    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                PRESERVING THE AMAZON: A SHARED MORAL IMPERATIVE

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
              THE WESTERN HEMISPHERE, CIVILIAN SECURITY, AND TRADE

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               September 10, 2019

                                   __________

                               Serial No. 116-60

                                   __________

            Printed for the use of the Committee on Foreign Affairs
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov,

                               or www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    37-563PDF                  WASHINGTON : 2019

    --------------------------------------------------------------------------------------

                          COMMITTEE ON FOREIGN AFFAIRS

                       ELIOT L. ENGEL, New York, Chairman
    BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking
    GREGORY W. MEEKS, New York               Member
    ALBIO SIRES, New Jersey		     CHRISTOPHER H. SMITH, New Jersey
    GERALD E. CONNOLLY, Virginia         STEVE CHABOT, Ohio
    THEODORE E. DEUTCH, Florida	     JOE WILSON, South Carolina
    KAREN BASS, California		     SCOTT PERRY, Pennsylvania
    WILLIAM KEATING, Massachusetts	     TED S. YOHO, Florida
    DAVID CICILLINE, Rhode Island	     ADAM KINZINGER, Illinois
    AMI BERA, California		     LEE ZELDIN, New York
    JOAQUIN CASTRO, Texas		     JIM SENSENBRENNER, Wisconsin
    DINA TITUS, Nevada		     ANN WAGNER, Missouri
    ADRIANO ESPAILLAT, New York          BRIAN MAST, Florida
    TED LIEU, California		     FRANCIS ROONEY, Florida
    SUSAN WILD, Pennsylvania	     BRIAN FITZPATRICK, Pennsylvania
    DEAN PHILLPS, Minnesota	             JOHN CURTIS, Utah
    ILHAN OMAR, Minnesota		     KEN BUCK, Colorado
    COLIN ALLRED, Texas		     RON WRIGHT, Texas
    ANDY LEVIN, Michigan		     GUY RESCHENTHALER, Pennsylvania
    ABIGAIL SPANBERGER, Virginia	     TIM BURCHETT, Tennessee
    CHRISSY HOULAHAN, Pennsylvania       GREG PENCE, Indiana
    TOM MALINOWSKI, New Jersey	     STEVE WATKINS, Kansas
    DAVID TRONE, Maryland		     MIKE GUEST, Mississippi
    JIM COSTA, California
    JUAN VARGAS, California
    VICENTE GONZALEZ, Texas

                        Jason Steinbaum, Staff Director
                  Brendan Shields,  Republican Staff Director
                                     ------

      Subcommittee on the Western Hemisphere, Civilian Security, and Trade

                       ALBIO SIRES, New Jersey, Chairman

    GREGORY W. MEEKS, New York           FRANCIS ROONEY, Florida,
    JOAQUIN CASTRO, Texas                  Ranking Member
    ADRIANO ESPAILLAT, New York	     CHRISTOPHER H. SMITH, New Jersey
    DEAN PHILLIPS, Minnesota             TED S. YOHO, Florida
    ANDY LEVIN, Michigan	     	     JOHN CURTIS, Utah
    VICENTE GONZALEZ, Texas	     	     KEN BUCK, Colorado
    JUAN VARGAS, California	     	     MIKE GUEST, Mississippi

                      Alexander Brockwehl,  Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

            INFORMATION FOR THE RECORD SUBMITTED FROM CHAIRMAN SIRES

    Statement for the record submitted by Chariman Sires from former
      Congressman Henry Waxman.......................................     2

                               OPENING STATEMENT

    Opening statement submitted for the record from Chairman Sires...     6

                                   WITNESSES

    De Bolle, Dr. Monica, Director, Latin American Studies Program,
      School of Advanced International Studies, Johns Hopkins
      University, Senior Fellow, Peterson Institute For International
      Economics......................................................    12
    Nepstad, Dr. Daniel, President and Executive Director, Earth
      Innovation Institute...........................................    21
    Millan, Bill, Chief Conservation Officer and Director of Policy,
      International Conservation Caucus Foundation...................    30

                                    APPENDIX

    Hearing Notice...................................................    49
    Hearing Minutes..................................................    50
    hearing Attendance...............................................    51

                  ADDITONAL MATERIALS SUBMITTED FOR THE RECORD

    Amensty International letter submitted for the record from
      Chairman Sires.................................................    52

