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Impact of an urban frontier in the Amazon:

The case of the Polo Industrial of Manaus

Marinella Wallis, C EDLA

Centre for Latin American Research and Documentation (C EDLA),

Amsterdam, The Netherlands

Prepared for delivery at the 2010 Congress of the Latin American StudiesAssociation, Toronto, Canada October 6-9 2010


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Impact of an urban frontier in the Amazon:

The case of the Polo Industrial of Manaus

Marinella Wallis, C EDLA

1. Introduction

Manaus has been emerging as the largest urban centre in the Amazon basin. The

development of an infrastructural network that links the city with population

centres, resources, and markets in the region and abroad is resulting in the hub

function of Manaus. A wellfunctioning infrastructural network will enhance the

prospects as an industrial pole and a regional centre for goods and services,

governance, and military control. At the same time, Manaus growth model exerts

pressure on territories adjacent to the city itself and to the spokes of roads and

waterways.

The next section focuses on the development of the Polo Industrial de Manaus, the

PIM, in the Manaus Free Zone (Zona Franca de Manaus) as the engine of the citys

industrial growth. Section 3 investigates the industrial model that lies behind the

Polo Industrial, including the relatively recent concept of the Zona Franca Verde,

which aims at combining economic growth of the city and its adjacent territory

with environmental sustainability. Section 4 shows that within the context of the

developments of the continentbroad Initiative for Regional Infrastructure

Integration in South America (IIRSA), Manaus appears to be central to plans of theAmazon Hub connecting the Pacific Ocean with the Atlantic. Moreover, the city is

connected with developments of the Guyana Shield Hub and indirectly with the

PeruBrazilBolivia Hub. The development of the latter increases the pressure on

the contested rehabilitation of the BR319, connecting Manaus with Porto

Velho, the capital of the state of Rondnia. See Map 1.

Section 5 describes Manaus as an urban frontier, based on the model of

anthropogenic pressure, and the potential impact on the deforestation of theregion.


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Map 1. Overview of northern IIRSA development hubs.

Source: adapted from www.IIRSA.org.

Section 6 focuses, in view of the potentially substantial and farreaching

environmental impacts of the hubandspoke model, on alternatives for a road

connection that are being proposed or under construction including railways and

waterways. Section 7 deals with a remarkable assessment of the impact of the

urban growth pole model of Manaus on deforestation and in the final section

some concluding remarks will be made.

2. The Manaus Free Zone

Manaus has expanded at a relatively high pace as compared to other urban poles

and to the national average, not only in terms of population size but also in terms

of average urban income per capita. Manaus population increased to a little less

than 2 million inhabitants by 2009, which is due to the citys natural growth rate

and to an inflow of migrants, attracted by employment and income opportunities.

Manaus is an extensive city, occupying an area of 11.401 km2 of which an area of377 km2 is urbanized.

From a policy perspective the development of Manaus is a special case. The city

flourished during the rubber boom, which lasted from the late 19th century until

the 1910s with a small revival during the Second World War , followed by a

downturn resulting in urban decline, poverty and outmigration. Since the mid

1950s, development has been stimulated by special sets of policy incentives: first

by establishing a taxfree port and from the 1970s on by providing incentives for

an industrial growth pole. These policies expressed the federal governments


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priority to colonize the Amazon basin by creating a metropolitan area in the

northern region. Special incentives were required to compensate for the costs

disadvantage of isolation. The Superintendency of the Development of Amazonia

(SUDAM) was designated to administer these incentives.

The establishment in 1967 of the Manaus Free Zone as an industrial growth pole

was the most significant initiative of the SUDAM, providing part of the city with an

exceptional legal status in support of the Polo Industrial de Manaus (PIM) within

the free zone, and with a special regulating body, SUFRAMA (Superintendency of

the Manaus Free Zone). To attract foreign investors, a series of incentives was

introduced including tax incentives, import and exportrelated facilities such as

the exemption of import duties, of value added tax on industrial products, the

exemption from excise duties and taxes on services. The rationale of thesemeasures is linked to the importsubstitution policies that were pursued from the

1960s onwards up to the early 1990s.

