Latin American Countries Aim to Curb Amazon Deforestation
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Latin American Countries Aim to Curb Amazon Deforestation

Brazil’s president hosts regional leaders as rainforest risks losing ability to help offset climate change

By SAMANTHA PEARSON
Thu, Aug 10, 2023 8:00amGrey Clock 4 min

SÃO PAULO—The Latin American countries that share the Amazon rainforest embarked on a two-day meeting Tuesday in the Brazilian jungle city of Belém with an aim to halt the deforestation that many scientists blame for accelerating climate change.

Brazil, home to 60% of the world’s biggest rainforest, held a meeting for presidents and top officials from countries that are home to the rest of the Amazon: Peru, Colombia, Bolivia, Venezuela, Ecuador, Guyana and Suriname. The summit is the first in 14 years for the Amazon Cooperation Treaty Organization, a group that arose from a treaty Amazonian nations signed in 1978 to promote harmonious development of the region. France, which oversees French Guiana on South America’s northeast shoulder, was represented by the French ambassador in Brasília.

The meeting comes as Brazilian President Luiz Inácio Lula da Silva seeks to position his country as a leading voice in the global fight against deforestation, and facilitator of cross-border environmental cooperation on the continent through the 45-year-old treaty.

“It’s never been more urgent to resume and widen this cooperation—it’s the challenge of our era,” said da Silva in his opening speech Tuesday.

Other countries with large tropical forests, such as Indonesia, Republic of Congo and the Democratic Republic of Congo, were expected to join the meeting along with Norway and Germany, which contribute to deforestation programs. The United Arab Emirates, which will host this year’s United Nations climate summit in Dubai, was also to attend.

Twice the size of India, the Amazon rainforest has long absorbed more carbon than it releases, acting as a vital brake on global climate change. But with close to 20% of the original forest now gone, scientists tracking the forest say the Amazon could be close to its so-called irreversible tipping point, at which it would dry out and eventually become savanna. The effects could be global. Climate scientists have blamed forest loss for contributing to global warming, which the U.S. Environmental Protection Agency has said explains why heat waves in countries such as the U.S. are becoming more common.

Deforestation in Brazil’s Amazon has hit its lowest level in four years since da Silva’s administration started in January, dropping about 34% in the first six months of this year compared with the same period last year, according to preliminary data from Brazil’s National Institute of Space Research, known as INPE. While da Silva has vowed to bring jungle destruction down to zero by 2030, he has argued that this can’t be done at the cost of the livelihoods of the some 30 million people who live in Brazil’s Amazon.

Instead, Brazil must build a new green economy in the Amazon with financing and investment from abroad, da Silva argues, as well as develop a regulated carbon market. Brazil relies on foreign donations to help operate its underfunded environmental enforcement agencies, which use helicopters, drones and other equipment to monitor illegal deforestation across the vast area.

“What we want is to tell the world what we’re going to do with our forests and what the world has to do to help us,” da Silva said in a government statement. Da Silva said he plans to pressure wealthy nations to fulfil the pledge they made during the 2015 Paris climate accord to provide $100 billion a year to help developing countries fight climate change.

Other Latin American countries, including Colombia and Peru, have set deforestation targets but face serious challenges from illegal mining and drug gangs that have tightened their grip over the forest in what the U.N. recently referred to as “narco-deforestation.”

Tackling deforestation is one of the most urgent tasks facing South America, scientists say.

Heavily-deforested parts of the Amazon’s southeastern region have already ceased to function as a carbon absorber and are now a carbon source, according to a study published in 2021 by Luciana Gatti, a researcher for INPE, which uses satellites to track deforestation.

The Amazon rainforest influences weather patterns around the world and as deforestation advances, this could make extreme weather events more common, said Daniel Nepstad, who heads the California-based Earth Innovation Institute and has worked in the Amazon for more than 30 years.

“The forest is a global air-conditioning unit…an enormous heat processing machine that influences weather around the world,” said Nepstad, adding that the willingness of all leaders to meet to discuss the issue was in itself a “hugely positive outcome.”

Deadly heat waves have upended daily life in large parts of the U.S., Europe and Asia this year, while unusually high temperatures in South America’s winter have melted snow in the Andes mountains.

Regional coordination is vital, environmentalists say. Deep in the Amazon, where indigenous communities often straddle borders and loggers and criminal groups move freely, one country’s efforts can easily be rendered ineffective by those of its neighbour.

Such a summit seemed a distant possibility just a year ago, when da Silva’s right-wing predecessor Jair Bolsonaro was president. Bolsonaro, who jokingly referred to himself as “Captain Chainsaw,” cut funding for environmental enforcement and bristled at attempts from foreign countries to influence his stewardship of the Amazon even as he called on them to fund deforestation efforts.

Under the conservative leader, a swath of forest bigger than Vermont was destroyed in four years, according to INPE data.

Da Silva’s election in October last year put much of South America in the hands of a group of loosely allied leftist leaders, easing regional talks on an issue, the Amazon, that had never resulted in tangible cooperation, political scientists said.

Points of conflict, to be sure, exist among the countries participating in the Belém summit.