                PRESERVING THE AMAZON: A SHARED MORAL IMPERATIVE

                          Tuesday, September 10, 2019

                            House of Representatives

                    Subcommittee on the Western Hemisphere,

                          Civilian Security and Trade

                          Committee on Foreign Affairs

                                         Washington, DC

        The committee met, pursuant to notice, at 10 a.m., in room
    2172 Rayburn House Office Building, Hon. Albio Sires (chairman
    of the subcommittee) presiding.
        Mr. Sires. Good morning. This hearing will come to order.
    This hearing, titled ``Preserving the Amazon: A Shared Moral
    Imperative,'' will focus on the fires taking place in the
    Brazilian Amazon to highlight the global importance of the
    Amazon and the role we in the United States should play in
    helping to combat climate change and protect the rain forest.
        Without objection, all members may have 5 days to submit
    statements, questions, extraneous materials for the record,
    subject to the length limitation in the rules.
        I would like to submit a statement for the record from my
    friend and former colleague, Henry Waxman of California.
        [The information referred to follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Sires. I will now make an opening statement and then
    turn it over to the ranking member for his opening statement.
        Good morning, and thank you for being here today as our
    witnesses on this hearing. I convened this hearing because
    protecting the Amazon is vital for the health of our planet.
        The Amazon rainforest is the most biodiverse region in the
    world. It contains approximately one-fifth of the world's
    surface fresh water supply.
        The water released by the Amazon's plants and rivers impact
    climate throughout South America and can affect precipitation
    and the severity of droughts.
        The Amazon also stores billions of tons of carbon dioxide,
    a portion of which enters the atmosphere when deforestation
    occurs, potentially accelerating global climate change.
        For these reasons and many more, the fires currently
    burning in the rainforest are an issue that should concern all
    of us. While the fires have helped draw attention to what is
    happening in the Amazon, we know that they are just one symptom
    of the much bigger problem of deforestation.
        Scientists generally agree that the Amazon could reach a
    tipping point if current deforestation trends continue. This
    scenario would jeopardize the many benefits the Amazon provides
    to our climate and would threaten millions of plants and animal
    species the rainforest ecosystem supports.
        The goal of this hearing is to understand the causes and
    scope of the problem and explore solutions to preserve the
    Amazon.
        Today, we will hear experts' analysis of Brazil's
    environmental protection policies, challenges to their
    implementation, and recommendations about what more needs to be
    done.
        I deeply value our relationship with Brazil and appreciate
    the Brazilian government's historical commitment to balance its
    promotion of economic development with efforts to preserve the
    environment.
        In looking for a path to success we can look to Brazil's
    recent past. From 2005 to 2014, deforestation in the Brazilian
    Amazon declined by over 70 percent during the same period the
    Brazilian economy grew and nearly 30 million people were lifted
    out of poverty.
        In other words, well-regulated economic development efforts
    have gone hand in hand with successful environmental protection
    programs in the past.
        There is no reason why this cannot be achieved again. I
    believe the United States has a role to play in supporting
    Brazil on this issue and I urge my colleagues on both sides of
    the aisle to work together in fulfilling our global leadership
    role.
        We must also support the indigenous communities that live
    in the Amazon whose right to live on their ancestral lands for
    generations to come depends on the health of the rainforest.
        Preserving the Amazon is not just the right thing to do.
    This is an issue that directly affects our own constituents
    because the health of the Amazon rainforest ultimately impacts
    the water we drink and the air we breathe.
        Unfortunately, the United States cannot be a leader in the
    environmental if we do not return to policies of acknowledging
    the scientific reality of global climate change.
        I strongly criticized the Trump Administration's decision
    to withdraw from the Paris Climate Agreement not only because
    it ignored overwhelming scientific evidence but also because it
    has undermined our credibility on the world stage and hurt our
    national security interests.
        This should not be a partisan issue. If we do not take the
    threat of climate change seriously, our children and
    grandchildren will never forgive us for failing to meet the
    moral demand of our time.
        Today, I look forward to a bipartisan discussion about how
    the U.S. Congress can advocate for the necessary policies to
    combat climate change and work with the Brazilian government to
    protect the Amazon.
        Thank you, and I know turn to Ranking Member Rooney for his
    opening statement.
        [The prepared statement of Mr. Sires follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Rooney. Thank you, Chairman Sires.
        I think this hearing on the shared moral imperative of the
    Amazon is very important. The media is focused on the Amazon in
    recent weeks because of the fires there.
        The fires have broadened public awareness of the unique
    ecological importance of the region and its global impact. I
    personally have spent much time there. I have traversed it from
    Iquitos, Peru to Manaus, Brazil and have navigated the Napo in
    Ecuador.
        In Brazil, the Amazon biome constitutes 2.1 million square
    miles of rainforest, 40 percent of the world's, so the world
    has a vested interest in preserving the Amazon rainforest.
        It contains nearly one-half of the world's carbon, which is
    in many ways an essential defense against global climate
    change.
        Recent concerns over deforestation and fire hot spots in
    the Amazon are legitimate and credible. However, this year's
    number of fires registers as the eighth highest in the last 20
    years and 2018's was the twelfth highest.
        While not the highest number of fires in hectares of
    deforestation, they are still unacceptable. The governments of
    the region have the responsibility to enforce the laws and take
    the necessary measures to preserve the Amazon.
        Laws and regulations enacted by Brazil since 2004 have
    reduced deforestation and placed regulations on legal burning
    and land-clearing practices.
        Within the Amazon biome, private property owners are
    mandated to conserve at least 80 percent of their lands' native
    vegetation.
        Further, Brazil's commitment to the 2009 Copenhagen
    Agreement has reduced deforestation by 73 percent since its
    peak in 2004. that is a 2.28 gigaton reduction in CO2
    emissions.
        Brazil also invested in monitoring technology and data
    bases to detail events in the Amazon while also investing in
    renewable resources to achieve 45 percent usage of renewable
    energy.
        Further, just last week, leaders from Brazil, Bolivia,
    Colombia, Ecuador, Guyana, Peru, and Surinam held a regional
    summit in Colombia to discuss regional measures to protect the
    Amazon.
        The United States and the international community must also
    work with these countries to advance conservation of the Amazon
    rainforest.
        The United States provided over $20 million in foreign aid
    assistance for natural resource and biodiversity conservation
    in 2017 and 2018, and created the partnership for conservation
    of the Amazon Biodiversity Program, which conserves the Amazon
    through management and monitoring of protected areas.
        It also considers the critical role of the private sector
    in developing public-private partnerships aimed at conservation
    and sustainability for existing communities within the Amazon.
        Through USAID, the Forest Service works with the Brazilian
    government on sustainable forest management and biodiversity.
        In Fiscal Year 2019, Congress appropriated $11 million
    through USAID to be used for environmental programs.
    International cooperation is essential to preserving the Amazon
    rainforests but will only be effective if the host governments
    are committed to meeting conservation goals.
        As a representative from southwest Florida whose district
    includes the Everglades, I have a thorough understanding of the
    importance of preserving our watersheds.
        Data shows that what happens in the Amazon affects us in
    Florida and throughout the United States from rain patterns in
    the Midwest to the sargassum grass washing up on the beaches in
    the Caribbean, Cancun, and the Gulf of Mexico now, and the
    algae blooms in the Gulf of Mexico.
        These blooms, which severely threaten tourism-based
    economies in Florida and the other coastal areas, are partly
    caused by nutrient runoff from the Amazon.
        I will continue to work with my colleagues in Congress as
    well as international partners in the Brazilian government to
    seek reduced burning, reduced deforestation, and reduced
    outflow of polluted water through the Amazon watershed.
        I look forward to hearing the testimoneys and opinions of
    our important witnesses today.
        And thank you, Mr. Chairman. I yield back the balance of my
    time.
        Mr. Sires. Thank you very much, Ranking Member Rooney.
        I will now introduce Dr. Monica de Bolle. She is the
    director of the Johns Hopkins School of Advanced International
    Studies, Latin American Program and holds the Riordan Roett
    Chair at Johns Hopkins.
        She has also a senior fellow at the Peterson Institute of
    International Economics. She previously worked as the director
    for the Institute for Economic Policy Research in Brazil and as
    an economist at the International Monetary Fund. She holds a
    Ph.D. in economics from the London School of Economics.
    Welcome.
        We will hear from Dr. Dan Nepstad, the president and
    founder of the Earth Innovation Institute. Dr. Nepstad has
    worked in the Brazilian Amazon for more than 30 years,
    publishing over 160 papers and books on regional ecology and
    public policy.
        Before founding the Earth Innovation Institute, he was a
    senior scientist at Woods Hole Research Center, a lecturer at
    Yale University, and co-founder of the Amazon Environmental
    Research Institute.
        He was also a lead author of the fifth assessment report by
    the Intergovernmental Panel on Climate Change. He holds a Ph.D.
    in forest ecology from Yale University. Thank you for being
    here.
        Finally, we will hear from Mr. Bill Millan, chief
    conservation officer and director of policy at the
    International Conservation Caucus Foundation.
        Previously, Mr. Millan was a career Foreign Service officer
    for over 20 years.
        He served in U.S. embassies in Colombia and Venezuela and
    worked as a political counselor at the U.S. Mission to the
    Organization of American States.
        He is a U.S. Army veteran and earned two Bronze Stars in
    Vietnam. He received his Master's degree from the University of
    Virginia. Thank you for your service and for joining us here
    today.
        I ask the witnesses to please limit your testimony to 5
    minutes, and without objection your prepared written statements
    will be made part of the record.
        Dr. de Bolle, it is now your turn.

      STATEMENT OF DR. MONICA DE BOLLE, DIRECTOR, LATIN AMERICAN
      STUDIES PROGRAM, SCHOOL OF ADVANCED INTERNATIONAL STUDIES,
    JOHNS HOPKINS UNIVERSITY, SENIOR FELLOW, PETERSON INSTITUTE FOR
                        INTERNATIONAL ECONOMICS

        Dr. de Bolle. Good morning, Mr. Chairman, members of the
    committee. It is my distinct honor to testify before you today
    on how Brazil and the United States should work together to
    preserve the Amazon rainforest.
        Mr. Chairman, my remarks this morning will summarize my
    submitted written testimony.
        Global warming is widely and correctly blamed for wildfires
    around the world. But the Amazon fires in Brazil represent a
    more specific government policy failure as Brazilian public
    agencies that are supposed to curb man-made fires have been
    deliberately weakened.
        These fires set by farmers, cattle growers, and others take
    place every year. But they have risen in number and severity in
    2019.
        After President Jair Bolsonaro took office, he set about
    fulfilling his campaign pledge to ease environmental land use
    and health regulations.
        The Amazon fires are not just a tragedy but an opportunity
    for the governments of Brazil and the United States to stop
    denying climate change and cooperate on strategies to preserve
    the rainforest and develop ways to sustainable use its natural
    resources.
        The record of such cooperation has already yielded positive
    results. For example, there is a history of collaboration
    between NASA and Brazil's National Institute for Space
    Research, employing state-of-the-art technologies to monitor
    deforestation.
        It is possible to accommodate competing demands of economic
    interests, food security and saving or even restoring the
    Amazon rainforest along with its life-sustaining rainfall for
    Brazil and the world at large.
        Following are the major policy recommendations presented in
    this testimony. The United States should rejoin the Paris
    Climate Agreement and immediately establish a joint action plan
    with Brazil to implement steps to preserve and restore the
    rainforest.
        Under the Paris Agreement, Brazil has committed to
    restoring 12 million hectares of native vegetation in cleared
    areas. Brazil should impose greater regulations on land use in
    the Amazon that would allow farming and cattle grazing in some
    areas to sustain livelihoods of local and indigenous people
    while cracking down on illegal uses such as logging and mining
    and the invasion of public lands.
        To combat destructive activities, the government should
    encourage livestock rearing and cultivation in nonsensitive
    areas while more systemically demarcating land and property
    ownership rights in the rainforest itself.
        Brazil should lead an international effort to foster the
    diversity of native vegetation in the Amazon region while
    preserving the rainforest and also creating jobs and reducing
    poverty and income inequality which plague the region.
        Sustainable production of livestock and soy is already
    happening in areas outside the Amazon. These activities could
    be expanded to areas adjacent to the rainforest following an
    effort to demarcate land and enforce property rights.
        The international community should work with Brazil to
    revive and expand the Amazon Fund, created years ago but now in
    limbo, to raise international donations for investment in
    sustainable activities that protect the rainforest.
        The Fund would greatly benefit from the financial support
    of the United States. Technical cooperation agreements to
    develop new technologies for sustainable development are a
    must.
        Finally, the Brazilian constitution allows the economic
    exploration of indigenous lands in cooperation with local
    communities and with a focus on sustainability.
        However, use of these lands is yet to be formalized through
    adequate regulation. The United States with its experience in
    formulating and applying similar regulations can play a key
    role in advising the Brazilian government on such roles.
        The rise in deforestation precedes President Bolsonaro's
    electoral victory. But the dismantling of environmental
    agencies under his watch and his past and present rhetoric on
    environmental issues have emboldened farmers, loggers, and
    other players to engage in predatory behavior in the
    rainforest.
        It is time for the international community to cooperate on
    a strategy to provide the resources to conserve, restore, and
    develop the planet's largest continuous rainforest.
        The close relationship that has developed between the
    leaders of Brazil and the United States should be used to
    jumpstart this effort before it is too late.
        Thank you.
        [The prepared statement of Dr. de Bolle follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Sires. Thank you very much.
        We will now hear from Dr. Nepstad.