With the subsequent nationwide introduction of a more open trade policy, the

Manaus Free Zone lost its special advantages, and consequently many industries

moved away to more favourably located production zones in Brazil or to other

countries in the region. To counter the deterioration in Manaus attractiveness as

an investment site, the federal government adopted after some serious lobbying

by the state of Amazonas and by the municipality a new package of incentives in

2002 to stimulate a hightech electronics sector and research and development

institutions. Biotechnology and sustainability of production processes became

spearheads. Complementary to these initiatives, the Secretariat for the

Environment and Sustainable Development of the State of Amazonas (SDSAM)

introduced the Zona Franca Verde (Green Free Zone) as part of the Manaus Free

Zone Model, involving innovative mechanisms to promote sustainable

development, with special emphasis on poverty reduction, smallscale agricultureand conservation, and climate change.

The dynamics of the Manaus industrialization model is reflected by the capability

of the Free Zone to generate employment: 105,000 jobs directly and 400,000 jobs

through backward and forward linkages in 2007. Not only did employment

opportunities increase strongly but the skillintensity of the jobs went up as well,

contributing to wages and value added per employee, and the enhancement of the

service sector. Recently, the support package for the industrial pole of Manaus

was prolonged from 2013 to 2023, due to its success in generating value added


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and employment. It is also expected that the attractive location of Manaus in the

northern part of the country will facilitate trade with growth poles in Southeast

Asia and China

3. Industrial growth model.

The industrial growth model of the Manaus Free Zone was originally based on

labourintensive exportorientated industrialization that demanded lowskilled

labour in excess of the natural growth rate of the local population. This model

induced migration from outside as well as inside the Amazon basin. Inhabitants of

the region who made a living of forest extractivism activities, smallscale cattle

ranching and agriculture, socalled caboclos , moved to the city to benefit from

more rewarding employment opportunities in manufacturing industry, servicesand the informal sector. Population growth in combination with rising income

levels generated growing demand for agricultural products and agrobased

produce, thus stimulating landuse conversion in an increasing area in the

proximity of the market. These combined factors stimulated demand for transport

and transport infrastructure, which in itself contributed to landuse conversion by

making new areas more accessible. The Zona Franca Verde was created as a

concomitant programme and aims at channelling these developments in a

sustainable way.

Zona Franca Verde

The Zona Franca Verde was designed as a programme to generate employment

and income by sustainable use of forests, rivers and lakes. One of the innovations

of the programme is the creation of the Bolsa Floresta, or Forest Conservation

Allowance programme, to facilitate remuneration of environmental services in

selected conservation units. The Programme is administered by the FundaoAmazonas Sustentvel (Foundation for a Sustainable Amazonas FAS) and is

expectedly financed by payments for reduction of carbon emissions. According to

the programme, communities commit to zero deforestation in primary forest

areas and the FAS commits to implementing the four components of the Bolsa

Floresta programme:

incentives and investments in infrastructure for smallscale sustainable

production;

investments in health, education, transport and communication;


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strengthening of social institutions; and

participation of families in deforestation reduction activities and providing

them with a supplementary income.

The programme covers more than 10 million hectares and more than 7,000families (Viana 2008).

The objective of the model of the Manaus Free Zone, including the Zona Franca

Verde , is to create a sustainable economic base in western Amazonia that

promotes the best productive and social integration of this region of the country,

guaranteeing the national sovereignty over its borders. (.) In the optimal

case this regional development strategy should link economic development with

the protection of the environment promoting the highest welfare, quality of life,

and wellbeing for its inhabitants (SUFRAMA homepage). This approach was

inspired by the priority to avoid a Colombiatype of development driven by drug

cultivation in forested areas that are beyond control of the national government.

More recently, growing pressure by international organizations to preserve the

forest as an international public good contributed to giving priority to a

sustainable type of development.

