Effects of Energy and Transportation Projects on Soybean Expansion in the Madeira River Basin

A number of energy and transportation projects have been proposed to promote the physical integration of Peru, Brazil and Bolivia's Amazon territories. The Madeira River Hydroelectric and Navigation Mega-project includes the construction of two hydroelectric power stations (HPS), Jirau and Santo Antônio, in Brazil, a third HPS between Abunã in Brazil and Guayaramerín in Bolivia, and probably a fourth at the Esperanza Falls on the Beni River in Bolivia. Other transportation infrastructure projects proposed in this region include the paving of the Bolivian "Northern Corridor," the Cuiabá-Santarém Corridor, and the "Interoceanic Highway." One of the main consequences expected from these energy and transportation projects is the expansion of soybean planting, which would involve conversion of several types of Amazonian ecosystems, including forests, grasslands and savannahs.

The paper provides a useful illustration on the linkage between subsidies to energy and transport infrastructure and resultant shifts in land use that can exacerbate environmental effects.

This study predicts potential land use changes as a function of soybean expansion in the regions of Brazil, Bolivia, and Peru affected by the infrastructure projects, using an interdisciplinary model to estimate soybean yields based on climate, soils, and economic factors. The analysts then use yield predictions to estimate soybean profitability based on variations in transportation costs. The effect of new infrastructure projects is evaluated by estimating changes in the cost of shipping soybeans to the nearest export port under 11 alternative infrastructure scenarios. The study results indicate that future navigation mega-projects and road improvements in the Bolivia-Brazil-Peru border region in the Southeast Amazon Basin have significant potential to spur soybean expansion by reducing transport costs. The area considered highly profitable for planting would increase by between 6,594 (1 percent) and 142,749 square km (17 percent), depending on the projects included in the simulation.

In all the scenarios evaluated, northwestern Bolivia would be the most heavily impacted in economic and ecological terms. Nevertheless, the state of Mato Grosso in Brazil would continue to have the greatest total area classified as highly profitable from soybean cultivation. These results underscore the potential for natural habitat losses in the southwest Amazon Basin as more infrastructure is constructed. While drawing no conclusions about the feasibility or merits of particular projects, the study team concludes that conservation investments are needed in parallel to any new infrastructure projects in this region to minimize the loss of natural values.