       STATEMENT OF DR. DANIEL NEPSTAD, PRESIDENT AND EXECUTIVE
                  DIRECTOR, EARTH INNOVATION INSTITUTE

        Dr. Nepstad. Good morning. Thank you, Chairman Sires, and
    it is a real honor to be here to give this testimony. I will
    give a brief summary of my written submitted testimony.
        I moved to the Amazon in 1984 to begin my doctoral
    research. It was a Wild West town of Paragominas. One thing I
    learned there is that we tend to think of frontier towns as
    full of bandits and land grabbers.
        That place was full of families from across Brazil trying
    to improve their lot in life. I think that observation is still
    relevant today--the need to not demonize the people of the
    Amazon.
        The Amazon is important, as Ranking Member Rooney already
    mentioned, largely because of its role in the global climate
    system.
        There are seven or 8 years' worth of global emissions of
    carbons stored in the trees of the Amazon and if those come
    out--that carbon comes out rapidly it really diminishes the
    likelihood that humanity will avoid catastrophic climate
    change.
        But there is also an effect on global circulation patterns
    through the amount of water that is evaporated from Amazon
    trees. That is enough water, enough conversion of solar energy
    into water vapor to influence global circulation patterns much
    the way an El Nino event--a warming of the east Pacific surface
    waters--shapes rainfall patterns around the world.
        The current situation is dire but not unprecedented.
    Deforestation is up, currently estimated about 6,000 square
    kilometers against a historical average of 20,000 square
    kilometers per year--that average through 2005.
        But it is higher than last year, perhaps 40 or 50 percent,
    and it is certainly a cause for concern. There are a lot of
    fires but as has already been mentioned, this is not an
    unprecedented high year for fires-highest since 2010. And these
    two phenomena are related.
        Many of the fires today are persistent fires in the same
    position. That means burning little patches or large patches of
    felled forests where the trees have been dried for months and
    can now be set fire.
        That means that there is a lot of smoke coming out of the
    Amazon and that is creating tens of thousands of internments
    and respiratory ailments and deaths because of smoke
    inhalation.
        Intact forests--all of the available evidence suggests that
    they are not burning at scale, so forests that have neither
    been logged nor previously burned, and this is very good news.
        It is not a severely dry year, and this is a cause for
    concern. We need to be watching for those forests and make sure
    that if they start to catch fire there are teams on the ground
    ready to spot them and put them out because they are actually
    quite easy to put out--forest fires in intact forests.
        That is part of the Amazon die back scenario referred to by
    the chairman. A big part of that is wildfires basically--well,
    man-made fires escaping into intact forests.
        In 1998, 40,000 square kilometres of forest--standing
    forest caught fire, and once it burns a forest is more likely
    to burn again.
        And that, together with the fact that the Amazon forest
    generates much of its own rainfall come together in this Amazon
    forest die back scenario, and we may be close to the tipping
    point--the minimum--well, the area of deforestation beyond
    which that downward spiral begins.
        Finally, to the U.S. response, I want to call attention to
    what I feel in my many decades--years working in Brazil is a
    frustration--a frustration in the Brazilian government, in
    Brasilia nationally, in State governments, and among farm
    sectors that Brazil has done its part in climate change.
        There was a promise coming out of Copenhagen that there
    would be a robust international mechanism for compensating that
    contribution and that has not come through.
        Of the approximately 7 billion tons of emissions reductions
    achieved through reduced deforestation in the Amazon, about 3
    percent of that has been compensated through Norwegian and
    German contributions to the Amazon fund and direct contracts--
    pay for performance contracts with the States of Mato Grosso
    and Acre in the Amazon region.
        There is, as referred to by Ranking Member Rooney, a very
    high bar for farmers. That has not been always the case. It
    jumped from 50 to 80, back to 50.
        There is a concern among farmers that the legal compliance
    that they are striving to achieve is not recognized. I think we
    are in the middle of a very strong backlash from the farm
    sector because of that failure to recognize how difficult it is
    to comply with the law there.
        I think, moving forward, this is not a time to back out of
    trade agreements. it is a time to stay in trade agreements,
    processes, and send a signal that if Brazil continues its
    historical march toward reducing deforestation there will be
    real benefits.
        We need to monetize those benefits as was done about 11
    years ago nearly by this House.
        I think I am out of time so thank you very much.
        [The prepared statement of Dr. Nepstad follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Sires. Thank you.
        Mr. Millan.

       STATEMENT OF BILL MILLAN, CHIEF CONSERVATION OFFICER AND
         DIRECTOR OF POLICY, INTERNATIONAL CONSERVATION CAUCUS
                               FOUNDATION

        Mr. Millan. Thank you, Mr. Chairman.
        Like the others, I will submit my statement for the record
    and talk briefly extemporaneously on top of that statement.
        Thank you, Mr. Chairman. Thank you, Ranking Member Rooney,
    and other members of the committee.
        When I left diplomatic service I began working in
    conservation, something I have now done for 20 years. I have
    worked for many years in the international programs of the
    Nature Conservancy, which, of course, is very active in Brazil
    and the other countries of that region, and for the last 4
    years at the International Conservation Caucus Foundation,
    which acts as the secretariat for a caucus of members of this
    Congress, about 170 members of the House and Senate who are
    interested in and supportive of U.S. support and activism for
    conservation in the poor countries of the world--the developing
    countries of the world.
        Internationally, ICCF has created similar caucuses in about
    12 foreign countries and we are hoping to grow further in the
    near future.
        We are in Mexico, Colombia, and Peru. We are in nine
    countries of Africa, and we are hoping to expand into Indonesia
    and the Caribbean Island States starting next month.
        With regard to the Amazon, as the other speakers have
    noted, this is by far the world's largest tropical forest.
    About 90 percent of it is rainforest. About 20 percent of the
    original forest is already gone.
        Deforestation often occurs in stages. Where the lumber is
    valuable the loggers will clear cut. Would-be ranchers then
    come in and burn the slash that is left behind in order to
    clear the land for grazing, and later if the soil is suitable
    with modern fertilizers and methods, it may be converted to
    field crops such as soybeans.
        Deforestation is, of course, not unique to Brazil. It has
    also been high in neighboring Paraguay and Bolivia and in
    regions of Peru and Columbia.
        During the period of 1960 to 2010, the population of the
    Amazon Basin rose from 6 million to 25 million persons, many of
    them engaged in agriculture. This has, inevitably, had an
    effect.
        Deforestation of the Amazon in Brazil peaked at around
    2005, as you noted, Mr. Chairman. It subsequently dropped by
    about 70 percent.
        While market forces may have played some role in this
    decline, it was not mirrored in other countries of the Basin,
    which suggests that better enforcement of Brazilian laws which,
    for example, mandated that private landowners had to keep a
    percentage of their Amazon land in forest and which forbade
    intrusions into protected areas--better enforcement of those
    laws was the major cause and better enforcement ultimately
    depends upon political will. It depends upon the top leadership
    of the country taking conservation and good management of
    natural resources seriously.
        People, of course, have a right to develop their natural
    resources and that right is probably clearest when the people
    are poor. Brazil is a modern high-productivity country with a
    population equal to that of France--60 some odd million.
        But the actual total population is 211 million. So Brazil
    has a highly unequal distribution of income and it has a large
    population of poorly educated small farmers and ranchers who
    are eager to take advantage of what they are told is free land
    and better jobs and many large ranchers and farmers eager to
    employ them in defiance of national laws.
        It is especially painful to note that 15 percent of the
    Amazon is reserved by law for Indian tribes and if those laws
    are weakened or not enforced their fate, which is already
    difficult, is likely to get worse.
        The situation of the Brazilian Amazon and neighboring
    countries of the Basin is a complex one that involves balancing
    many competing interests, many of them legitimate.
        It is unlikely to be resolved purely by outside pressures.
    A growth of political will to properly manage their own natural
    resources will be vital.
        Progress over the coming years and decades are most likely
    to be uneven and will sometimes be reversed. But we have to
    try. We have to keep trying.
        U.S. foreign assistance can play an important role in that
    struggle. I recall a study done by my colleagues at the Nature
    Conservancy when I worked there when they said that we needed
    to increase world agricultural production by 100 percent by
    shortly after 2050.
        But to do that by expanding the land under cultivation
    would mean essentially the destruction of the entire natural
    world around the globe.
        But we could do it by raising productivity on existing
    lands. The meaning of this for the Amazon boils down to this.
    Cutting down the Amazon forest is not needed for the future
    agricultural production of the world.
        The existing forest is needed for a host of other benefits
    and we urge the Congress to continue as it has in the past to
    support that goal.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Millan follows:]