Clearly, the Federal Government, the State of Amazonas, and the City of Manaus,

all three have a substantial stake in the developments of the Manaus Free Zone,the Zona Franca Verde included. As a consequence, the possible discrepancies

between economic development and environmental conservation, and among the

interests of stakeholders with different preferences, became ineluctably part and

parcel of the policies of these three layers of government. This issue is critical

when assessing decisionmaking processes for infrastructure plans and

programmes.

4. Manaus as a hub: logistics

The largest intraregional trade flow in Amazonia is between Manaus and Porto

Velho, which is to a large extent a transito connection with So Paulo. Porto Velho,

for its part, is embedded in the IIRSA PeruBrazilBolivia Hub, entailing a

connection to the Pacific Ocean. Moreover, substantial flows are being developed

between Manaus and the north which area is covered by the IIRSA Guyana

Shield Hub specifically to Boa Vista and further up north towards Caracas, or

alternatively towards Georgetown and the port of New Amsterdam in Guyana,providing access to the Caribbean Sea and beyond.


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Complementary to the historical shipping lanes eastward between Manaus and

Belm as a transit to the rest of the world, new lanes are envisaged westward

between Manaus and the port of Manta in Ecuador as a transit to East Asia, as part

of the IIRSA Amazon Hub. The connection is visualized in Map 2.

Map 2. The planned MantaManaus multimodal connection.

As shown, several of these transport corridors are part of the IIRSA hub

programme, which is expected to boost significant economic growth. The Amazon

Hub extends for approximately one thousand kilometres along the multimodal

transport system interconnecting ports on the Pacific in Ecuador and Peru with

the Brazilian ports of Manaus, Belm, and Macap. The envisaged waterway may

eventually link the two oceans by a 6,000 kilometres long navigable waterway, in

combination with a road.

The Amazon Hub creates a transport corridor passing through an area with

significant natural resources such as oil, gas, gold, uranium, and iron, and links the

industrial pole of Manaus PIM with markets in South America and beyond. The

IIRSA agenda and the agenda of SUFRAMA in Manaus envisage improvement of

the navigability of the Amazon River and the Napo River to create a multimodal

link between Manaus and the future container port of Manta at the Pacific coast ofEcuador. The port is in the process of reconstruction with the involvement of a


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Chinese port operator from Hong Kong, but several other ports along the Pacific

Rim compete for a similar transito function (Wohlgemuth Kitslaar, 2008).

Limited road infrastructure.

Notwithstanding the special favours granted to the Manaus Free Zone, investment

in improvement and expansion of road infrastructure has been limited for several

decades. Consequently, in the absence of adequate road infrastructure, cargo was

transported by waterway or by air. Brazils Growth Accelaration Programme

(Programa de Acelerao do Crescimento PAC) allocated in 2007 up to 2.9

billion of US dollars for investment in improvement and construction of roads and

waterways in the northern region. The state of Amazonas would receive 374

million US dollars until 2010 in order to conclude the planned infrastructuralimprovements of the interconnection road ManausPorto Velho, the BR319,

including pavement and bridges .

IIRSA investments are complementary to the PAC programme, involving the

improvement of the AM10 (ManausItacoatiara) and the BR174 (ManausBoa

Vista and beyond). The construction of the socalled Arco Norte, linking Manaus

with the three Guyanas by road along the Caribbean coast and ultimately to

Brazils most northeastern edge in the state of Amap, will make its contribution

to the strategic location of Manaus as a transport hub. Assuming that the port of

Georgetown or New Amsterdam may be turned into an efficient deepsea port, a

transport route may be developed that links the north of the Amazon basin with

shipping lanes towards North America, Europe, and Asia via the Panama Canal

(see Map 5). This connection could complement and in part replace the traditional

link of Manaus with the Atlantic Ocean via the Amazon River.

