The Madeira Complex: International Banks to Fund Deforestation and Displacement

"We saw 50 tons of fish die in the Madeira in 2005. And we need to fish in order to live," warns Domingos Parintintin, leader of the 400 remaining Parintintin, indigenous people who live in the Madeira river basin in southern Amazônia, near the city of Humaitá, Brazil. "The dams won’t cause problems only for us, but for all Brazilians who live off the fish from this river."

Along the Madeira, the second-largest tributary to the Amazon, local communities are facing the proposed construction of the Santo Antônio and Jirau dams, part of the Madeira River Complex.

The project has received a commitment of partial funding from the Brazilian national bank Banco Nacional de Desenvolvimento (BNDES) and forms part of the portfolio of 335 internationally-financed megaprojects known as IIRSA (the Initiative for the Integration of Regional Infrastructure of South America). The Madeira Complex includes four dam projects: two in Brazil, one binational dam between Brazil and Bolivia, and one in Bolivia.

The Santo Antônio and Jirau dams would produce 3,150 and 3,300 megawatts of hydroelectricity respectively for the energy-deficient urban area of São Paulo. The total cost for the two dams alone is calculated at US$9 billion.1 Locks built to control the flow of water through the dams and dredging at the head of the 3,380 km. river would also expand transport of soy, timber, and minerals along the Madeira, integrating a waterway that extends from the Peruvian and Bolivian Andes to the Atlantic port of Belém. Brazil’s agribusiness sector anticipates major economic gains as a result of the project.

The Threat of Soy Expansion

However, the economic benefits are not likely to reach Nove de Janeiro and Ipixuna, the two protected indigenous areas of the Parintintin. Top-down projects to exploit the natural resources of the area have already led to conflicts between the communities over gold mining, illegal logging, and overfishing.

"There are a lot of illegal loggers," states Domingos. "There are some areas they don’t go into, but they are invading … Two years ago many loggers came from the Transamazon Highway—there were 10, 20 trucks transporting wood night and day," claims the leader. Now, the Madeira River Complex threatens to increase agribusiness pressure on the Parintintin’s federally protected lands, especially from soybean producers.

"Soybeans can justify all sorts of public works, which have much more impact on deforestation than the actual area that’s cleared for soybeans," says Phillip Fearnside of the Instituto Nacional de Pesquisas da Amazônia (INPA). The price of soy, according to Fearnside, explains 72% of the fluctuation in deforestation rates since 2004 in the state of Mato Grosso. Mato Grosso alone accounts for 40% of all deforestation in the Brazilian Amazon. The governor of Mato Grosso, Blairo Maggi, is also the chairman of the world’s largest soybean production company, Grupo André Maggi. The company received two loans of US$30 million each from the International Finance Corporation (IFC, World Bank Group) in 2002 and 2004, and one loan of US$34 million from BNDES in 2004.2

The Madeira Complex, if completed, would enable the Madeira River system to transport an estimated 35 million tons of soybeans a year—a 500% increase from the seven million tons currently carried out by river.3 Critics claim cheaper transport costs on the river would provide an incentive for the expansion of soybean production in neighboring Rondônia and Amazonas states, increasing deforestation and land invasions of the type already faced by the Parintintin. "For soybeans," says Fearnside, "you have the justification to do it, and that sets into motion a whole series of other processes: land speculation, logging, and, of course, ranching." For the Parintintin, land invasions and decreased river levels would place the resources they utilize for survival—such as fish, their dietary staple—at risk.

The food security of the other inhabitants who call the river basin home—peasants, caboclos,4 and city dwellers—would also be at risk. Down river from Humaitá, the city of Santo Antônio de Borba receives more than 100,000 visitors annually to mark the festival day of Santo Antônio in June. Though one of the dams shares with the city the name of the most popular saint in Brazil, Santo Antônio, the "Saint of the Poor" the Associação de Pescadores de Borba notes that almost no public discussion has taken place on the construction of the two dams, due to a lack of information.

The association, which represents 416 small and medium-sized fishers who fish for both local consumption and for export to Manaus, has been planning with the Amazonas state government to build refrigerated warehouses to put the city’s fish supply on ice during periods of scarcity. If the Santo Antônio and Jirau dams are built, even with the frozen supply the city may not be able to supply enough fish to feed the annual influx of visitors for the Santo Antônio festival due to a reduction of fish breeds in the river as a result of damming.

Lending for Lending’s Sake

Taking place far from the extensive river network of the Madeira basin, planning and decision-making for the Madeira Complex has followed a dangerous trend characteristic of many projects included in the IIRSA portfolio. Since their creation in 2000, IIRSA projects have attracted financing not according to their ability to meet the social needs of local citizens, but in large part to fulfill the financial quotas of the international finance institutions (IFIs) that provide loans to governments to build infrastructure such as the Madeira Complex.

