US embassy cable - 05BRASILIA1030

UNCLAS SECTION 01 OF 03 BRASILIA 001030 
 
SIPDIS 
 
STATE FOR OES/ENV AND WHA/BSC 
 
E.O.  12958: N/A 
TAGS: SENV, SOCI, TNGD, TRGY, KSCA, BR 
SUBJECT: BRAZIL'S QUARTERLY ENVIRONMENTAL UPDATE 
 
 
1. Summary:  The following is a summary of events relating 
to the Brazilian environmental situation from January to 
March, 2005. End Summary 
 
------------------------------------- 
Transposing the Sao Francisco River 
------------------------------------- 
 
2. Transposing the waters of the Sao Francisco River, also 
known as the Old Chico, and diverting them to the semi-arid, 
drought prone regions of the NE is a promise that dates back 
to the times of the Emperor Pedro II.  Now, in the waning 
days of President Lula's first term, this grand undertaking 
looks to come to fruition.  In the wake of the project are 
social tensions and looming questions about the 
environmental sustainability of the project.  This was more 
than evident in the end of January when Ibama (Brazil's 
Environmental Enforcement Agency) tried to hold a series of 
eight town-hall style meetings, one for each state involved 
in the transposition.  Of these, only four were realized, 
while the others were cancelled as a result of protests by 
NGOs, environmental groups and disaffected citizens. 
 
3. The project proposes two canals, connecting the Sao 
Francisco River Basin to various watersheds, one to the East 
taking water to Pernambuco and Paraiba, and the other to the 
North towards Ceara and Rio Grande de Norte. 
 
4. From the environmental perspective, the primary question 
is whether or not the Old Chico has the flow capacity to 
support the NE states while maintaining its own downstream 
tributaries and the populations who have been the 
traditional recipients of the river's water supply.  The 
project will divert 26 cubic meters of water per second, 
which the government posits will cause little damage to the 
river.  Critics claim that the project will dry out the 
River's dwindling reserves.  Other contentious factors 
involve the risk to the flora and fauna of the riparian 
ecosystem, the potential harm to energy generation at 
downriver hydroelectric sites and, in the four states 
receiving water, the question of who will actually receive 
the diverted water.  Current estimates portend that the new 
water supplies will reach 45 percent of the population while 
detractors assert that the majority will be used in 
agricultural projects by the landed elite. 
 
5. While the project was debated for many years, it was 
finally approved, via environmental licensing by Ibama, in 
February.  Work is set to begin in May 2005.  To this end, 
the GOB has allotted USDOL 600 million for the project this 
year in addition to preliminarily budget appropriations for 
2006 and 2007, in order to cover the expected USDOL 4.5 
billion price-tag. 
 
--------------------------------------- 
Satellites Monitor the Paraiba do Sul 
--------------------------------------- 
 
6. Brazil is continuing its trend of using high-tech 
satellite systems to perform up to the minute environmental 
monitoring.  On March 29, INPE (the National Institute for 
Space Research) launched the first of seven monitoring 
platforms planned to monitor the River Paraiba do Sul.  The 
other six are expected to be operational by the end of this 
year. 
 
7. The sensors will monitor chemical and organic pollutants 
in the river, oxygen content, flow, acidity, temperature, 
salinity, and water levels in addition to indicating rain 
volumes, the potential for flooding and extreme cases of 
clandestine dumping.  Until now, the river was tested and 
monitored twice annually.  The new system will allow for 
updates every three hours, by routing information through 
SCD satellites as well as the China-Brazil satellite CBERS. 
The information will then be routed to INPE bases where it 
will be analyzed and made available for the public via the 
internet. 
 
--------------- 
New Water Tax 
--------------- 
 
8. In commemoration of world water week, Brazil has launched 
a number of measures aimed at improving environmental 
sanitation and improved water resource management.  Starting 
on March 21, 2005 the National Water Resource Council 
(CNRH), an organ linked to the Ministry of Environment (MMA) 
approved a resolution allowing for the collection of a tax 
for the use of water.  At present Brazil's water system is 
governed by 100 committees who oversea regional hydrographic 
basins.  Each committee will be responsible for setting up a 
system of tariffs whereby all sectors of society from 
industrial to private will pay a tax for using water.  The 
revenues produced will be reinvested into infrastructure and 
environmental sanitation as well as water treatment, solid 
waste management, garbage and street cleaning. 
 
-------------- 
Nuclear Fuel 
-------------- 
 
9. On January 25, Brazil tested a new nuclear fuel, 16 NGF 
(New Generation Fuel), in its Kori II reactor.  It was the 
first test of the 16 NGF, produced by a partnership between 
Brazilian scientists, Westinghouse and South Korean KNFC. 
According to media reports, the new fuel should provide a 10 
percent increase in production potential, capable of 
supplying a 200,000 person city with energy.  Moreover, it 
should require significantly less raw material.  Authorities 
reportedly plan to begin using 16 NGF in Brazil's Angra I 
reactor in 2007, following a retrofit of the reactor's 
generators. 
 