The reconstruction of the BR319, linking Manaus with the secondlargest urban

hub in the Amazon region, Porto Velho, will expectedly contribute significantly tothe locational advantages of Manaus. Transportation between Manaus and the

southeast of Brazil will be facilitated by the creation of a road linkage that

complement the bimodal transportation link that combines fluvial transportation

over the Madeira River and road transport between Porto Velho and the

southeast. At the same time, as Map 1 shows, the IIRSA PeruBrazilBolivia

corridor links Porto Velho with ports at the Pacific Ocean and will probably create

new possibilities for Porto Velho as a hub, as well as economic activities in the

states of Acre and Rondnia, and in the south of Peru. These developments may


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contribute to the significance of the improvement of the road connection between

Porto Velho and Manaus.

5. Urban frontier

All these developments, even though impressive from an economic standpoint,

will have notable impact on processes of deforestation. As extensively written

(van Dijck forthcoming), the impact of roads on surrounding areas has become

clear from many studies. Ramirez Gomez concludes that The results of the

analysis suggest that distance to roads and distance to towns are the main

predictors of deforestation in the area under investigation with decreasing

probability of finding forest in the presence of road infrastructure and population

centres, while the presence of protected areas increases the probability of findingforest. In her study, from the perspective of optimal decisionmaking in the context

of government spending on infrastructure and governance scenarios for the region,

one should be alert to see these mechanisms in a wider policy context, as

Accuracy in the predictions would increase and probably more driving forces

may be distinguished if at the local and regional level, more complex factors are

taken into account, such as government policies and land tenure systems, central

market places, population growth and its relationship with land use, and the

suitability of the land for agriculture. Moreover, differentiation between paved

and unpaved roads may contribute to our insight into the impact of roads on

adjacent territory. (Ramirez Gomez, in van Dijck forthcoming).

Anthropogenic pressure.

Garcia et al. (2007), in their analysis on the impact of urban centres in the Amazon

region, built on the model of anthropogenic pressure which concept has been

created for the pressure imposed on the environment by the socioeconomicconditions of human settlement in order to analyse the relation of urbanization

processes and deforestation (SoaresFilho et al ., 2006; Monteiro and Sawyer,

2001 ). According to Becker (2001) the Brazilian Amazon can be regarded as an

urban forest, as data from the 2000 census by the Brazilian Institute of

Geography and Statistics (IBGE) show that indeed more than 68 per cent of the

population in the region live in urban settlements. The territory organization of

the Brazilian Amazon, understood as a socioeconomic network of municipalities,

reflects the diversity of human settlements and the potentials for environmentalchanges, especially deforestation. The point of the Garcia et al . study is that


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models designed to simulate deforestation should incorporate a demographic

dynamics system to help project the influence of these variables on the location

and rates of deforestation across the Amazon basin, and in order to visualize the

effects of the gravity model. In addition, the crucial role an urban settlement may

play for services in the region is an oftenundervalued factor in relation to

transport needs.

In order to get a clearer picture of these processes and to establish a hierarchy of

settlements, Garcia et al. developed a socioeconomic dimension index (SDI), a

service domestic product (SDP), and an index of services (IS), where ISrepresents

a ratio between the SDP and the gross domestic product (GDP) of a municipality,

standardized by a reference service economy domestic product, specifically the

largest regional SDP. As the study shows, a municipality tends to concentratemore urban services as its economy grows. Thus, IS measures the potential of a

municipality to act as a regional centre, influencing surrounding municipalities.

The authors created an index of interaction to measure a twoway influence: of

the pole over remaining municipalities and of these over the pole. A high index of

interaction can be interpreted as a strong connection between two regions

facilitated by proximity and population movement, and as a result an

anthropogenic pressure gradient, influencing the deforestation process, is

established from the pole to the satellite regions. As, according to the study, there

is an association between the polarizing capacity of a pole and its overall

migration volume, the higher the economic importance measured in terms of its

IS the larger is its overall migratory volume, even if its net migration is relatively

low (Garcia et al, 2007, p. 726).