        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Sires. Thank you. We will now go to questions. I will
    start by asking: I made a statement before that, from 2004 to
    2012, cattle and soy production in Brazil rose.
        The economy grew. Nearly 30 million Brazilians were lifted
    out of poverty and deforestation rates declined. Can you tell
    me what policies were implemented during that time that were so
    successful?
        Anybody.
        Dr. de Bolle. If I may.
        Mr. Sires. Yes.
        Dr. de Bolle. So the Brazilian government in 2004
    implemented an action plan to reduce deforestation, given that
    it had been on the rise in previous decades.
        This plan was a broad umbrella of many different
    initiatives to fight off deforestation, including through
    monitoring and law enforcement.
        So there was a lot of coordination between two major
    environmental agencies in Brazil: the National Space Agency
    that I have already mentioned and also IBAMA, which is the
    agency responsible for monitoring and for law enforcement.
        These two agencies were working in close cooperation.
    Satellite imagery systems developed with NASA were incorporated
    into these efforts and alongside the monitoring and the law
    enforcement capabilities that were put in place there were also
    other policies.
        So, for example, in 2008, the Brazilian Central Bank
    actually passed a resolution whereby it restricted credit
    greatly to areas where deforestation had been on the rise.
        Rural credit in Brazil is subsidized so a lot of those
    farmers did depend heavily on those credits, and those credits
    were then conditioned on meeting several different
    environmental regulations.
        If these farmers were not in compliance with these
    regulations, they did not get access to the credit.
        There are several academic and empirical studies showing
    that that policy in itself was hugely successful in bringing
    down deforestation in 36 municipalities in the Amazon where
    that had been previously a problem.
        So, the tools, the capabilities, the initiatives--there are
    a number of things that have been tested and tried, some of
    them with great success, some of them perhaps with lesser
    success.
        But, broadly, I would say that Brazil knows what to do.
    There is an issue of political will at the moment.
        Mr. Sires. Yes.
        Dr. Nepstad. Just to add very briefly to that, in our
    summary of those policies that we published in science a few
    years ago, our conclusion is that it was largely a set of
    command and control interventions that were lacking carrots.
        So part of the reason deforestation has been coming up
    beginning in 2012 is that a lot of those measures that were
    referred to my Monica have lost their teeth and there is a lack
    of that positive set of incentives for farmers and State
    governments too that are doing the right thing.
        Mr. Millan. Thank you. I would endorse the comments by
    Monica that it is possible to grow the economy rapidly without
    doing grave damage to the conservation of nature and natural
    resources.
        What it requires is taking a long-term perspective and it
    takes good governance, and a well-managed public authority.
        Mr. Sires. One concern that I have is I see that China is
    now getting involved in buying a lot of the soybean that they
    are not purchasing from us.
        Do you think that is going to make the situation worse
    since now 80 percent of the soybeans made in Brazil basically
    are going to China. Do you think that is going to drive
    deforestation?
        Anybody?
        Dr. Nepstad. I think in the short term, the large-scale
    slaughter of swine in China, because of African fever, is
    really reducing the demand for animal ration but it is
    increasing demand for pork.
        So I think in a few years as that crisis passes there is a
    very high risk that rising demand for soybeans could accelerate
    deforestation.
        A lot of it depends upon whether or not those incentives to
    soy farmers are in place, whether or not the current momentum
    to dismantle the Forest Code that requires 80 percent forest
    cover on soy farms in the Amazon moves forward, and I think
    that will depend upon whether markets give a positive signal
    that they recognize legal compliance with the Forest Code as a
    very high bar of performance on the ground.
        And so I think a lot is in play right now. Brazilian
    farmers have lots of options for markets. But we have to
    remember that a positive market signal including from the U.S.;
    for example, Brazilian beef is seen as a carrot. it is one of
    the carrots that can be mobilized without invoking large flows
    of new finance.
        Mr. Millan. Mr. Chairman, my colleagues on the China desk
    in the old days would not appreciate my bluntness. But I think
    that the massive entry of China into these markets is not a
    good thing.
        We have talked about the importance of good governance. I
    think that as a government the Chinese government simply does
    not take these environmental issues very seriously,
    particularly not when it is outside China.
        So, for example, 10 or 15 years ago they enforced a
    nationwide ban on cutting down any further forest inside China
    and decided to instead cut down in Indonesia.
        Dr. de Bolle. Let me add on, if I may, to my colleagues'
    remarks just to say that the environmental seal for the
    agribusiness sector in Brazil and, in particular, beef but not
    just beef--soybeans as well--has been until recently hugely
    important for exports.
        There is a very large chunk of the sector which is geared
    toward exports and one of the very important roles that the
    international community at large and the United States in
    particular can play is in ensuring that that seal remains as an
    incentive for this sector, or this portion of the sector, to
    continue with its sustainable production practices and thus
    sort of staving off any kind of pressure coming potentially
    from the Chinese.
        Mr. Sires. Thank you.
        Congressman Rooney.
        Mr. Rooney. I would like to thank all three witnesses for
    their testimony. Very thorough.
        I would like to ask Mr. Millan first, and then Dr. Nepstad,
    about the absence of land titles in the Amazon and the economic
    interest of the landowners, being kind of a free enterprise
    kind of guy.
        You know, Mr. Millan mentions that the 70 percent decline
    in deforestation since 2005 may have something to do with
    economic factors and that there is an asymmetry between what
    has happened there, with the decline and enforcement of laws,
    versus what has happened in neighboring countries. I assume you
    mean Paraguay and Bolivia.
        So how does the increase in titling and enforcement of laws
    relate to these statistics and what can that tell us about
    going forward?
        Mr. Millan. Congressman Rooney, I will defer to Monica
    about some of the technical economic aspects here. I think the
    decline of deforestation inside Brazil clearly was driven
    mainly by better enforcement of their laws rather than by
    market factors.
        Across Latin America the lack of clear title to land is a
    terribly grave issue. When I worked at the Nature Conservancy
    we had a program in Bosawas in Nicaragua where we worked for
    five or 6 years and we finally were able to help an Indian
    community there to get what seemed to be a firm title to their
    land.
        I was told laughingly in Guatemala that in the entire
    history of the country only 10 absolute titles to land had ever
    been issued. We are talking about legal systems that function
    very poorly and they are particularly bad at recognizing legal
    title.
        And so the result is that for many people by far the
    easiest way to acquire a large ranch is to steal it, and this
    is a bad thing.
        Some of these countries need to reform their land title
    laws, but then having reformed them they will then need the
    political will to actually carry out the new provision.
        Mr. Rooney. Dr. Nepstad?
        Dr. Nepstad. There has been huge steps forward with law
    enforcement in Brazil under the PPCDAm strategy that Dr. de
    Bolle referred to.
        One of the risks, though, is that in getting to law
    enforcement and one of the fundamental tools of that approach
    is the Rural Environmental Cadastro or Registry--the CAR. Every
    landholder under the new Forest Code of 2012 is required to
    submit their own map of their property. Unfortunately, they
    have come in and there is a lot of overlap. Surprise, surprise.
        But the risk is that in focusing on law enforcement the CAR
    is not a land title. You neglect the very fundamental role of
    land as a guarantee against loans.
        Farmers today in Brazil and the Brazilian Amazon have a
    hard time getting loans with their property as collateral if
    they are mostly forested. Land values increase as forests go
    down.
        So we have this fundamental economic disconnect where if
    you take the EPA social cost of carbon, a hectare of forest,
    that carbon out of the atmosphere is saving the world economy
    $50,000.
        But if I am a landholder and I have that same hectare of
    forest that is worth to me $200, if I clear it, its value
    multiplies by 10, and I cannot use the forest land as
    collateral.
        So I think you have identified a fundamental gap that, as
    we move to--as Brazil moves to a strategy that continues the
    sticks but adds some carrots, getting to land title is a
    crucial piece of that.
        Dr. de Bolle. So I fully agree with Dr. Nepstad's
    assessment and overview of what he has just said about the sort
    of market incentives--economic incentives at play.
        I will just add one thing from the past experience under
    the PPCDAm, the national action plan of 2004. Alongside these
    actions that I mentioned that the Central Bank put in place to
    restrict credit and thereby, you know, just put in place a
    mechanism whereby credit was conditioned to meeting the
    environmental standards that had to be met, there was a clear
    effort to put together a land registry of these areas within
    the Amazon biome.
        So, again, these efforts have been now sort of fallen by
    the wayside. They are things that could, again, be implemented
