério de Minas e Energia, Governo do Brasil, 2011.

13. BBC, “Indigenous Groups Occupy Brazil Hydro-electric Plant,” January 26, 2010.

14. The World Bank, “GDP Growth (Annual %),” 2012, available at -


15. Governo do Brasil, Ministerio de Desenvolvimento, “Balança Comercial,” Aliceweb. Available at aliceweb.desenvolvimento.gov.br.

16. Ibid.




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