The SDI is interpreted as a proxy for the anthropogenic pressure on deforestation.As a measure of attraction of people, the size of the population, strengthened bySDI, is employed in a gravity model, in conjunction with the total migratorymovement among the poles and the surrounding municipalities to make up theareas of influence. Aiming to shed light on the way these regions interconnectinfluencing the mobility of the deforestation frontier across the Amazon basin, thestudy characterizes the level of anthropogenic pressure and the interrelationshipsamong municipalities. Three categories of urban poles were distinguished: macropoles, mesopoles and micropoles, whereby the regional macropoles appear todirectly polarize the nonpole municipalities plus other mesopoles and indirectlytheir micropoles of influence. The set of municipalities polarized by a macropole

is the macroregion of influence (see Map 3).


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Map 3. Impact regions of the macropoles in Amazonia.

Note that the impact of a macropole crosses state boundaries.Source: Garcia et al., 2007.

The main component of the model of territorial organization is the hierarchy ofcentral places (poles) established by the concentration of urban specializedservices, represented by the SDP and the IS. The study counted 9 macropoles,with Manaus on a fifthranking position, due to a relatively low IS at the time.However, as these data were from 2000 a period of decreasing activities of theManaus Free Zone and the Polo Industrial de Manaus would be thriving from

2002 on, IBGE could note in the reportAreas of Influence of Cities 2007 thatManaus has become the fourth metropole of whole Brazil, and became first in theranking as a service centre in the northern region (IBGE 2008).

IBGE 2007 report

In the report Areas of Influence of Cities 2007 , IBGE shows the networks formed by

the main urban centres in the country, based on the presence of institutions under

executive, legislative and judiciary powers, as well as big companies, higher

education institutions and healthcare services. For an impression of the distanceto services in the northern region and consequently the vast impact area of themacropole the following figures are illustrative. Among the several comparativedata collected relative to the influence networks nationwide, they show that, in

order to go shopping the Brazilian population travels about 49 km on an average.In the influence network of Manaus however, this distance is 218 km. To attend a

university, the average distance travelled is 112 km, versus 41 km in the influencenetwork of Rio de Janeiro.


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Transfer of capital

A second observation through the model of Garcia et al. is that Manaus is a special

case, due to voluminous fiscal incentives conveyed to its industrial park. This may

cause that the city, although with a high SDI, concentrates much of its potential ofdeforestation nearby, namely on its urbanrural fringe attributed to its large flow

of urban inmigrants who are attracted to the numerous jobs offered by its

growing industrial pole. This effect also demonstrates that the economic model of

Manaus is exogenous to the region under its influence (see map 4; Garcia et al .,

2007, p. 727).

This finding is in line with Franceschi and Kahn (2003). Building on neoclassical

growth and development models, they develop an understanding of how one

sector of the economy can contribute to the sustainable development of the eco

Map 4. 19952000 major deforestation fronts, derived from the integrated analysis ofthe Amazon urban network, population movements and socioeconomic dimension index, laid over 20002001 deforestation hotspots from Alencar et al. (2004).

Source : Garcia et al ., 2007

nomy as a whole and the role of ecological resources in sustainable development.

Of course, sustainable development does not require that the surplus used for

capital investment be generated from within the region. These funds for

investment can come from other parts of Brazil or from abroad. In fact, the

policies which have been developed to create and sustain the Manaus Free Trade


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Zone represent a transfer from southern Brazil to the Amazon region that results

in an increase in the stock of artificial capital in Manaus. Although environmental

protection was not the original motivation for the policies, they have resulted in a

slowing of deforestation in the area. The state of Amazonas remains at 97% of its

original forest cover while other Amazonian states have lost over 20% of their

original forest cover (Franceschi and Kahn, 2003, p. 218).

6. Alternatives: connecting by railways and waterways

In view of the probable and substantial impacts of roads on the Amazon forests,

several alternatives have been proposed. According to Fearnside, the decision to

construct a highway between Manaus and Porto Velho may impact directly upon

approximately half of the Amazon basin because of migration induced by

improved access. Such a road will connect the area with the socalled arch of

deforestation in the south and southeast of the Amazon basin. Fearnside (2009a)

asserts that the economic justification for the rehabilitation of the BR319 is

biased as alternatives are not seriously being analysed, presumably because

stakeholders are not particularly interested in developing such alternatives.