    and they are things that could, again, be implemented on a much
    larger scale.
        So there is the potential to do these things again and
    there is the potential to achieve the sort of successes that
    were achieved back in the mid-2000's through these policies by
    greatly enlarging what has previously been done.
        Mr. Rooney. Referring to the past policies, it is a pretty
    bad deal when the property value goes up with more
    deforestation. That is kind of working against what we want to
    happen.
        The requirement of 80 percent property staying in
    preservation, first of all, will that be--do you have any
    confidence that will be enforced and will have an impact, and
    if it were impacted how, would that improve that asymmetry
    between value and deforestation?
        Dr. de Bolle. Well, on the 80 percent, the 80 percent has
    over the last few years--correct me if I am wrong--but I think
    over the last few years has already been somewhat softened.
        So, in a way, it is not being enforced as such, including
    because the 80 percent requirement that you do not touch that
    area of your own property to produce and retain its native
    vegetation, is very, very hard to comply with.
        So there has to be something else being done with the
    legislation in agreement overall as to what is best for the
    region in terms of meeting these requirements or even lowering
    these requirements in certain cases.
        As for the current situation, which is that, you know,
    cleared land is worth more than forested land, which basically
    leads to all sorts of speculation as we have been seeing, it is
    a matter of designing the proper regulations and the proper
    incentive structure that makes that equation shift the other
    way.
        So this is what we are looking at. This is what Brazil
    needs. Brazil needs to get the regulations rights so that it
    shifts that balance.
        Mr. Rooney. Thank you.
        Dr. Nepstad. If I could just add to that. Yes, so the 80
    percent is fairly new. Until 1996, 50 percent of the property
    in the Amazon had to remain as forest cover.
        I think one of the most significant actions that could take
    place today would be a public recognition of the importance of
    those private land reserves and recognition of the need to
    compensate farmers who are being asked to forego their legal
    right to clear forests in excess of that 80 percent.
        That is the farmers' current complaint, for example, about
    the Brazilian soy moratorium where 90 percent of the soy buyers
    for the Amazon said that after 2008, if you cleared after that
    date, you cannot--we will not buy your soy grown on that land.
        And the farmers' response is, but wait a minute--I am in
    legal compliance and I have the legal right--what about me. And
    that concern has gotten particularly grave as that same
    approach is under discussion for the Cerrado savanna biome next
    to the Amazon.
        So it is a very big issue.
        Mr. Sires. Thank you.
        Congressman Levin.
        Mr. Levin. Thank you so much, Chairman Sires, for calling
    this really important hearing on short order and getting these
    tremendous witnesses. This is really great and I appreciate all
    of your testimony.
        I want to try to focus on what we can do with U.S. policy
    to be helpful to this very difficult situation.
        Dr. de Bolle, you mention in your testimony that the
    economic benefit of conservation far outweighs the short-term
    gains from cutting down the forest and then setting it ablaze
    after it is been dried out.
        Is there a role for the United States to play in
    encouraging conservation in Brazil and making clear that it is
    more sound economic policy than deforestation? How can we
    really get at that?
        Dr. de Bolle. Well, I think--thank you for that question--I
    think there are a couple of ways. One is through the current
    mechanism that exists, so the Amazon Fund.
        The Amazon Fund is already there. We need to just properly
    redesign--perhaps rethink what its role should be and
    therefore, you know, what kind of financial resources it needs.
    So that kind of financial assistance from the U.S. I think
    would be crucial.
        There are other things in the area of regulation,
    sustainable cattle grazing, land demarcation for indigenous
    lands, and not only that but how do you actually exploit
    indigenous land--some of the things that I have mentioned in my
    oral remarks but are also in my written testimony where the
    U.S. has had ample experience and where that experience can
    certainly be transferred to Brazil.
        So there is a lot of room for technical cooperation on a
    number of these issues.
        Mr. Levin. OK. Great. Let's talk about one area of our
    relations, so just trade. Both President Trump and President
    Bolsonaro seem interested in growing the trade relationship
    between the U.S. and Brazil.
        So how should the U.S. insist on strong environmental
    commitments from Brazil before expanding trade between our
    countries?
        For example, last month BBC reported that Brazil had
    seriously relaxed its enforcement of environmental laws that
    are already on the books.
        And I am quoting here from the BBC account: ``Official data
    from Brazil's environmental agency shows that fines from
    January to the 23d of August dropped almost a third compared
    with the same period of last year, and at the same time the
    number of fires burning in Brazil have increased by 84
    percent,'' and as you all testified, the highest since 2010.
        And I have heard direct testimony from people there saying,
    hey, it is the Wild West now--the president, obviously, is
    giving us the green light to go ahead here.
        So how can the U.S. demand that Brazil commit to stricter
    enforcement of the environmental laws already there and any
    other ideas you all have to how we should use our trading
    relationship with Brazil to preserve the Amazon?
        Dr. de Bolle. Well, I think the U.S. should use its
    leverage on that front. The Brazilian government is greatly
    interested in pursuing some of bigger trade agreement with the
    U.S.
        Whether that becomes an actual, you know, free trade
    agreement or not, that is years in the making. But, certainly,
    closer trade relations, and those closer trade relations, that
    conversation in itself can be used for the U.S. to leverage and
    try to enforce some of these that are not being met.
        So that can certainly be achieved through negotiations,
    which the Brazilian government is very much open to at this
    point.
        Dr. Nepstad. I would just add that I think we are in a very
    volatile time in Brazil where unilateral actions that threaten
    market retaliations, restrictions to trade--I believe they will
    backfire.
        I think it is time for sitting down at the table and
    saying--you know, recognizing that managing a continental-size
    force like the Amazon is a phenomenal task.
        it is very expensive. Brazil did what no one thought was
    possible and now it is time to recognize that and say how we
    can help.
        Part of this is that Brazil is 109th on the ease of doing
    business ranking of the World Bank and the Amazon is much worse
    than that. it is really hard to do investments, to do
    enterprise in the Amazon.
        I think the U.S. has a lot to offer in that sort of
    collaboration through the GDA and other mechanisms of the
    USAID.
        But I think this collaborative approach that says listen,
    we will open to whatever--Amazon beef--if these conditions are
    in place and we see some progress.
        What Norway did in the Amazon Fund is say, you build the
    system--if deforestation comes down the payments will flow, and
    a billion dollars later--a little more than a billion dollars
    later--you know, I think that was a very positive thing to do.
        The way it was structured was probably not right. That
    money did not make it to middle and large-scale farmers; for
    example, and they are wondering why they have been left out.
    So, in short, collaboration, keep the negotiations going and
    weave the conditions into that.
        Mr. Levin. Thank you. My time has expired. But I would just
    observe, Mr. Chairman, that the investment we need to make to
    tackle the grave, grave crisis of climate change for the United
    States, and the world, is so immense it seems that this would
    be penny wise and pound foolish not to work with Brazil very
    intensively on the efforts that our panellists are suggesting.
        Thank you very much.
        Mr. Sires. Thank you, Congressman.
        Congressman Ted Yoho.
        Mr. Yoho. Thank you, Mr. Chairman. And I look forward to
    finding a way forward with what Brazil wants to do with their
    natural resources to find what they want to do with their
    natural resources that is compatible with, I guess, world
    standards.
        How successful are the bans on crops on deforested land by
    other countries have you seen?
        Dr. Nepstad, you were talking about that. what is your
    experience? You have been down in the Amazon a long time.
        Dr. Nepstad. You know, when threats come from the EU, the
    first response is, oh, this is protectionism and they are
    protecting their own markets and that point was made abundantly
    about President Macron's threat to pull out of the EU Mercosur
    trade agreement.
        We have to remember that 60 percent of agricultural exports
    from Brazil go to Asia, and China, as already mentioned, is the
    biggest supporter, and currently Asian markets are not
    demanding sustainability or deforestation-free sourcing.
        And so I think that Asia will move in that direction. Xi
    Jinping is keenly interested in solving climate change and
    keenly interested in investing in the Amazon.
        So something like the Ferrograo railroad is something that
    could buy good will in Brazil, give soy farmers a big break in
    transport if it is structured right, and everyone comes up
    winning.
        Mr. Yoho. I wish I had your confidence on Xi Jinping. I am
    more in line with Mr. Millan.
        In Brazil, we know they are the largest cattle exporter in
    the world. But yet, between 1990 and 2018 Brazil beef
    production increased 139 percent while the areas of cattle
    grazing decreased 15 percent.
        And if you look at it in America, we are producing a third
