This is an archived USAID document retained on this web site as a matter of public record.

Testimony By Carl H. Leonard,
Deputy Assistant Administrator
Bureau for Latin America and the Caribbean

I. Opening

Thank you, Mr. Chairman, for inviting me to speak on environmental problems in the Latin America and Caribbean (LAC) region. Many of these problems are due to rapid economic and population growth, and unsustainable land-use practices, as well as other stresses on the environment. In addressing these issues, I would like to emphasize three points:

1. First, environmental degradation in the LAC region is severe and has serious consequences for both the people of the region and the United States.
2. Second, environmental degradation can not be addressed in isolation of other development challenges. In particular the resolutions to poverty and environmental degradation are interrelated and interdependent-poverty is one of the major forces driving environmental degradation, while sound natural resource management is essential for reducing poverty and ensuring prosperity within the region.
3. USAID programs to conserve natural resources and foster their sustainable use are achieving positive results, but the dimensions of the problem are well beyond the resources of any individual donor.

I request that my full written statement be included in the record.

II. Introduction

The countries of LAC have made significant progress in advancing the well-being of their citizens in the past decade. People are better educated and healthier than ever before, economic reforms have spurred more robust growth, and democracy has been embraced in most countries. We should be and are encouraged by this progress. Nevertheless, the progress is fragile and major challenges remain.

Severe degradation of the region's environment and natural resource base is one of the most serious challenges. Most alarming, the degradation is accelerating. The environmental services and resources upon which economic prosperity, health, security, and political stability rest are being destroyed. But, this environmental destruction cannot be viewed in isolation. Rather, it must be addressed in the broader context of development challenges including issues of governance, equity, and human and institutional capacities. From my current perspective and from my experience as USAID Mission Director in Costa Rica, Bolivia, and El Salvador, I firmly believe that to safeguard progress and advance prosperity, sound environmental management must be a high priority within the region's broader development agenda.

It is the good fortune of the region to be blessed with an extraordinarily rich natural resource base. But, this fortune can mask the severity of the environmental crisis. I will first outline some of the most significant problems to illustrate the extent of this crisis. Then I will cite approaches USAID has found successful in helping to address the region's environmental challenges.

III. Examples of Environmental Degradation

Forests- LAC has half of the world's tropical forests, but also one of the world's highest rates of deforestation. The region lost more than 210 million acres of forest between 1980 and 1995. Brazil, the country with the greatest amount of tropical forest in the world, loses more than one percent annually, or an area four times that of Rhode Island. Of particular concern, countries with the least amount of remaining forests have the highest deforestation rates. For example, if Jamaica, with only ten percent of its forest remaining, does not reduce its deforestation rate, it will have no forests by 2010.

What is lost when forests are destroyed?-watershed protections, soil stabilization, habitat for biodiversity, and employment opportunities from forest industries and other businesses dependent on forest services. Left behind frequently are fragile and easily degraded lands. Conversion to agriculture is the principal cause of deforestation, but paradoxically much of the cleared land is unsuitable for sustained agricultural production. The chain of events is all too common. Declining land fertility leads to declining yields, which causes farmers to switch land to less productive uses such as pasture, use more inputs such as chemical fertilizers, and eventually abandon unproductive lands to move on to clear remaining forests.

Fresh Water- Besides forests, the LAC region is blessed with more freshwater per capita than any other region of the world, but during the past fifty years it is also the region that has suffered the greatest decrease per capita. The principal culprits are poor watershed management, misuse of agricultural inputs such as fertilizers and pesticides, the overdrawing of aquifers, and the lack of wastewater treatment. More than ninety percent of LAC's urban and industrial wastewater is released to the environment untreated. The consequences of water mismanagement include: severe health problems (e.g., waterborne diseases cause sixty percent of child mortality); reduced hydroelectric potential; water shortages and increased costs for industry, agriculture, and homes; reduced shipping capacity; and extensive damage to freshwater, coastal, and marine ecosystems.

Marine Resources- The region's extensive marine and coastal resources include the second longest reef in the world, and extensive mangroves, sea grass beds, and estuaries. These resources harbor globally important biological diversity, support fisheries and tourism, buffer coastal communities against storm damage, and are at the core of some countries' economies. The small island nations of the Caribbean derive thirty-one percent of their GDP from a tourism industry based on the beauty of their marine environments. Nevertheless, the region's reefs are being smothered and poisoned by siltation, pesticides, and wastewater. Scientists categorize the survival of two-thirds of the reefs as threatened or highly threatened. Other marine and coastal resources, such as mangrove forests are faring no better.