Fearnside draws a comparison with the decisionmaking process regarding the

construction of the BR163, in which case the advantages of paving the road in the

political debate had been amply overstated (Fearnside, 2009b). This point is

corroborated by the costsbenefit analysis by Fleck, indicating that the economic

benefits of rehabilitating the BR319 are rather poor (Fleck 2009). Alternatives in

this regard are a railway and improved waterway.

Railways

A barrier for opting for a railway is that the construction is more costly than

building a highway, be it that the maintenance costs are lower. However, the

development of a railway connection between Manaus and Porto Velho instead of

reconstruction of the BR319 has an environmental rationale in terms of

avoided deforestation as well as a related economic rationale in terms of

generated credits for avoided deforestation and carbon emissions. According to

Cenamo, the reduction of greenhouse gasses in order to contain global warming

costs nowadays about 0.5 per cent of global GDP. If measures are not taken now,

the impacts of climate change will cause losses until 20 per cent of global GDP.

Amaznia has a high stake in these mechanisms, as 75 per cent of national


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emission of greenhouse gasses comes from deforestation of the Amazon (IDESAM,

2008).

According to a conservative estimation a railway would avoid 80 per cent of the

carbon emission induced by construction of the BR319 , i.e. about 760 millionstonnes of carbon. At a rate of 3.36 US dollar per avoided tonne of CO2, the railway

could yield 4.5 billion US dollar of carbon credits. The accumulated income from

carbon credits could be used to finance construction of the railway, the purchase

of engines and wagons, and the implementation of measures to mitigate the

environmental impacts of the railway (Cenamo, 2009).

In 2007, on the initiative of the Secretariat for the Environment and Sustainable

Development of the State of Amazonas, a previability study for a railway track as

an alternative for the BR319 was commissioned and, in March 2008, a debate for

a broad audience in the auditorium of SUFRAMA was organized. Among the

discussants were members of government bodies, NGOs, academia, students and

researchers, and representatives of the PIM. The representative of the Ministry of

Transport gave arguments for the building of the BR319, as much more studies

would be needed to assess whether a railway was feasible, and because the

Ministry could boast of a sustainable way of working, in light of the environmental

impact assessment (EIA) of the building of the BR319 they had the Universidade

Federal do Amazonas commissioned for. So, there was little chance that the

Ministry would rubberstamp the project without a serious contemplation of the

impact for the environment. On the contrary, the Ministry was very conscious that

they also would monitor the environment after the building of the road. On the

other hand, it is remarkable that as the transport of goods from the PIM often is

used as an argument for the necessity of the rehabilitation of the BR319, a

representative of the Industry Centre of the State of Amazonas (CIEAM) said that

the PIM saw the proposal for a railway alternative as very interesting, as itrepresented a direct connection between Manaus and other states CentreWest in

the country, without the necessity of transfer (from barges to trains to roads)

during the ride (IDESAM, 2008). These examples give a little impression of the

debate on the building of the BR319. And although the BR319 is part of PAC I

and president Lula da Silva of Brazil announced during his visit to the Amazon

International Fair FIAM in Manaus in 2008 its definite building, the environmental

agency IBAMA at the time of writing hasnt given yet a licence to build the

contested part of the road due to insufficient fulfillment of environmentalrequirements (www.ibama.gov.br).


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A railway to the Caribbean

In the area surrounding Manaus are four more sites of specific economic

significance: Itacoatiara as a soy bean transit port at the Amazon River; the region

at the Trombetas River and the site nearby Lethem, with production of bauxiteand cassiterite; and an agroindustrial zone nearby Boa Vista. These economic

centres may create another option for a northbound transport corridor towards a

seaport in Guyana, as shown in Map 5. Part of the new corridor could be built by

improvement of the BR174 between Manaus and Boa Vista and building a

railway between Boa Vista and the ports in Guyana, or alternatively by building a

railway connection between Manaus to these ports. In the latter case the option of

a railway as an alternative for the BR319 may become more attractive.

Map 5. Linking Manaus with the Caribbean.

Source: Freitas, 2008.