    more beef with a third less of the land that we use. And
    knowing that, best management practices on our farmlands--we
    know that grasslands, according to a study in UC Davis that is
    titled ``Grasslands More Reliable Carbon Sinks Than Trees.''
        And I am not implying they are more efficient, but they
    store their carbon underground along with other things like
    nitrogens and sulphur and things like that, that when a forest
    burns that is not released into the atmosphere. So, therefore,
    it is sequestered more securely.
        With the best practice management, those are things that I
    think there is a tradeoff. So if you cut down 100 acres of
    rainforest, which is a shame because We have all been there and
    seen that and we know what that biodiversity gives to the world
    and the National Geographic specials, we can offset that by a
    certain amount of rangeland. Would that be true?
        Dr. Nepstad. I think there is tremendous scope for
    improvements in the productivity of cattle, especially in the
    Amazon. You know, 50 kilos of beef per hectare per year is not
    an efficient system.
        And as you say, beef production in--outside of the Amazon
    in Brazil is growing on a shrinking area of pasture. I think
    the net balance on greenhouse gases because of enteric
    fermentation is this very serious issue that can be partially
    compensated by good grazing, partly----
        Mr. Yoho. Let me go back to something that the EPA said.
    The U.S. EPA estimates that direct emissions from the U.S. beef
    industry are only 1.9 percent of the total U.S. greenhouse gas
    emissions.
        So I know there is a lot of emphasis on beef cattle as far
    as greenhouse gas emissions. But I think it is maybe not
    accurate as it could be, and I think we need to look at that
    because for sustainability of protein and food sources we have
    to have that kind of juggling of which is the best way to go.
        And with the world population growing stronger or, you
    know, going to, you know, 9 billion to 10 billion, we have to
    have sustainable agricultural practices, and it goes back to
    best managed practices or practices that we do.
        Going back to the deforestation, there has to be a market
    for those trees--you know, where that lumber is going. What
    country is the biggest importer of illegal deforested areas?
    Does anybody----
        Mr. Millan. Well, the largest market for illegally
    harvested wood is China. Has been for 20 years.
        Mr. Yoho. I was going to say I think it is a five-letter
    name with a C and an A in it.
        Mr. Millan. Oh, yes. Yes. But I do not know if any of it to
    speak of comes from Brazil. Perhaps one of my colleagues has
    better information than I do. A lot of it comes from----
        Mr. Yoho. Dr. de Bolle?
        Mr. Millan [continuing]. Comes from Malaysia. It comes from
    Indonesia. It comes from Burma. It comes from Madagascar or
    Mozambique. But I had not heard about Brazil.
        Dr. de Bolle. Well, I have not either so I have no direct
    answer to that. But one thing that I will say about what
    happens to the trees that are cut down, in order to be able to
    clear the land for pastures--this is a rainforest that we are
    talking about so you need to dry out the rainforest first.
        Mr. Yoho. Right.
        Dr. de Bolle. So the way that that is done is that the
    trees are cut. So the trunks go dry and then after you do that
    you set it ablaze.
        So to a large extent, we are talking about logging
    activities that, yes, take place. Probably some of that goes,
    you know, to the region itself.
        Brazil is a big country so a lot of it probably goes into
    the construction sector in Brazil. it is all very opaque so we
    do not have the data on that to say something, you know.
        Mr. Yoho. Right.
        Dr. de Bolle. But I would say that most of it probably is
    internal and goes to the internal construction sector, and the
    rest of it is just wasted and it is just meant to clear land.
        Mr. Yoho. Right. Thank you. I yield back, Mr. Chairman.
    Thank you.
        Mr. Sires. Congressman Phillips.
        Mr. Phillips. Thank you, Mr. Chairman and Ranking Member
    Rooney and to each of you, our witnesses. Grateful for your
    time today.
        I am hoping to connect some dots, just starting with some
    yes and no questions. The primary drivers of deforestation in
    the Amazon are cattle ranching, logging, and large-scale
    agriculture.
        Is that correct? Each of you. Yes or no answers, if you
    could.
        Mr. Millan. Yes, absolutely.
        Dr. de Bolle. Yes.
        Mr. Millan. President Bolsonaro, before he was elected,
    made statements concerning his intent to pursue development in
    the region. Is that correct?
        Dr. de Bolle. Yes.
        Mr. Millan. Yes.
        Mr. Phillips. Before his election, President Bolsonaro also
    repeatedly pledged to relax environmental regulations and the
    environment, and open up indigenous territories and protected
    areas to mining, agriculture, and large-scale energy projects.
    Is that correct?
        Dr. de Bolle. Yes.
        Dr. Nepstad. Yes.
        Mr. Millan. Yes.
        Mr. Phillips. So do you believe it is a coincidence that
    President Bolsonaro was elected last year with the support of
    Brazil's powerful agriculture lobby? Coincidence or no?
        Mr. Millan. I have not seen any polling data one way or the
    other. I really cannot say that definitively.
        Mr. Phillips. Doctor?
        Dr. Nepstad. He was supported by the farm sector. Yes,
    certainly.
        Dr. de Bolle. He was supported by the farm sector. I,
    however, think that the farm sector now, at least a portion of
    the farm sector, and we have seen that happen, is quite aware--
    keenly aware--that they will lose their international standing
    and they will lose their green seal, so to speak, if they
    continue to support the kind of measures that Bolsonaro has
    been putting in place.
        So they are a potential political force in Brazil that can
    be exploited to produce the results that we would like to see
    in terms of, you know, the environmental scale back that we
    have seen under Bolsonaro.
        Mr. Phillips. And, Doctor, can you talk about any efforts
    to that end that might exist right now?
        Dr. de Bolle. So there have been a few. it is not a lot of
    voices as of the moment but there have been a few important
    agribusiness people, in particular one who was a former
    agricultural minister and is one of the largest soybean growers
    in Brazil, Mr. Blairo Maggi, who has made some very important
    remarks regarding how hurtful the scaling back of environmental
    regulations has been so far for Brazil and the potential that
    that could be even more hurtful down the road.
        So there have been voices like that, which are important
    not just from the productive sector side but from the political
    side as well because there are voices that have been in
    government that are starting to see that this can be hugely
    detrimental to their own interests.
        Mr. Phillips. Thank you, Doctor.
        Mr. Millan, we know there are indigenous and local
    communities in Brazil that are living and working sustainable
    in the forest.
        You spoke of laws in place in these communities. Can you
    expand on the current enforcement of these very laws?
        Mr. Millan. My direct experience of the programs there is
    now some years in the past and so I would not want to try to
    comment on the details of recent changes.
        Brazil has hundreds of separate Indian tribes, most of
    which speak a unique language and many of which do not have a
    single member of the tribe who has graduated from the
    equivalent of high school. So these are intensely vulnerable
    communities that desperately need outside help to organize and
    defend their rights.
        Theoretically, under the law they have a lot of rights. But
    actually making them effective against the pressure of illegal
    miners and other invaders of their territory for agriculture or
    otherwise is and has been terribly difficult.
        Mr. Phillips. And the organizations at the forefront of
    assisting them in that effort?
        Mr. Millan. My colleagues?
        Dr. Nepstad. You know, groups like Instituto Socioambiental
    I think are very concerned with the wave of impunity I think
    that is present in the Amazon right now, an impunity growing
    out of frustration for the lack of positive incentives and
    recognition for past efforts and successes.
        So it is a very volatile moment and there are signs that
    deforestation patches are increasing within protected areas and
    indigenous territories.
        Mr. Phillips. OK. President Trump has characterized
    President Bolsonaro as, quote, ``a like-minded leader,'' end
    quote.
        he has announced several agreements to bolster economic and
    security ties with Brazil and also opposed the aid package
    course for the fires during the G-7 and instead publicly
    praised Bolsonaro for, quote, ``working very hard on the Amazon
    fires and in all respects doing a great job for the people of
    Brazil,'' end quote.
        Do you believe, each of you, considering these statements
    that President Trump is helping or hurting the crisis unfolding
    in the Amazon? Helping or hurting?
        Dr. de Bolle. At the moment, not helping.
        Mr. Phillips. Doctor?
        Dr. Nepstad. I think that is--I sense that you want really
    fast questions and I think there is a lot of nuance to this
    question.
        As I said before, I think unilateral sort of threats of
    retaliation against Brazil right now could backfire and I do
    not support a lot of what is going on in Brazil right now.
        But I do know the roots of it and I think a positive signal
    on trade from the United States, for example, could go a long
    way.
        Mr. Phillips. Thank you, Doctor. And Mr. Millan?
        Mr. Millan. And I would suggest that as we go forward on
    these issues, which, as I commented in my remarks, are
    difficult and complex, and they involve not just legitimate
    interests against illegitimate ones but direct competitions
    between interests that are inherently legitimate in and of
    themselves.
        These are terribly difficult issues that are going to be--
    are not going to be resolved this year or next year or in 5
    years.
