Last November, China’s President Xi Jinping and his Peruvian counterpart, President Ollanta Humala, signed a pact to build a new Twin Ocean Railroad Connection designed to transport goods 5,300 km from the Pacific to the Atlantic Coast and propel trade within the region.
However, the extensive rail project is raising concerns over accelerated environmental harm and deforestation of a fragile and diverse region. Critics say Latin American countries are destroying biodiverse areas to supply Beijing’s thirst for energy and raw materials. On top of the detrimental impact of road construction, rainforest regions are being converted into farmlands to increase agricultural production.
The pact, signed in July by Brazilian President Dilma Yusoff as well, will enable Beijing to circumvent the costly shipping fees of the Panama Canal and propel trade with the region, shortening the sea route from Latin America to Chinese ports.
Bolivia, which stands between Peru and Brazil, wants its share of the pie. Luis Fernando Rada, the Bolivian Vice Minister of transportation, said that the railway should enter from the Bolivian port of Puerto Suarez, cross Cochabamba and the capital La Paz, and enter Peru through the port of Ilo.
The transcontinental railway is one the most significant infrastructure projects for Latin America’s first economy. Some 2,900 km of the 5,300-km long road will cross Brazil. It is estimated to cost US$10 billion, which China will help finance. A small part of the railway through Brazil – about 880 km – is evaluated at US$2.3 billion, according to Ms. Andrade.
The Chinese, Brazilian and Peruvian governments are currently auctioning the project. Competitors include the consortium with the Brazilian holding company Camargo Corrêa and China Railway Construction Company.
It may take longer than forecast, however. Although the cross-continental railway is supposed to be completed within six years. “I really do not see this happening that fast, especially because of the [bureaucracy of the] government in Brazil and the impact that this kind of project involves,” said Tábatha Andrade, Development projects and international business missions manager at the China Brazil Chamber in Rio de Janeiro.
The promise of wealth
China has transformed the region into a crossroads of international trade in its scramble for energy, as prices for oil and other commodities slide, becoming an infrastructure juggernaut in Latin America while facilitating and speeding up exports of natural resources to Chinese ports.
The Twin Ocean Railroad Connection is a key strategy to satiate China’s voracious appetites in mineral and agricultural riches since Brazil and Peru have a bonanza of raw materials. China is both countries’ biggest trade partner.
For instance, Beijing has invested about US$6 billion worth of infrastructure in Peru between 2010 and 2013. Brazil in particular, is facing serious logistical challenges as most of its infrastructure is decrepit. Nor is Brazil alone. An October 2014 report by the Economic Commission for Latin America and the Caribbean estimates that Latin American countries must invest 6.2 percent of GDP annually on infrastructure in order to meet development demands between 2012 and 2020. This equals to nearly US$320 billion.
“Brazil has a very poor railroad line so [the Twin Ocean Railroad Connection] would be an alternative flow of production to export and also a faster and more secure way of transportation,” Andrade said. The railway will enhance the country’s export and import capacities as it will save on transportation time in the fifth largest country in the world, she adds.
Peru exports mainly gold, copper ore, refined petroleum, lead ore and refined copper whereas Brazil trades soy, iron and ore. A Brazilian minister indicated that the railway would cut the cost of shipping Brazil's grain to Chinese ports by US$30 per tonne.
Notwithstanding economic opportunities for both China and Latin America, the railroad connection is likely to harm the environment, as the 2575-km long Interoceanic Highway connecting São Paulo and Lima did. The highway crosses through tropical rainforests in the Amazon and over the Andes, accelerating deforestation, fragmenting fragile ecosystems, worsening climate change and threatened the livelihood of indigenous communities along the way, critics say.
Equally worrisome, it has eased trade for drug traffickers and illegal gold miners, especially in the Madre de Dios department in southeastern Peru. On top of having highly diverse rainforests, this region produces 10 percent of the country’s gold.
“It is likely that the new railway connection, just like any human activity, will generate direct environmental impacts, combined to the existing ones caused by the Interoceanic Highway, which was not covered in the environmental impact assessments,” said Nexar B. Torres, President of the Organization for Environmental Development and Regional Education, a non-governmental group in Muyupampa, the capital city of Peru’s San Martín region.
He referred to the Peruvian government’s assessment of the environmental impact of more than 200 different economic activities between 2001 and 2010, mainly in the mining and energy sectors.
Torres says the Andean country is facing today serious environmental problems because there was no forecast for the environmental and eco-system impact of the Interoceanic Highway.
“Direct environmental impacts [of the Twin Ocean Railroad Connection] will be related to the increase in noise levels, changes in the landscape structure, soil alteration and the destruction of flora and fauna,” he warned.
Building roads through rainforests has proved to be disastrous. The Alliance of Leading Environmental Researchers and Thinkers, a scientific organization focusing on environmental issues, found that 95 percent of deforestation occurs within 50 km of a road.
This number is even more concerning as the majority of future infrastructure projects are set to take place in countries with high levels of biodiversity.
The increased contamination of soils are a key challenge of building roads in bio-diverse areas, such as Peru and Brazil. It is therefore crucial that both the Brazilian and Peruvian states assess and monitor the environmental impact of the Twin Ocean Railroad Connection and implement a sustainable environmental management program.
“It is [also] necessary to raise awareness of potential environmental damages and involve local communities to assume commitments and reduce the negative impacts [of road construction],” Torres said.
China’s footprint in Latin America
Deforestation is a key issue in this region, which has suffered the largest net losses.
For example, the acceleration of Brazil’s deforestation coincides with the construction of the 4,000-kilometer long Trans-Amazonian highway, the country’s third longest, in the 1970s.
Mongabay, a database on tropical rainforest conservation and environmental science, estimates that more than two million hectares of rainforest are lost annually in the South American nation. Mongabay also estimates that Peru loses 290,000 hectares of forests every year. This is even more crucial as the small Andean country has some of the highest levels of biodiversity on the planet.
In the end, notwithstanding green commitments at home – Chinese Vice President Zhang Gaoli vowed to reduce carbon dioxide emissions by 40 percent for 2020 – China is jeopardizing biodiversity conservation in Latin America to fuel its growth.