Moreover, PAC II (for the period until 2023) includes the planned extension of the

Ferronorte (northern railway) connecting the cities of Cuiab, Porto Velho and

Santarm, but final decisions still have to be made on the exact trajectory of the

line. Overall, the Ferronorte represents the largest transportation project in Brazil

today and will constitute an important impetus towards the economic

development of Brazils northern and western regions. This would be in line with

the recent framework of the Ministry of Transport, consolidating a new Brazilian

rail network with the implementation of 11,800 km of new rail lines, with 10,700

km of largegauge tracks. The ministry recently created a new transport scenario,observing that the huge bias of Brazil towards roads in comparison to other


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countries of similar size had to be countered. A more balanced Brazilian transport

matrix with a significant participation of rail and water modes, which are more

efficient in terms of economy and energy consumption, was developed into the

National Plan for Logistics and Transportation (da Costa, 2009).

As one of the conditions for the business preference for a railway between

Manaus and Porto Velho was a connection with the broader railway network, it is

without much fantasy that these developments could lead to the feasibility of a

railway option for the BR319. For a preliminary presentation of the proposed

Ferronorte lines see Map 6.

Map 6. Projected Ferronorte railway.

Note : the dotted black lines represent the railway tracks as planned in the PAC IIdocument for 2023. The dotted blue line between Manaus and Porto Velho is thecontested track of the Br319, planned as a highway in PAC I.

Waterways

Finally, it can be argued that inland shipping over waterways may be another

alternative with environmental and economic advantages as compared to both

options presented earlier, in particular for transportation of products the value of

which is not affected by the duration of transport (Fearnside, 2009a) . However,

inherent disadvantage of using the Rio Madeira as an alternative transport

corridor is its wide variation in water levels, ranging between 2 and 15 metres,

making the river nonnavigable during periods of low water. Alternatively, the

route over water towards Belm may be used, followed by coastal route to thesouth.


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A major barrier for the development of efficient inland transportation over water

is the inadequacy of port infrastructure. The capacity of the port of Manaus,

situated in the old centre of the city, is limited. The new port under construction is

mainly designed to serve international freight over sea, not domestic transport

over rivers. Moreover, the port of Manaus is the least efficient port of Brazil in

terms of number of hours required to handle cargo (Ono 2001, p. 43).

7. An economic instrument to protect the Amazon

As of now the city of Manaus has the largest concentration of population and

economic activity in the Amazon basin. Not unlikely, the development of

infrastructure will contribute to the citys functioning as a regional hub in the

years to come. As reviews of landuse conversion and deforestation studies have

shown, the vicinity of population centres and markets and of paved roads

contribute significantly and substantially to the probability of deforestation,

specifically so in combination with suitable land quality, and the vicinity of

already deforested areas (van Dijck forthcoming). Consequently, the direct and

indirect environmental impacts of the city of Manaus will expand in the future. An

extension of deforested areas and the transformation of land use in favour of

agrobusiness and cattle ranching beyond the situation are probable, albeit local

and regional initiatives in support of sustainable development may reduce the

expansion of the impact area in the future. As the study of the model of

anthropogenic pressure showed as well, the surroundings of Manaus were less

deforested than expected.

So, the argument that the PIM industrial development pole of Manaus decreases

rather than increases deforestation is noteworthy. According to this reasoning,

the concentration of employment and incomegeneration activities in an urban,

industrial centre averts landuse conversion and deforestation that is associatedwith extensive slashandburn agriculture as the presumed alternative form of

income generation for those employed in the Manaus Free Zone (Rivas et al.,

2009). Because environmental sustainability is among the preconditions to be

fulfilled for extending a license for the Polo Industrial de Manaus up to 2023, the

specific strategy that combines industrial growth with sustainability criteria may

reduce environmental impact further as compared with alternative forms of rural

employment.


