Sustainable infrastructure in the Pan Amazon: In search of an oxymoron

The macroeconomic hypothesis that infrastructure investments stimulate economic growth assumes that these physical assets overcome a logistical or systemic constraint on production. In practice, this requires for individual projects to be the subject to an objective feasibility analysis, are priced fairly, and have been approved after the full evaluation of their social and environmental impacts. Unfortunately, many infrastructure investments in the Pan Amazon have not met these three fundamental criteria. Some are poorly conceived or simply unnecessary, and many are foisted on society by vested interests or corrupt politicians.

Poorly designed or unnecessary infrastructure can create a negative economic impact because scarce financial capital is funneled into projects with limited benefit for society, thus denying investment in more deserving initiatives. A poorly conceived project may provide a short-term economic boost but fail to provide the long-term economic benefits provided by a well-designed infrastructure asset. In the Pan Amazon, the lack of an economic return is compounded by large negative environmental and social impacts caused by poorly conceived infrastructure initiatives.

This chapter has focused on large-scale infrastructure built in the Pan Amazon over the last several decades. Some have been poor investments when evaluated solely on economic criteria, but many more have been economically successful and politically popular because they benefit the actual [albeit recent] inhabitants of the Amazon. The most controversial have benefitted stakeholders who are not residents of the Amazon, particularly the companies that cater to extra-Amazonian consumers of energy and commodities. These assets and systems may be profitable, but they are not ‘sustainable’ when they fail to comply with the criteria of sustainable development. The most obvious manifestation of the failure to incorporate the concepts of sustainability into infrastructure development is the persistent high rates of deforestation, environmental degradation and social inequality.

The concept of sustainable infrastructure has been around since the initial academic discussions defined the concept of sustainable development; however, guidelines for defining the criteria specific for built infrastructure appeared only about a decade ago. The first efforts were little more than a laundry list of high-level standards for loan officers and corporate executives to consider when evaluating a potential investment. More detailed systems are now available that address the multiple and complex challenges required to transform the global economy in the face of climate crisis. They are not, however, particularly applicable to the unique situation of the Amazon, which also has an acute deficit in basic infrastructure.

What might define sustainable infrastructure in the Pan Amazon? First and foremost, it should benefit the inhabitants of the Amazon. Equally important, investments should yield economic benefits over the short, medium, and long term, particularly those that contribute to GDP, but also others that improve people’s quality of life without generating an immediate increase in income. In some cases, an investment may be un-economic in conventional terms, but be justified on humanitarian or ecological grounds and, thus, worthy of a subsidy.

The most obvious infrastructure investment that meet these criteria are the physical assets that are the foundation of the region’s health care systems. The COVID pandemic of 2020/2021 revealed glaring deficiencies in the health care system in all eight nations. The impact of the disease was particularly severe in their Amazonian jurisdictions where it fell disproportionately on marginalized populations. Shortfalls in basic health infrastructure included not just a lack of hospital beds, but also the specialized equipment needed for acute medical conditions.

The pandemic also revealed that a significant portion of Amazonian populations were vulnerable to the disease due to the occurrence of chronic conditions caused by infectious diseases associated with unsafe drinking water and poor sanitation. Public utilities provide water in most large and medium sized cities, but coverage is far from universal, particularly in the peri-urban neighborhoods that house recent migrants. Investment in basic sanitation is abysmal and even the largest cities have woefully inadequate sewage systems. Rural inhabitants are left to their own devices.

The situation is worse in the Andean Amazon where administrative decentralization and revenue sharing mechanisms have only begun to address decades of under investment by central governments. Cities show radically different outcomes. Pucallpa (~370,000 inhabitants) provides only about 48% of households with potable water, while Iquitos (477,000) approached 90% coverage; neither city have any system to collect and treat sewage. In contrast, Santa Cruz de la Sierra (1.7 million) provides universal coverage for potable water and has extended basic sanitation to approximately half of its population.

Amazonian cities have invested in drinking water systems, typically with the assistance of the multilateral banks, but are still dumping nearly all their wastewater into the Amazon and its tributaries, operating under the assumption that the volume of water will provide a level of protection against contamination. Unfortunately, that practice does not protect the downstream populations from diseases caused by poor sanitation.