-------------------- 
Animal Trafficking 
-------------------- 
 
10. A shipment of exotic indigenous artifacts, feathers from 
endangered birds and a variety of teeth from Brazilian 
animals was captured in Campo Grande on February 2nd.  The 
value of the shipment was estimated at USDOL 600,000 and was 
destined for the United States where it was meant to be 
sold, via a criminal consortium, to collectors, millionaires 
and museums interested in Brazilian art.  The shipment 
originated in the Amazon and came by river, jumping along a 
route of indigenous villages.  It was the largest ever 
shipment apprehended by Brazilian authorities. 
 
------------------------- 
The Atlantic Rainforest 
------------------------- 
 
11. At one time, the Atlantic Rain Forest ran along the 
entire Brazilian coast, spanning 17 states and covering more 
than 1.3 million km2.  At present, only 7 percent of the 
forest still remains, concentrated more in the Southern 
Regions of the country, highly fragmented, highly fragile 
and very endangered.  Often overshadowed by the immenseness 
and mystery associated with the Amazon Rain Forest, the Mata 
Atlantica, some say, is even richer in biodiversity. 
Accordingly, the Ministry of Environment announced on March 
18, the transfer of resources for the creation of federal, 
state, municipal and private conservation units, the 
implantation of ecological corridors, reforestation research 
and the promotion of ecotourism in Sao Paulo's Ribeira 
Valley.  The actual funding and resources will be allocated 
through the Ministry of Mines and Energy and the German 
Cooperation Bank (KfW), but will be administered by NGOs. 
These organizations can form partnerships with governments, 
research and institutional centers. 
 
---------------------------- 
Biodiesel/Renewable Energy 
---------------------------- 
 
12. In January the GOB adopted a national biodiesel 
initiative.  The measure calls for a voluntary 2 percent 
biodiesel mixture through 2007.  Starting in 2008 a two 
percent mixture will be mandatory until 2013 when a five 
percent mixture will become mandatory.  In response to this 
measure, Brazil opened its first biodiesel factory in the 
Cassia, Minas Gerais on March 24.  The factory, Soyminas, 
will have the capacity to produce 12 million liters of 
biodiesel per year.  In addition to decreasing Brazil's 
dependence on foreign oil sources, biodiesel is an 
environmentally friendly alternative to conventional diesel 
and, according to the MCT, will decrease carbon monoxide 
emissions by up to 40 percent. 
 
------------------- 
The Green Package 
------------------- 
 
13. Over the past year the GOB has instituted a variety of 
measures to combat the surge of deforestation in the Amazon 
Basin.  The most recent of these measures was introduced to 
Congress in March 2005 by order of a Presidential decree. 
Expectations are that the bill will be voted on by mid-year. 
The most important aspect of the legislation, would allow 
the government to grant concessions in public forests, 
primarily in the Amazon region.  Of the 75 percent of land 
considered public domain in the Amazon, about 45 percent 
remains unprotected.  The government hopes that concession 
based management will discourage slash-and-burn activities 
and other destructive logging practices. 
14. According to the bill, a region of public land would be 
divided into thirty small, medium and large concessions 
blocks.  The government would then, based on land surveys, 
determine the most suitable form of sustainable forest 
management for the area.  In the case of managed forestry, a 
concession grantee would be allowed to take five to six 
trees per hectare over a year followed by a thirty year 
moratorium on activities in the area.  Other endeavors would 
include rubber tapping, fruit collection and wood-oil 
extraction.  Further discouraging consolidation and land 
grabbing, no private-sector entity would be allowed to work 
more than one concession in a single region.  When awarding 
the concessions, the government would take into account the 
environmental as well as the social impacts of the plans 
vying for the grants. 
 
15. Among the proponents of the plan are the logging 
companies, many of whom have been forced to suspend their 
operations over the last few years as questions of the 
validity of land titles arose.  The plan will allow managed 
logging companies a chance to get back into business.  Among 
others, the bill also has the support of the PFCA (Group of 
Certified Amazon Forest Producers), an association of nine 
companies who practice managed forestry in accordance with 
international standards set by the FSC (Forest Stewardship 
Council).  According to the president of the PFCA a 
concessions based system of management would also make 
logging more financially attractive because leasing land is 
cheaper than buying it.  Revenues garnered through the 
leasing of lands would further support governmental 
conservation activities.   The additional funds would 
actually be used to monitor and verify the systems of 
concessions. 
 
16. The bill also has its detractors.  Many are asking how 
this bill would be different from previous protective 
legislation.  While the bill is good in theory it is 
extremely difficult to execute.  According to Paulo Adario, 
Greenpeace Brazil's coordinator, "the government has a 
horrible track record of providing such safeguards, 
especially in the Amazon.  The Ministry of Environment (MMA) 
Forest Coordinator, Tasso Azevedo, however, countered that 
enforcement would involve state as well as the Brazil's 
Environmental Enforcement Agency authorities and have access 
to greater financial resources as a result of concessions 
royalties. 
 
17. Still others find fault with the bill for its potential 
effect on national sovereignty; always a sensitive issue 
with respect to the Amazon.  Some believe that giving equal 
opportunity to international firms will favor the expansion 
of, for example, Asiatic logging companies into Brazil's 
Amazon territory.  The counterargument is that even if 
international firms manage an area, they will not own it. 
Primary ownership will always remain with the GOB. 
 
DANILOVICH