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The forestconserving contribution of industry follows from the survey of

economic models by Angelsen and Kaimowitz (1999) as well. The survey shows

that roads, higher agricultural prices, lower wages, and particularly shortage of

offfarm employment generally stimulate deforestation. Hence, policies that

contribute to rising rural wages and offfarm employment opportunities for rural

people will reduce deforestation. Such policies simultaneously avoid

deforestation and diminish poverty.

In addition, the finding is corroborated by the more general statistical findings on

the relationship between concentration of population and deforestation in the

Amazon basin (Garcia et al., 2007; Monteiro and Sawyer, 2001). It needs to be

noted that the continuous flows of migrants from within the (forested) region as

well as from outside the region towards the city of Manaus are directly caused bythe success of the labourintensive industrialization policy of Manaus and by the

the opportunities for indirect employment, which numbers are fourfold of that of

the direct employment. Consequently, the growth of the population is in part the

outcome of a policy that aimed at attracting people to move towards the region

for the specific purpose to contribute to industrial development, not engaging

themselves in alternative forms of employment and income generation outside

the city.

Given the size of the population in Manaus, a sustainable industrial development

strategy may have a limited deforestation impact as compared to alternative

strategies, be it that high urban industrial wage levels as compared to rural

income levels as such contribute to consumption and landuse conversion. A

study based on a dynamic panel data analysis, Economic Instruments to Protect the

Amazon: The Manaus Industrial Pole Experience , concludes that the level of

deforestation in the state of Amazonas would have been 77.2 per cent higher in

the absence of the industrial pole in Manaus. In line with this last figure, Rivasetal. argue that it would be reasonable that the PIM instead of the argument of

overcoming transport costs disadvantages would receive their incentives for the

acknowledgement that the industries in the PIM yield positive externalities for

Brazil and the rest of the world by reducing the pressure on the deforestation of

Amaznia, contributing to a more sustainable form of production. This would

silence the complaints from other industrial centra in the country that Manaus is

profiting from unfair competition. It would be better still, if in the near future the

products produced by PIM factories in an ecofriendly way would have a marketvalue that has internalized this (Rivas et al ., 2009).


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Concluding remarks

This paper, in a stylized manner, has tried to give an overview on the complexity

of Brazils present development processes, in particular in the northern region

Amaznia. The initiatives to intensify the building of infrastructure facilities aresomething essential for an economy of an emerging market. IIRSA initiatives, in

coordination with PAC plans, will in potential change the developmental horizonsignificantly. The city of Manaus, in the middle of the Amazon rainforest, will nowalso become a central place in the middle of developmental hubs in the making.

Unfortunately, these infrastructural works have an enormous impact on the

landscape. Notices about huge deforestation figures are now more or less dailynews. And although these notices are in general more connected with agriculture

and timber industry, the information about the impact of roads and dams ondeforestation processes is growing.

However, economic perspectives for the region and its population are to be takenseriously. Therefore, the compatibility of economic and environmental aspects

and the pursued economic model are challenging issues.

That a thriving industrial zone such as the Polo Industrial of Manaus is avoidingdeforestation is a promising theme, which will immediately illicit sceptic

comments derived from the traditional concepts of an urbanization process that

will devour surrounding nature. Indeed, the urban frontier that Manausrepresents will have its consequences, but given the parameters of the region andthe government condition to have an urban settlement on this location, it could bein all likelihood the best option. Especially the preconditions of sustainibility of

the development model may lead to innovative solutions.

In the struggle between economic development and conservation of the Amazonrainforest, i.e. the two development categories of nonrenewable natural

resources and the renewable natural resources, the driving forces for shortterm

solutions in order to develop nonrenewals often seem to have the upper hand.However, the fact that the license to build the contested track of the BR319 hasnot yet, notwithstanding the announcement by President Lula da Silva during hisvisit to Manaus in 2008 that the BR319 would be finished shortly, been granted

by the environmental agency IBAMA, implies the recognition of the value of theAmazonia de p (the Amazon as a standing forest).

Last but not least, this paper has the implicit intention to show that the dynamicsof putting forward arguments for different development models and solutions are

well and truly active in the region itself and not, as so often suggested, a westernpastime.


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impact of an urban frontier in the amazon

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