A similar infrastructure deficit exists in the region’s primary and secondary schools, particularly in the public systems that serve rural communities and impoverished urban neighborhoods. This deficiency is exacerbated by inequality driven by middle-class and affluent families who send their children to private schools, a common practice across South America that encourages under investment in public school systems.

Investments in education and health care might not meet the classic definition of built infrastructure (roads and bridges), but few would deny that sustained economic growth is wholly dependent upon a healthy and well-educated populace.

Fortunately, investments in schools, clinics and sanitation systems are labor intensive and require significant amounts of concrete, lumber, and hardware, which ensures they meet the short-term objectives of infrastructure investment program – job creation and economic stimulus. Since schools and clinics are relatively simple structures, their construction can be contracted to local businesses creating a positive feedback loop since their proprietors and employees spend the proceeds close to home.

Both health and educational systems would benefit from improvements in digital infrastructure, another non-traditional class of investment essential for economic growth and development in the 21st century. Technology is an obvious antidote to the long distances and antiquated telecommunication systems that isolate rural communities.

Exposure to computer technology would allow rural students to acquire basic information management skills essential for success in modern society, while access to the internet would democratize learning opportunities for tens of thousands of student and teachers. High-speed internet is the gold standard. It would allow health care professionals to diagnose and treat many more patients, while allowing students to participate in seminars and virtual events via the rapidly evolving ‘zoom’ technology.

Providing high-speed internet to remote areas constitutes a significant technological challenge and only a limited number of Amazonian cities have internet connections faster than 10 Mbs. Speed is inherently limited because most connections are mediated by geostationary satellites with a response time limited by the speed of light. The cost of extending a fiber optic network to the far-flung communities across the Pan Amazon would be exorbitant and precludes any attempt to expand high-speed internet service. This is about to change.

In 2020, the Brazilian government launched the Projeto Amazônia Conectada, an ambitious initiative to lay 8,000 kilometers of fiber optic cable on the bottom of the Amazon river and all its major tributaries. The initiative is being coordinated by the Brazilian army; more importantly, it is being implemented as a public-private partnership but has the backing of several large domestic and international telecom companies. This initiative has the potential to provide a digital backbone that extends far beyond the region’s major cities and could conceivably be expanded upstream to include isolated urban areas in the Andean Amazon.

It will not, however, provide a solution to thousands of communities that are not located on a major river or connected to a cell phone network that could provide a cost-effective internet services to the populace. Fortunately, there is a Plan B.

Two of the most innovative entrepreneurs on the planet, Jeff Bezos and Elon Musk, are competing to launch a network of low-orbit communication satellites with the express purpose of providing affordable high-speed internet services to remote regions. If successful, they will provide an alternative service to the fiber optic backbones and cell-phone towers that constrain the expansion of high-speed internet. Low orbit satellites will communicate with a receiver that consists of an antenna and router, which will interface with a local area network. The expected cost of a terminal is estimated at about $US 500 with a monthly service fee of $US 99.

The business model is based on providing service to marine vessels, remote mine sites, industrial farms, vacation homes and rural communities isolated from fiber optic networks. The technology represents a step-change in cost and quality; nonetheless, it will still be too expensive for the of rural schools and clinics across the Amazon. Presumably, the cost is negotiable, and citizens of the Amazon can obtain a discount from the wealthiest men on the planet. Perhaps Mr. Bezos could be convinced to donate systems to the communities of the region in compensation for appropriating their regional identity to brand his commercial enterprise.

Roads and bridges can also be sustainable. They are anathema to environmental advocates because of their association with logging, deforestation, and settlement. However, these classic examples of built infrastructure contribute to sustainable economic growth when they improve secondary road networks within long-established agricultural frontiers. Almost all farmers lose a portion of their harvest due to spoilage, a problem that is particularly severe in humid tropical climates that accelerate decay and disease infestation.

Supply and demand govern commodity markets and, according to macroeconomic theory, post-harvest losses indirectly drive crop production onto frontier landscapes. Just as energy conservation should be part of a green energy strategy, so should investments in traditional infrastructure be part of a holistic development strategy when it enhances the long-term productivity and profitability on existing farms.