"It’s not a question of whether the loans are good or bad, but rather that each [bank] manager has a level of financing that must be met," says Vince McElhinny of the Bank Information Center, a group that tracks international financing of IIRSA projects. "This is well known. The Inter-American Development Bank (IDB) needs to loan US$8 billion this year. It’s not a question of whether a country needs this money or not, but a question of how to place the money." According to McElhinny, meeting financial quotas is "perhaps the most important factor to a bank’s credibility and financial sustainability. And each day this is leading to weaker environmental and social safeguards."

As IFIs rush to make loans in order to meet financial market quotas, proper studies that assess the environmental and social impacts of infrastructure projects are being shirked in favor of reports that allow for a quicker timetable for construction.

According to local leaders in Porto Velho, Brazil, the environmental impact assessment (EIA) of Santo Antônio and Jirau ignores the indirect and regional environmental and social impacts for local populations downriver, such as sediment and mercury accumulation, and diminished fish breeds. Instead, the EIA, written by Furnas Centrais Eletricas—the public company under contract to build the electric transmission lines that would deliver hydroelectric power from the river to São Paulo—takes into account only direct impacts surrounding the urban municipality of Porto Velho and nearby areas.

Even a scant few kilometers away from the proposed site of the Santo Antônio dam, the impacts of the projects extend beyond what is considered in the EIA. According to a report5 from Instituto Pólis, a Brazilian public policy organization, the potential for the expansion of intensive agriculture and the opening of a labor market for the construction of the dams would attract a wave of migration to the area, putting pressure on the city’s public resources and infrastructure.

The report, released in June of 2006, warns of the arrival of 40,000 new migrants who would occupy four new proposed settlements for construction workers and their families on close to 2,090,000 square meters of land. The settlements would be de facto satellites of Porto Velho, and would increase demand for scarce social services, including medical care, which already only covers 25% of families living in the city. The push for land spawned by lower soy transport costs would also contribute to uncontrolled fluctuations in land prices, and the replacement of farming communities by agribusiness plantations will lead to increased unemployment, and higher incidences of prostitution, according to the report.

Instituto Pólis calculates that the dam projects would forcibly relocate up to 3,000 families along the length of the Madeira. Father Manoel Farias Lopes, a Franciscan priest who tends to parish Nova Olinda downriver from Porto Velho, claims that many of the families that would be relocated are unaware that the dam projects even exist. "People here don’t have any notion of the impacts of the Madeira dams, because they don’t have access to information about the projects," states Lopes. "But certainly the dams will have an impact, starting on the fish and the water quality."

Despite these grave omissions to the EIA report, the Brazilian government is pushing ahead with plans for the project. In January of this year, President Lula da Silva unveiled the Plan for Accelerated Growth (PAC), an economic investment package aimed at increasing Brazil’s GDP by 5.0% each year beginning in 2008.6 The Madeira Complex figures prominently in the plans of the PAC in Amazônia, despite being arguably one of the largest and most harmful "development" projects of its kind in Brazil.

In order to meet the PAC’s goals for growth, the government would need an estimated US$20 billion to construct the entire Madeira Complex, including Santo Antônio and Jirau dams, electrical transmission lines to São Paulo, plus the two additional dams the government has offered to build in Bolivia. Though Brazil’s national bank, BNDES, has committed to funding 40% of that total, the World Bank has also been reported as interested in financing the project.

For Domingos Parintintin, however, investment in large-scale infrastructure may not lead to the kind of growth that is important for his people. "From an original population of 4,000, we came to have only 120 people after the Transamazon highway was built in 1970 ," states the indigenous leader. " If it keeps going this way, in a couple of years, our people are not going to have any more forest, only destroyed land. We’re going to have problems because people want to invade our land, and how are we going to accept that?"

End Notes

  1. "Brazil offers Bolivia ‘a gift’—but at what cost?" Glenn Switkes, International Rivers Network,
  2. Jan Willem van Gilder, "Bank Loans and Credits to Grupo André Maggi, a Research Paper Developed for CEBRAC," June 4, 2004,
  3. Jorge Molina Carpio, "Analisis de Los Estudios de Impacto Ambiental del Complejo Hidroelectrico del Rio Madeira — Hidrología y Sedimentos," April, 2006,
  4. A term in Portuguese referring to a person of mixed Indigenous and European heritage.
  5. A copy of the report may be obtained by contacting
  6. See Plano para Aceleração do Desenvolvimento, Governo do Brasil,



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