        I think that to the extent that private groups can be
    involved not only as investors but also as consumers and as
    associations of consumers, you see this a lot in Europe and you
    see it to a certain extent here already in the United States.
        That brings another interesting player to the table because
    now it is not just a big country appearing to bully a
    developing world country; it is groups of hundreds of thousands
    or potentially millions of consumers saying, we will not buy
    your stuff if you do bad things in order to create it.
        And striking that balance, of course, is always going to be
    complicated. But I think that sort of action has a lot of
    potential.
        Mr. Phillips. Thank you, all. I yield back.
        Mr. Sires. Thank you.
        Congressman Castro.
        Mr. Castro. Thank you, Chairman. And I apologize that I
    came in late and missed some of the conversation. I was at
    another meeting. But I think everybody would agree that the
    Amazon forest is important to the health of the region and the
    health of the world.
        And I guess my question is in your own assessment how
    strong are the efforts of Bolsonaro's government to protect the
    Amazon? Do you believe that he and his administration are doing
    everything they can to protect the Amazon?
        Dr. de Bolle. As I submitted in my written testimony and as
    I mentioned in my oral remarks, the answer to that is no. He
    has scaled back the capabilities of the environmental agencies
    in Brazil.
        He has scaled back monitoring efforts. He has scaled back
    law enforcement. He has spoken specifically about, you know,
    using the Amazon's resources and not necessarily in a
    sustainable way. He has not underscored sustainability in any
    of his remarks.
        So that really has emboldened a lot of predatory behavior
    in the rainforest more recently. Does he have the tools to do
    what he needs to do?
        Does he have the capabilities within these agencies and
    within ministries in Brazil and also going from past experience
    in Brazil in terms of what has been done? The answer to that is
    yes. But the ultimate question here is a question of political
    will.
        Mr. Castro. Sure. Do either of you significantly disagree
    with that answer? Or let me ask it this way. Do you believe
    that he has doing and his administration are doing what they
    should to protect the Amazon?
        Dr. Nepstad. I think more can be done, certainly. I think
    there are threats. I would agree with Dr. de Bolle on that, and
    there is been some scaling back.
        I think Minister Tereza Cristina is in a pivotal position
    right now. Under her ministry there will be the climate change
    agenda.
        Brazil is sitting on these billions of tons of emissions
    reductions that have never been monetized. I think just sending
    the signal that some of those emissions reductions are going to
    be worth something would be hugely, hugely influential right
    now.
        And so I feel like Brazil is poised for some positive
    signals from the United States that what they have done
    historically is recognized and we are moving into a new phase
    that is more about incentives than about punishment.
        Mr. Castro. Sir?
        Mr. Millan. I would not take issue with the comments of my
    colleagues and I would particularly recognize the value of Dr.
    Nepstad's comment just now about the potential value of the
    stored carbon and the avoided emissions.
        One of the difficulties of trying to value these intact
    forest is that the benefits to the extent that they are real,
    and they are real, are global. But the costs of not developing
    are often perceived as local.
        Mr. Castro. Sure.
        Mr. Millan. And so the world needs to find better ways to
    monetize that global value so that some of the benefits flow
    through to local people and local institutions. If that can be
    done, you would then create a powerful local incentive not to
    cut down the forest.
        Mr. Castro. OK. Part of the reason that I asked that
    question is because I do not believe that the government there
    is doing everything they can to protect the Amazon.
        I also do not have confidence in President Bolsonaro's
    administration right now because he has demonstrated very
    erratic behavior: turning down that money from France, getting
    into a fight with the French president about comments that were
    made about the French president's wife.
        So what leverage do concerned nations have to make sure
    that the Amazon is protected? Those could be carrots or those
    could be sticks.
        So I ask you in the array of carrots and sticks, what do
    you recommend? I know you just spoke on the emissions issue. Is
    there something else?
        Dr. Nepstad. California Air Resources Board on the 19th of
    September will vote upon the tropical forest standard.
        Under construction for 10 years, it would be a way of
    recognizing the role of State governments in the Brazilian
    Amazon and their role in reducing deforestation.
        That sort of thing will send a very positive signal to
    those States. They were part of the construction of that
    standard and that will make it easier for them to attract
    investors including climate finance.
        So I think there are a lot of things that could happen that
    provide those signals to Brazil that we are moving into an era
    of collaboration. Agribusiness--you know, Bolsonaro threatened
    to pull out of the Paris Agreement.
        He did not do it because he heard from his own constituents
    that that was a bad idea. He was going to eliminate the
    Ministry of Environment. He did not do it because his own----
        Mr. Castro. Well, he has not done it in year one, right? Or
    year two. You know, he has got more years----
        Dr. Nepstad. Well, I think he has been very loud and clear
    as referred to by Dr. de Bolle that his own constituents are
    saying, wait a minute--we want the forest agenda intact because
    otherwise we are going to lose a lot of markets. We are going
    to lose a lot of investors.
        So I think that is really the way forward. You know, what
    could the U.S. Government do to create a robust mechanism for
    compensating emissions reductions? You know, it does not seem
    very viable in the current political environment.
        But that, in the end, I think is what is going to happen.
    You know, that is going to grow. There are 30 companies in
    California right now that want to become climate neutral and
    they want tropical forest offsets.
        Those will be voluntary in the first step. Eventually we
    will need regulated markets to give that whole endeavor greater
    volume and greater scale.
        Mr. Castro. My time is up. I know that she had wanted to
    make one comment.
        Dr. de Bolle. Just wanted to add one thing. On
    environmental compensation, which is a key incentive, this is
    contemplated under Brazil's 2012 Forest Code. It just is
    lacking in regulation.
        So it has not properly been regulated. So that is one thing
    that should advance, and collaboration with some moral suasion
    could go a long way toward getting that done.
        And second, once you do have that mechanism working, a lot
    of the financial resources could come from a much enlarged
    Amazon Fund. So just to get that point in.
        Mr. Castro. Thank you.
        Mr. Sires. Thank you.
        Congressman Vargas.
        Mr. Vargas. Thank you very much, Mr. Chairman, and I thank
    the ranking member for the opportunity.
        When I was in law school I had a great professor named
    Abram Chayes, and Abram Chayes was one of the best and
    brightest. He was one of Kennedy's guys in the State
    Department, and I took a class with him called International
    Environmental Law, and this is back when we were really worried
    about the ozone layers at the Poles, as we should have been and
    continue to be worried about.
        And anyway, he was just a master professor, and at one
    point he told this story and he said there is a person that
    lives in the Amazon and this gentleman has a gigantic tree in
    his front yard and it is a thousand years old and it is
    hundreds of feet tall and is absolutely magnificent.
        It does everything a tree ought to do for oxygen. So what
    should that gentleman do as an environmentalist? And, you know,
    of course, having had him for a couple other classes and
    knowing that he was a very progressive thinker we thought,
    well, you know, preserve the trees.
        He goes, no, he ought to cut it down and make it into
    lumber, because being an environmentalist first means feeding
    his family. He goes, but, of course, that is the wrong result.
        He goes, that is the absolutely wrong result. We ought to
    pay him for his tree so he does not cut down the tree because
    we are the ones in the developed world--that We have already
    done so much damage to the environment we ought to pay him for
    his tree.
        And, you know, there is a lot to that, I think. I mean, we
    should participate in a much stronger way in making sure that
    this forest does not get destroyed because it does benefit all
    of us.
        We do not want to see that magnificent tree cut down. In
    fact, we do not want to see any of them. I have had the
    opportunity to go to the Amazon before and one of the things
    that is the most amazing to me, and I wish young people would
    understand this, when you have clear cutting, when you have
    burning, all that is terrible.
        But the worst terror out there is when they burn the forest
    to plant cocaine, because when they do that often times you get
    this moss, and this moss does not allow the trees to pop
    through it.
        We went over and actually stopped in some places where they
    had grown cocaine 20 years ago and the forest had not popped
    through yet because of the thickness of the awful moss. It was
    unbelievable.
        But anyway, I think what is going on there right now is
    reprehensible and we have to have more of a hand in working
    this out as a global community.
        Doctor, I would like to ask you about that. I mean, you
    know, what about this thought? I mean, you know, Dr. Nepstad
    said that, you know, there are these other companies that are
    involved and California wants to be, you know, neutral in the
    sense of its climate impact.