The agricultural and consolidated frontiers across the Southern and Andean Amazon all suffer from poor secondary road networks. Improved secondary road networks will do more than reduce waste, because bad roads delay planting, cause wear-and-tear on farm equipment, and add to the cost of moving commodities to market. Small farmers suffer the most, because they are more likely to depend on truckers that prorate services based on the quality of the roads. The option to transport coffee or cacao via truck rather than mule, would be welcome by most small farmers and it might motivate many to expand production.

Another underappreciated infrastructure class are the airports that support the aviation transportation system. Regional carriers have benefitted from investments in airports in larger cities, but the development of smaller airstrips is largely managed ad hoc by the military, loggers and [illegal] miners. The region once had a flourishing air taxi system organized by Evangelical and Catholic missionaries, but they have been replaced by commercially motivated operators many of whom are often complicit in the illicit drug trade. Examples in Alaska and Canada show that air taxi can provide a cost-effective transportation solution for a roadless wilderness populated by Indigenous villages, settlers, and vacation resorts.

Key to that system is an airstrip in every village and operating subsidies to ensure the services are affordable for the region’s Indigenous inhabitants. The lack of an affordable air taxi services is the largest single constraint to the expansion of ecotourism, which is currently clustered around a handful of Amazonian cities with large airports (Manaus, Iquitos, Puerto Maldonado, Leticia, and Coca).

Energy systems will continue to figure prominently in future investments in the Pan Amazon. Historically, economic growth has been tightly correlated with energy consumption. As families become more affluent, they buy electrical appliances and consume more energy. Refrigeration is the first appliance purchased by families emerging from rural poverty; once they are solidly middle class, they buy an air conditioning.

The relationship between GDP and energy consumption may change in the next fifty years at the global scale as societies transition from fossil fuels to a low-carbon economy. It is not, however, the path that will characterize development in the Pan Amazon. Energy consumption will grow in the Amazon because access to affordable and reliable sources of electrical energy improve the quality of the lives of most of its inhabitants.

The rapid decline in the cost of solar power — and the advantages of distributed solar — provide an interesting option for communities and households that are not connected to the electrical grid. However, the capital cost of solar will hinder its adoption by most Amazonian families who prefer to be linked into a grid system and pay a small monthly fee. Some electrical utilities have technologies and consumer packages designed to build and expand distributed systems, but the incentive system inherent in their business models continues to favor the expansion of the grid.

Utility-scale solar will become more important and the construction of large-scale hydropower plants may become less attractive as an investment due to opposition by environmental advocates and Indigenous groups. If so, they may increase their investments in medium- and small-scale hydropower, which will contribute resilience to a diversified portfolio of electricity generation assets.

The pandemic of 2021 highlighted the social and economic inequalities of Amazonian society, but no well-informed observer was surprised by the suffering that COVID-19 wreaked on remote IFndigenous villages, smallholder landscapes and the marginalized neighborhoods in rapidly growing urban centers. The asymmetric impact was not unlike the scenario that played out in the advanced economies where other disadvantaged populations suffered disproportionately from a legacy of under investment.

The [promised] response, particularly in the United States, is to implement stimulus and recovery policies that benefit underserved populations. In addition, the Biden administration seeks to channel resources to the long-delayed campaign to invest in renewable energy and other technologies required to avoid a climatic catastrophe.

The same logic to favor marginalized populations and promote sustainable production models can – and should – be applied to the pandemic recovery in the Pan Amazon. There is a palpable need to compensate for long-standing inequalities and the need to reform the conventional economy is similarly urgent.

In July of 2020, a progressive think tank launched a petition, which was signed by seven former presidents, calling on the International Monetary Fund (IMF) and other multilateral organizations to cancel the external debt of Latin American countries and for bondholders to accept a restructuring of sovereign debt that included a two-year interest payment holiday. The petition argues that such actions are “fair and necessary” given the extraordinary challenge posed by the pandemic. Multilateral institutions have recognized the need to respond to the crisis but, unfortunately, none have the capacity to provide [real] debt forgiveness, much less allocate the capital resources required to transform the economies of the Pan Amazonian nations.

Institutions from China are not capable or inclined to alleviating the debt burden. More likely, governments and their private sector partners will invest in mining ventures and industrial agriculture that can generate export revenues needed to shore up their economies. Consequently, the 2020/2021 pandemic will foster investments that promote another cycle of conventional economic development.

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0 license).

Read the other excerpted portions of chapter 2 here: