Erickson, Andrew

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Western Oregon University Digital Commons@WOU Student Theses, Papers and Projects (History) Department of History 5-31-2005 "Chilean Economic Expansion and the Effects of the Forest Industry on the Environment" Andrew Erickson Follow this and additional works at: https://digitalcommons.wou.edu/his  Part of the Latin American History Commons t-Andrew EricksonHistory 352s13u2005Dr. Rector"Chilean Economic Expansion and the Effects of the Forest Industry on the Environment"ISouth America has been a hot bed of revolutions and military coups for many yearsand the economic stability ofthe countries has paralleled that instability. Chile hasmanaged to achieve something that no other country on the continent has been able to do,they have managed to stabilize their economy into a constant state of growth. This camefrom their new emphasis on the free market economic agenda the country adopted underthe military rule in the early 1970's.This economic system adopted the timber industry as one it's major exports. Thechange created a new economic system but also created new more complex social andenvironmental problems that have caused major conflict within the country. The conflict isover a compromise of interests in keeping the current economic success but with moresustainable environmental practices . They want to preserve the old economic structurebut have to reconcile how it has fallen short. To do this, an understanding ofthe newerdemocratic ideas needs to be incorporated into the economic strategies. These twocompeting ideas ofthe proper way to run a sustainable economic and environmental policyhave been the central focus since the election of 1989. The Chilean Timber industry hasbeen a great economic boost nationally but has caused the central conflict in the country,making it the key to solving the conflict.Why is the Forest industry so intriguing to the Chilean Government. Theintroduction of the Monterey pine made the forest industry possible in Chile. TheMonterey pine had the perfect blend of qualities that make it an viable product to produce.The Monterey pine grows exceptionally fast, the demand for the soft woods is widespread, and is usable in many different wood products, they reproduce easily, and they area pioneer species so their natural predators and parasites do not exist in sub tropical1.tregions. Another major advantage they provided was their abiliry to germinate in veryinhospitable soils and root is severely eroded soils.r The trees grow fast with littlemaintenance and have very few predators to limit them which made it the perfect choice togrow in the region.The tree was first introduced in 1890 by Arturo Junge who owned a plant nurseryin Concepcion. He received the seeds from Germany, and planted them around the area.When the seeds were successful a man named Federico Albert distributed the seeds to theother plantation owners in the coastal areas. The pine was to be used for mineconstruction in the hills, but it was to weak and Eucalyptus replaced it. The pine howeverwas quickly developed for paper and other purposes. The government started torecognized it as a budding industry and started supporting it as a new industry, and by1935 there were 25,000 hectares of planted land. The plantation growth followed with15,000 hectares planted in 1940, and by the 1980's there were almost 80,000 hectares ofplantation land .2 *' '-*The economic efficiency of the timber farms have made it extremely profitable toreplace their agricultural land to plant the foreign trees. In 1995, 85 percent of thecountries wood production was produced by tree farms when they only accounted for l5percent of the total area of land.rAll of this development also has an effect on the environment around it.The plantations eliminate all vegetation early on in plantation life because the seedlingtrees have shallow roots. Then as the trees grow the pine needles that cover the groundi Clapp pg 1-52 Clapppg s3 Clapp pg224contributes to the inability of other plants to grow there. The trees are relatively fastgrowing the reach peak height between 18 -24 years so they carefully prune and thin thetrees to get the best quality tree. The pruning is done to intemrpt the trees natural knotmaking response to branch decay. The trees also grow best in sunlight so pruning andclearing the less desirable trees help with sun light absorption. Later in the second decadeof growth the trees perspire more than agricultural field or native forests, making theground drier contributing to low stream and river flows in downstream areas. One of thefew secondary products obtained from the trees are mushrooms. The mushrooms mergewith the tree roots and for mycorrhizae which aid in the absorption of minerals in the soil.The major Ecological damage from the trees comes from the deforestation of thenative trees to make room for the Pine. In 1995 of the 850,000 hectares of plantations onthe coast regions, 50,000 hectares were established directly after forest clearing. Thisprovides a direct danger to one Chilean species of tree, called bosque maulino, which only ' -resides intact in small pockets in parks south of Constitution. This is so detrimentalbecause they also have four of the six species of Chilean flora in danger of extinctiondwelling inside. 5The large scale plantations had other effects on the people of Chile. The large scalemono plantation reduced the need for tenant farmers. The farmers were displaced andlarge migrant worker camps and shanty towns emerged. The other group greatly affectedare the Mapuche Indians who have battled with the Chilean Government for years, undera Clapppg65 CtapppgJ3counterpd this trend was gradually opening certain sectors oftheir economy, which fqrcedthem to modernize to compete in a world market. The slow discretionary opening up ofthe economy took a few years but was generally successful, because they whole economydid not suffer a depression.* The average tariffin Chile in 1974had fallen from 105percent to 57 percent, along with the nearly elimination of import licensing, prior deposits,and other import fees. They tried to expand industries but still remained biased towardtheir own manufacturing of finished goods. The tariffs were lowpred signifipaqtly more oninputs and capitol and not as much for finished manufactured goods. eThe Government was trylng to transition to an open market system gradually. fhenext step was major changs which came in 1975. The government started restructuring theeconomy. The support shifted from protection to allowing the industries to collapse thatwere not competing and the capitol was then funneled in to tlre natural resource exportindustries the governpent was trying to develop. The tariffs were eventually lowered to aneven 10 percent. This eliminated the protection of local manufacturing almost entirely, theeconomic policy was almost totally neutral making imports and exports supported equally.10All ofthis was trying to take the Chilean economy and reestablish it as free marketsystem. The restructuring was very successful without any large scale depression becausethe government was still favoring certain industries like the Forest industry. The way theydid this was with a law in 1974.Law 701, provided massive subsidies for planting andstarting forest crops, it also made all land forested under this law exempt from taxes. The8 Kurtzpg4e Kurtz pg+10 Kurtz pg45the terms oftheir surrender they were not permitted to sell their land. The militarygovernment then took their land hotdings and divided them up into individual plots. Thegovernment made them a limited time claims. Then in the 1990's the land started to comeup for transfer, displacing more people in the rural areas. ultable la)The Mapuche Indians were especially resistant to the military government. Theyhowever, were defeated and accepted their terms of transfer of land. They were forced tomove out of the forest hills onto the valley flatlands, so the trees could be cut andplantations replacing them. The land they were moved to was more agriculturallyacceptable, but the Mapuche were not given any support or technology to help them starta previously unknown agrarian lifestyle to them. After they were not glven anyrepresentation in congress, one representative, they rebelled and in the late 1990's therewere episodes of violence. They started forest fires in areas where forestry was going orqand they destroyed some logging machinery. The Mapuche were attacking to people whohad taken their homes.?All ofthis was due to the change in economic structure in Chile. The rapideconomic expansion in Chile was during a time of Military government, between 1973and 1975. This would have seemed like it wouldn't have been good based on theeconomic performance of other Latin American Countries. But the key to the expansionwas the rate at which the economy was opened to the world markets. The governmentprobably saved it's economy, the total opening up of the Chilean economy to the worldmarket could have made it collapse because it could not have competed. The way they6 Clapp pg 131 EconomistpgP4subsidies were up to 75 percent of the star up costs. Which led to massive expansion in theforest industry. In the following 20 years the export dollars went from 130 million to 1.45billion dollars in 1994. Table 2a shows the massive increases in forest products during thisperiod.rrThe progressive economic structure of the military started a debate that involvedthe type of development the newly democratic country wanted for its economy. Theelections in 1990 ushered in the Democratic era of modern Chile, the ways of the oldconservative military were being questioned and the country had to decide which directionit wanted to go in. Two different ideals were coming onto the scene. There were the oldeconomists that wanted to keep the economy running the same as the Military did, thenthere were the people who wanted economic reform. The peasants that were displaced bylarge plantations, and Indians who had their land sold to the large timber plantations whowere silent during the Military rule because of the fear of reprisal. The environmentallyminded scientists and naturalists were also taking advantage of the new freedoms to speakout about how poor the situation of the environment was.The general economic goals of Chile after 1990 were a major factor in where theireconomy would go, which determined the direction ofthe Timber industry. The conflictover the style of economy caused a lot of conflia. the two ideas were the sustainablemarket economy and the idea of community goals of the same industry." Or the economicminded plantation owners opposite the lower class people and environmentalists.The sustainable market economists had three important areas to asses their11 Kurtz pg1412 Silvapg45S6policies. They were economic strengttq social equality. and environmental health. Thesethree ideas were the gauges of whether their policies were going to be effective. Theireconomic polices were set up to me€t these three basic societal conditions.'3 Thisapproach of economic development used the ideas of large corporate expansion thatconcentrated on rapid development of sustainable industries. The economist said that theeffect of large plantations were a good sustainable option because they provide keyeconomic support for general social development in Chile. It was the "Trickle DownEffect ", the large Timber plantations made lots money , provided jobs for people in thearea and invested in the area. This followed the idea that these companies did a job moreefficient than small farmers or the govemment could have done. They considered theTimber fields as contributing to the forest sustainability. Making their plantations soundlike forest that they were restoring. They also included the person property rights as socialdevelopment. This train ofthought made property rights more democratic thangovernment ownership, which was less oppressive to the people. The other effect ofhaving a democratic government was the people organizing in non governmentalorganizations. This allows the people put pressure on the government to monitor theTimber Industries. So in a way they indirectly support the policing of themselves. raThe counter argument to these economic ideas in Chile was the idea that lowerclass small development could be better and that the timber Industries should becontrolled more. The counter argument for the wage labor dispute is that the largecompanies start wage competitions the small farmers can't compete with driving thei3 Silva pg 45914 Silval pg46o7working wages loweq putting them out of business. The response that the large companyis better suited to run the industry is also refuted because of positive effects small farmerscould have at the same industry. The positive effects would be the community organizingfor harvesting and industrialization would have better effected the farmers raising profitswhich would go directly into the communities that earned thenU rather than other foreigninvestors and people not living in the areatt. The biodiversity would have also been servedbetter because the smaller farms would have used less timber and non timber products toproduce the same products. 