        I mean, shouldn't we be more aggressive doing this?
        Dr. de Bolle. Well, certainly. But I think the way that--
    and I will echo something that Dr. Nepstad made here on a
    number of occasions, which I think is crucial--the way I think
    to work this issue out, even though what is being done right
    now by the Bolsonaro administration is reprehensible----
        Mr. Vargas. It is reprehensible.
        Ms. de Bolle [continuing]. The way to work it out is
    through collaboration.
        Mr. Vargas. Yes.
        Dr. de Bolle. So it cannot be through sort of hand
    wringing. It cannot be through an approach where, you know,
    another government--any government--I mean, we saw that
    backfire greatly with France--it cannot be through another
    government trying to impose its views on a sovereign nation,
    which is the case of Brazil.
        So there is great scope right now for collaboration between
    Brazil and the U.S. And so what I think our role should be is
    putting pressure so that collaboration actually materializes.
    that is how I see it.
        Mr. Vargas. And I agree, and how do we do that then? How do
    we do that?
        Mr. Millan. Well, we need to find better ways of bringing
    together the long-term interests of the globe, including our
    own country, and the short-term interest of the developing
    world countries and the mainly poor people who live in their
    rural areas.
        Your story about the tree reminds me of something that
    happened here in the United States about 10 or 15 years ago.
    There was a forest researcher who was working in the
    bristlecone pines up in the Sierra Nevada Mountains of
    California.
        And he drilled a hole in an ancient tree in order to count
    the tree rings and his drill bit got stuck, and he asked
    permission of the forest rangers, which they rather stupidly
    gave him, and then he cut down the bristlecone pine tree in
    order to retrieve his drill bit.
        So he cut down a 4,000-year-old tree in order to retrieve a
    $20 drill bit. I guess the essence of this is that it is not
    just Brazilian farmers who----
        [Laughter.]
        Mr. Vargas. Yes. I agree that was absolutely a terrible
    thing to do. But, again, I appreciate--we do have to be more
    firm, I believe, in what is happening in the Amazon is
    reprehensible.
        And I hope the people that do use drugs also understand the
    damage they do to the forest because I know we just blame
    farmers, we blame--it is also people that use cocaine.
        I mean, I was absolutely shocked when I saw the damage that
    cocaine has done to the Amazon and our young people and maybe
    not so young people that use cocaine also are damaging the
    Amazon, damaging the air that we breathe.
        Mr. Chairman, I know my time has expired. I yield back.
        Mr. Sires. Thank you.
        We just have a couple more questions. I am curious about
    something. How large is the U.S. business investment in the
    Amazon--American business people? Is it a large portion? Are
    they very involved?
        Do we have--I am trying to get at the fact that maybe
    through the U.S. business people we can encourage these people
    to do some good things.
        Dr. Nepstad. Yes, I will take a shot at that.
        You know, currently, the Amazon is seen as one of the most
    risky investments around in the Americas, at least, and it is--
    I mentioned the ease of doing business index but it is more
    than that.
        If you do business in the Amazon there is a good chance
    that you're going to get attacked, and there is a lot of
    efforts right now by advocacy campaigns' campaigners to do
    that--to create reputational risk for your association with
    deforestation.
        And I think that those campaigns have been very important.
    they have brought companies and investors to the table, to
    accountability.
        So we have all of these companies and investors ready to do
    something and the question is how to create those safe pathways
    to invest, to partner with those local farm sectors and
    governments.
        And so I think the concept of these really safe zones--if
    you have got a Mato Grosso that is offered to reduce emissions
    by 4 billion tons by 2030, which is true--announced in Paris--
    let's rally around that government and those farm sectors and
    make sure that we have a development model in place for that
    gigantic State, which is Brazil's biggest soy producer, biggest
    cattle producer, so that they can win.
        And that is what is missing right now. We have an
    environment where the responsible investors in companies back
    away and there are plenty of U.S.--plenty of U.S. money and
    companies working in the Amazon.
        But right now it is a sense of how do we do it without
    getting blasted or without, you know, becoming a headline? And
    so I think we need to make those safe pathways.
        Dr. de Bolle. Let me just add to that by saying that
    without the Federal Government's involvement and without a
    clear strategy by the Federal Government that completely goes
    back on our or backtracks on what they have been doing so far,
    it is very hard to see a scenario like that actually
    materializing.
        So the potential is there. But, again, I come back to my
    basic point. You need the political will of the Federal
    Government to be able to get these initiatives going.
        Mr. Millan. I would agree with that.
        Mr. Sires. Thank you.
        My colleague now has a question.
        Mr. Rooney. I will ask one more. I mean, there is been a
    lot of facets or matrices put on the idea of solving the
    asymmetries of what is positive but what is not positive, and
    Congressman Castro's carrots and sticks was one analogy you
    just talked about--Mato Grosso, and we talked about some of the
    asymmetry of a guy that makes more money by tearing up the land
    and deforesting it than he ever wood keeping it.
        So I guess I got to thinking, when Ted Yoho mentioned about
    ag, is there any--let me go back to Mr. Millan's comment here
    in his testimony that you cannot--basically you cannot meet the
    needs of the world's food by continuing to plow up more land.
    We have to have higher productivity. Is that right?
        Mr. Millan. Sir, I do not think I said that. If I did, I
    erred.
        Mr. Rooney. Raising the production of existing lands.
        Mr. Millan. Yes. In other words, we need to raise the
    production of existing lands a lot.
        Mr. Rooney. Right.
        Mr. Millan. And if we do that, we do not need to cut down
    the forests.
        Mr. Rooney. that is what I meant. that is exactly right.
        Mr. Millan. that is the keeper. Yes.
        Mr. Rooney. And that gets you to--leads you to things like
    maybe different crops. You know, when Yoho's talking about how
    many hectares it takes to make a certain quantity of beef,
    well, that is a lot less in Mato Grosso.
        it is a lot less in Oklahoma or Texas than it is in the
    Amazon. The Amazon's a terrible place to grow beef and there is
    other crops like that. I cannot imagine growing soybeans in the
    Amazon.
        But what--are there other things that can be done in the
    spirit of positive replacement of opportunity that would be
    better that we do not know about?
        Dr. Nepstad. there is tremendous interest in the Amazon
    today and in the national government for fish--increasing fish
    production. That is managed wild fisheries of the Amazon flood
    plain.
        These are community-based management systems and fish
    farming. And so you have a place like Rondonia State is
    exploding with fish production and it needs technical support.
        It needs markets. It needs international markets. But that
    for me is getting back to the traditional cuisine of the
    Amazon. The Amazonians traditionally eat fish protein----
        Mr. Rooney. Pirarucu.
        Dr. Nepstad. I'm sorry?
        Mr. Rooney. Pirarucu looks like tarpon.
        Dr. Nepstad. Pirarucu, you can buy in Whole Foods around
    here.
        Mr. Rooney. Looks like a tarpon, tastes like a snapper.
        Dr. Nepstad. And so there is all of these amazing recipes,
    culinary--but just high volumes of high quality fish, and the
    great thing is farmers want it large scale. Soy farmers want
    it. Small-scale farmers want it.
        Some indigenous communities are doing fish farming and it
    is the sort of thing where you got 20 percent--20 times more
    production per hectare than beef and it is not excluding
    anyone. it is giving them supplemental income.
        I think that is an example of the sort of thing that could
    move forward very rapidly and be a win-win as a development
    agenda.
        Mr. Rooney. Great.
        Mr. Millan. A U.S. foreign assistance program, which
    married titling of land for rural farmers, raising productivity
    of that land through the use of hybrid crops and modern
    fertilizers and insecticides, could have tremendous relevance
    to 20 or 30 countries around the world, not just to Brazil.
        It had enormous potential, and one way or another something
    similar is going to be done or else they are going to cut down
    all the forests.
        Dr. de Bolle. Just coming back to my point on political
    will, this is exactly where we can get political will because
    these sorts of sustainable fish farming activities and things
    of that--and other sustainable farming activities that may
    happen in the Amazon or that are currently happening in the
    Amazon would serve toward reducing poverty rates and inequality
    rates.
        I mean, we are talking about a region of the country where
    inequality and poverty are at their highest. These are the most
    naturally rich in resources States of Brazil.
        But they are also the most impoverished. So there should be
    great political will just from that fact alone.
        Mr. Rooney. Thank you.
        Mr. Sires. Well, thank you all for being here today for
    this important hearing. I urge my colleagues to remain focused
    on what is happening in the Amazon.
        I hope this hearing will be the beginning of an ongoing
    conversation about how the U.S. Congress can help preserve the
    Amazon rainforest for generations to come. I thank the
    witnesses and all the members who have been here today.
        With that, the committee is adjourned.
        [Whereupon, at 11:20 a.m., the committee was adjourned.]

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