Three Hungry Giants:

1. Guy Edwards, Research Fellow, Center for Environmental Studies, and Timmons Roberts, Director, CES and Ittleson Professor of Environmental Studies and Sociology April 6, 2012 Three Hungry Giants: China, the U.S. and the E.U.’s battle over Latin America’s natural resources, and its implications for climate change and resource scarcity

2. Latin America’s Decade? • General confidence in Latin America has grown significantly. • Latin America’s adept handling of the financial crisis left it relatively unscathed and it achieved a rapid recovery. • Commodity exports are again a key economic area for the region. These exports consist of minerals, hydrocarbons (natural gas and oil), agricultural and livestock, forestry and fishery products. (World Bank 2009; ECLAC, 2010; Sinnott et al, 2010)

3. Latin America's Unparalleled Resources • 25% of the planet’s arable land, • 22 % of the world’s forest area, • 10% of its oil reserves and 4.6% of natural gas reserves • 40% of its copper and silver reserves • 31% of its freshwater resources • The region includes five of the world’s ten most biodiverse countries — Brazil, Colombia, Ecuador, Mexico, and Peru — and accounts for key environmental services. (BP, 2008; UNEP, 2010; FAO, 2011; Moreno, 2011).

4. What's going on? • From 2005-2010, China’s trade with Latin America grew twice as fast as its trade with the world overall. • If one excludes Mexico, which has shown a pattern of exports more strongly linked to manufacturing, of the remaining Latin American exports, over 70% are natural resource based commodities. • Chinese multinationals invested more than US$15 billion in the region in 2010. • More than 90% of those investments went to natural-resource extraction, mostly in the oil and gas sector and mining. (ECLAC 2010, 2011; UNEP, 2010)

5. China Development Bank Since 2005, the China Development Bank and other Chinese institutions have spent an estimated $75bn on financial investments in South America, which is more investment than the World Bank, US Export Bank and the Inter-American Development Bank put together. In May 2009 the China Development Bank lent $10bn to Brazil’s Petrobrasin exchange for a guaranteed supply of oil over the next decade. Also in 2009, the former Brazilian trade secretary, WelberBarral, declared a “historic moment” when China replaced the US to become Brazil's most-important trading partner. (The Telegraph, 2009; Aljazeera, 2011; Financial Times, 2011.

6. China in Latin America: Risks and Rewards Most Latin Americans welcome Chinese foreign investment in infrastructure. The assumption in LAC is that the current economic model leads simultaneously to economic growth, social disintegration and environmental degradation, with a marked trend towards more income concentration. There is limited evidence that the partnership with China is accompanied by a process of technology diffusion and knowledge spillovers, which are needed urgently to spur productivity growth. Governments concern over “land grabs” and food security as a result of Chinese interest in the agricultural and livestock sectors has led to calls to restrict foreign land ownership (Ratliff, 2012; UNEP, 2010; Oppenheimer, 2011); World Bank, 2011; New York Times, 2011)

7. The Impacts Commodity-led economic growth has put Latin American natural resources under tremendous pressure and this model is one of the principal factors explaining the lack of success of environmental policies in the region (UNEP, 2010). • Increased land clearing, habitat loss for agro-exports • Mineral resources extracted at great environmental cost to water resources, air pollution, and land contamination • Forced migration and displacement of peoples for mechanization of agriculture or hydroelectric plants. (Roberts and Thanos, 2003; van den Hombergh, 2004; Loker, 2004; Santiago, 2006; UNEP, 2010; Silva, 2012)

8. What’s driving biodiversity loss and ecosystem degradation in Latin America? Many governments fail to recognize the value of biodiversity and ecosystem services Government policies often inadvertently promote environmental degradation or subsidize unsustainable activities Many countries lack appropriate legislation to conserve biodiversity and ensure sustainable natural resource management and where such legislation exists, there is often limited capacity or willingness to enforce these rules. Economic forces such as growing markets for agricultural products and natural resources, increased commercialization and globalization are also driving resource use patterns (Bovarnick et al, 2010).

9. Civil Society Begins to Respond Growing social movement activism and national politics are found from Peru to Argentina due to mining, agricultural, and other agreements the Chinese have signed with Latin American governments that local populations believe violate their rights. But social controls and formal legal systems are not well positioned to regulate these impacts sufficiently nor quickly enough.

10. Our Questions 1. What impact will theextraction boom have on national profiles of emissions, and in particular on historically excellent ratio of human development per ton of carbon released into the atmosphere? 2. How has China approached the region’s states, private sectors and civil society, and how have they responded to China? 3. When the choice is between economic development and environmental and climateprotection and posed as such, how are governments in the region responding?

11. A good record, for some • A few Latin American nations are global models of achieving high human development with low levels of carbon emissions (E.g. Costa Rica, Colombia) • Latin America has pioneered work in pursuing environmental objectives within a development context and has moved toward more sustainable development patterns.   (Steinberger & Roberts, 2010; Onestini, 2012).

12. Climate Impacts and Awareness Governments from Mexico to the Andean region are taking climate change increasingly seriously following a wave of destructive natural disasters. Climate impacts include: • Intensification of weather patterns and storms, floods and droughts • The potential collapse of the Caribbean coral biome, • Warming of high Andean ecosystems, • Risk of dieback in the Amazon ecosystem. (IPCC, 2007; Vergara, 2009; ECLAC/UNEP, 2010; Lewis et al, 2011)

13. Country studies • Case Studies in progress: Brazil, Costa Rica, Chile, Peru, Colombiaand Ecuador • Initial findings from Ecuador • New miningdeals with China • Large social protests against mining • Is Ecuador’s green image being undermined?

14. Concluding Thoughts • China is leading a resources boom in Latin America • China's legacy in Latin America is being built right now: will it be one of protection or devastation? • If this is Latin America's decade, what is going to be the result of it? • Will there be enduring interest in Latin America in protecting the environment and tackling climate change? • How will countries balance the need for investment in natural resources and climate and environmental protection? • Climate issues-- both adaptation and mitigation--need to overcome domestic political obstacles and be factored into national development planning. • Latin America should be able to benefit considerably from Chinese interest in the region, but only if national leaders think strategically about the imperatives of low carbon, resilient growth models.

15. Thank you. Contacts: Guy Edwards guy_edwards@brown.edu Timmons Roberts timmons@brown.edu Special thanks to Professor Tony Bebbington, Cecilia Pineda, Spencer Field, Emily Kirkland, Meghan Kallman, Jeanne Lowenstein and Patti Caton.