16These two approaches came out of the freedom of the democracy under presidentPatricio Aylwin. The new freedoms were letting them voice there opinions over this issue.In 7992 the president sent a piece of legislation that was environmentally minded andslightly restrictive the Timber Industry. The bill proposed subsidies to support nativeforest management , which incorporated plantations. It also made the incentive highlyavailable to lower and middle si2e tandbwners. The oth,er stipulation was that it protectednative forests from clear cutting for industrial interests, and was very specific where andwhen elear cutting could happen.l?This bill was so controversial the Timber Industries Special interests in theCongress got the Industrialists peak association to support them and held out a vote onthe bill, which suspended the vote forever. the special interest groups for the conservativeTimber industries had enough influence from the economic success they could sway thecongress and even malevolently passed a timber development that would have been15 uribe16 Silval pg46l'7 Silr,a pg468,4698prohibited by the president's bill.rsWhat all of the controversy and the conflict over the topic of environmental forestprotection comes down to follows the wood chip production industry. The wood chipindustry has paralleled the fight over the native forests and the negative effects of theplantation forests in Chile. The wood chip industry since 1990 has become Chile's largesttimber product by volume.(Table 3a) In the years between 1990 and 1995 the annualincrease of 40 percent.re This is alarming because this market has opened up the logging ofpreviously unusable timber in native hardwoods. The new chips take almost any tree andare extremely profitable. The lack of use of foreign species and large growth in theproduct makes the logging of native trees very prevalent. 20The demand comes from the Japanese markets that make it extremely profitable.The large demand combined with the high prices in Japan for wood make it an excellentexport. The other effect that makes the Chilean wood chip market so successful is the lackof competition in other countries who have stopped logging their native forests. Malaysia,Indonesi4 most of Latin America(except Chile), New Zealand , and Australia have allbeen large unprocessed wood exporter but have cut back their exports for environmentalor economic reasons. Making Chile one of the only open hardwood chip market. 2rThe country has not totally ignored the problems. The forest law in Chile has amandate for an approved management plan for any cutting of forests. The CorporacionNacional Forestal (CONAF) is so under funded they do not have enough staffand" Silva pg469,47ote Clapp pg s20 Clapp Pg 182r Clapp pg lt9oinvestigating forest cutting is not a high priority. Even when they do investigate they oftenmeet resistance from local police and judges that do not want to enforce the laws. In a1993 study only about 30 percent of the management plans were being followed that weresubmitted. 22The laws are not enforced creating an almost uninhibited cutting of any forest thatis desired. This creates all kinds of environmental and social problems that need to betaken care of. The 1974 decree 701 expired in1994 and the two sides have been fightingeach other over a proposed compromise to make a new law. The environmentalists haveused an report that was leaked to the press in 1995 that said that between 1984 and 1994between 5 and 15 percent of Chile's native forests were cleared. This just added more fuelto the fire and nothing has been done, The Chilean government needs to take control ofthe situation and there needs to be an end to the destruction of Chile's native forests.There is a sustainable way to use eucalyptus tree instead of the native forest. The conflictwill keep going until the Government decides who they support, whether the especialinterest of the economy will rule their government or they will take control of the forestindustry and make them obey their policies .22 Clapp pg 1910BibliographyArnaldo Jelvaz, et al." A Profile of the Chilean forestry Sector," Center for theInternational Trade of Forrest Products, University of Washington,( I 988)Eduardo Silva, "The Politics of Sustainable Development: Native Forest Policy in Chile,Venezuela, Costa Rico and Mexico" Journal of Latin American Studies,29,No.2(1e997):457-4s3Eduardo Silva, "Democracy, Market Economics, and Environmental Policy in Chile"Journal of Interarnerican Studies and World Affairs 38, No.4, (1996): I -33Marcus Kurtz "State Development without a Developmental State: The PublicFoundations of the "Free Market System" in Chile" Latin American Politics andSociety 43, No.2, (2001):1-25Oscar Barros, Andres Weintraub,'?lanning for a Vertically Integrated Forest Industry"Operations Reseorch 30, No.6 (1 982) : 1 I 68- 1 1 82Roger Alex Clapp, "Waiting For the Forest Law: Resource-Led Development andEnvironmental Politics In Chile" Latin American Research Review,33, No.2(lee8):3-36Roger A. Clapp, "The Unnatural History of the Monterey Pine" Geographical Review,85, No. I (Jan.,1995): l-19None. "ANew Twist to an Old Tale" The Economist 352,Is.8135, (1999):40Kathrine Uribe, Sabrina Frazee "Chilean Wood Exports and Subsidy'' TED Case Study,(dec. 1996)11

Chilean Economic Expansion and the Effects of the Forest Industry on the Environment

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Chilean Economic Expansion and the Effects of the Forest Industry on the Environment

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