While da Silva has mulled plans to develop offshore oil finds near the mouth of the Amazon River to help lower domestic fuel costs, his Colombian counterpart, Gustavo Petro, called last month for all new oil developments to be blocked in the region.

“As heads of state, we must assure the end of new oil and gas exploration in the Amazon,” Petro wrote last month in the Miami Herald. “We must exhibit courage, even as we address fundamental social issues within our countries, exacerbated by a cost of living crisis and rampant inflation.”

Marcio Astrini, who heads a coalition of environmental groups called the Brazilian Climate Observatory, said Amazonian countries are likely to find common ground on the need to protect indigenous communities, combat crime at the borders and support scientific research to better understand the forest.

“These countries are in different political situations…but they all found space in their agendas to agree to this and get together to discuss these sensitive issues,” said Astrini.

The biggest point they have in common, though, is their desire to get richer nations to help pay for all of this, said Astrini.

“Show me the money—that’s one thing they’ll all be saying in unison,” he said.



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The Stock Market’s Breezy Summer Is Over. Investors Beware.

Investors are bracing for a bumpier fall stock market due to shifting odds of a Federal Reserve interest-rate increase and other macro challenges.

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The stock market had a decent summer. Investors are bracing for a bumpier fall.

In the past couple of months, equity investors cheered soaring profits at big companies, shrugged off jitters in the bond market and nudged megacap tech shares back near records.

Now, as the post-Labor Day stretch begins, a number of new challenges lie ahead: ever-shifting odds of an interest-rate increase from the Federal Reserve. Sky-high expectations after a stunning earnings season. The persistent threat of higher consumer prices as fighting in the Middle East drags on.

“You’re moving from this earnings-driven market to this macro-driven market with the Fed, inflation and interest rates in focus,” said Keith Lerner, chief investment adviser for Truist Advisory Services. “It tends to be a choppier period.”

Historically, every major U.S. stock index experiences its worst average return in September. The Dow Jones Industrial Average has slid an average 1.1% in the ninth month of the year, in data that dates back to the 19th century. The S&P 500 has seen the same average decline—and for every September dating back to 1928, the benchmark ends the month lower more than half of the time.

Analysts caution against reading too much into those seasonal patterns. But in recent weeks, new reasons for investor caution have emerged. One of the largest: the looming threat of an interest-rate increase from the Fed, which announces its next policy decision on Sept. 16.

Chairman Kevin Warsh’s decision to ditch forward guidance and take more of his cues from markets has muddied the waters for investors when it comes to monetary policy. That has left traders scouring Fed governor speeches and economic-data reports for clues on the central bank’s next move.

“There’s going to be a lot of eyes on those numbers,” said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors.

The past couple of weeks offered just one example of how frequently those expectations can change. After Warsh struck a hawkish tone during remarks on Aug. 28, the odds of a hike at the Fed’s next meeting jumped from 35% before the speech to 58%, according to CME FedWatch data.

On Thursday, Fed governor Christopher Waller made a case for leaving rates where they are. Interest-rate futures showed coin-flip odds between a hike and a hold. Then Friday’s robust jobs report amped up rate-hike bets once more, back to a roughly 60% chance of higher rates after the meeting.

“Rates have really been driving the car for equities the last few weeks,” said Ross Mayfield, an investment strategist at Baird.

That uncertainty comes as an unruly bond market could put pressure on stocks. Treasury yields have marched higher for much of the summer, driven by concerns about rising oil prices, growing U.S. budget deficits and a deluge of tech-company bonds now competing for investors’ cash. Last week, the rout went global, pushing yields to multiyear highs in Japan, Germany and the U.K.

Higher bond yields can drag on stock prices and lift borrowing costs for companies and consumers across the economy.

Rising prices remain the top concern for bond traders, and continued fighting between the U.S. and Iran has done little to ease those worries. The national average price of diesel climbed to a record of $5.850 on Friday, according to AAA. That is up from $3.712 a year ago.

Investors will get more insight on the path of prices this week, with the much-awaited consumer-price index report due Friday and a reading on producer prices Thursday.

With another blockbuster earnings season in the books, some analysts have also warned that any boost from the third-quarter reports due in the coming months could be minimal. Back-to-back quarters of standout profits have raised expectations and made it especially difficult to impress traders. Custom-chip company Broadcom, for example, said Wednesday that it more than tripled its earnings and nearly doubled its revenue. Shares slipped 2.7% the next session.

Many analysts note there are plenty of reasons not to panic. The economy is in impressive shape, thanks to a healthy labor market and the rippling effects of the artificial-intelligence investment boom. Profits are booming at America’s biggest companies. The Cboe Volatility Index has dropped to its lowest levels of 2026. Credit spreads are tight, a sign bond investors aren’t concerned about economic conditions that could hurt companies.

But the mood has shifted from the euphoria that felt tangible when the Nasdaq was notching back-to-back records early this summer. The question, Mayfield said, is whether the fundamentals that have bolstered the bull market so far can stretch the rally into 2027.

“There are more anxieties or uncertainties about the backdrop,” he said. “It does feel like a transitional moment.”

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