Production of Illegal Drugs- Production of illegal drugs create significant environmental issues. The impact on the environment of coca production and cocaine manufacturing in Bolivia has been well-documented. Land clearing for coca alone caused a deforestation rate estimated at 10,000 hectares/year. Cocaine processing also has an environmental impacts. Lime and sulfuric acid, used in the manufacture of cocaine base and discarded afterwards, modifies the pH of soil and water. Kerosene, used as a leaching agent, diminishes the oxygenation capacity of rivers, killing wildlife. During peak productions times in Bolivia, annual averages of 14 million liters of kerosene were dumped into rivers.

Urban Environment- Rapid urbanization, fueled in large part by immigration from rural areas, is magnifying cities' already severe environmental problems. Urban environmental services are essentially absent. The sewage of most households goes untreated, and refuse pick up is sporadic, inadequate, or totally lacking. Conditions are particularly bad in the shantytowns where almost half of city residents live and where the greatest growth is taking place. The rapid expansion of the "informal" (unregulated) sector of the economy, which employs over sixty percent of the labor force, is adding to the solid waste and wastewater problems. Unregulated textile, leather, metal processing shops and other small manufacturing operations dispose of their chemical and solid wastes in the most expeditious manner possible.

Disasters- None of the numerous examples illustrates the impact of resource mismanagement more clearly than Hurricane Mitch. To describe Mitch as a "natural disaster" is a misnomer. Nature provides the physical phenomena, people produce the vulnerability through the resource-use decisions we make. It is the combination of the two that leads to disasters.

Hurricane Mitch was the most destructive disaster in the Hemisphere's recorded history. Central America reported more than nine thousand deaths, and three million left homeless. Total direct damage reached $8 billion, including the destruction of social and economic infrastructure such as transportation routes, villages, schools, and crops. Such events threaten sustainable development, by destroying years of development progress and investments and shifting development priorities from long-term goals to meeting relief and reconstruction needs.

The Central American Commission on Environment and Development (CCAD) estimated that seventy percent of the damage from Hurricane Mitch can be attributed to poor land use decisions. The message is clear -- ignoring sound environmental practices imperils development.

Impacts on the United States- Environmental degradation in the LAC region directly affects the United States. Some impacts are immediately noticeable, for example, the 1998 fires in Mexico and Central America that fouled the air of the southern United States and reached as far as New Jersey. The impacts of habitat degradation are less immediate but profound. As examples, nearly two-thirds of the bird species found in the United States are migratory and depend upon LAC habitats during winter months, and many US commercial marine species depend upon coastal nurseries throughout the region. Loss of habitat in the LAC region has been a significant cause for the sharp reduction we have experienced in migratory birds and the population of important marine species in our country.

Environmental degradation can also lead to human flight. The 1999 annual report of the International Committee of the Red Cross concluded that the number of people displaced by environmental degradation far outstrips the number displaced by complex disasters such as political unrest, oppression, and war. When unsustainable practices exhaust fisheries and land, when pollution diminishes the quality of life, and when houses, schools, and clinics disappear in a disaster, people are compelled to move. There is no doubt that environmental degradation contributes significantly to the immigration pressures we experience.

Businesses in the U.S. also have long-term interests in the sound maintenance of our neighbors' resource bases. U.S. timber, fishing, tourism, and agricultural companies have made significant investments that require sustainable resource management.

Finally, degradation in the LAC region affects the U.S.'s interest in the global issues of biodiversity conservation and climate change. Latin American and Caribbean countries have approximately half of the world's biological diversity. The rapid measurable rate of habitat destruction demands our attention. The region's emission of greenhouse gases is substantial and rapidly increasing. A significant portion of this is due to deforestation, but the expansion of industrial output and growing demand for energy are major and growing contributors. If environmental practices for land-use, and energy production and use are not improved, the region's emission of greenhouse gases will dramatically increase.

Poverty and Population- The most grievously affected by environmental degradation are the people of the region, particularly the poor who have no choice but to live in the most vulnerable and degraded environments. It is the poor who depend most directly on natural resources to meet their basic human needs, and have limited access to safe and productive lands. It is the poor who are forced to squat on marginalized areas, such as floodplains, which maximizes their exposure to the next disaster. When disaster strikes, it is the poor who lack a safety net. The poor also lack access to clean water and sanitation facilities, and often are forced to meet their needs through environmentally destructive practices such as clear cutting steep slopes for firewood and slash-and-burn hillside agriculture. Consequently, the poor are the greatest victims of environmental degradation, but paradoxically it is poverty that is one of the most significant forces driving degradation.

Although alleviating poverty is the principal development and environmental challenge, rapid population growth makes the challenge more difficult. We are encouraged that in recent years there has been a marked decrease in growth rates, but population growth in the region has not yet stabilized. Due to the large percentage of young people in LAC countries (thirty-three percent are less than fifteen years of age), the population will double in Latin America and the Caribbean in the next thirty-nine years. In countries with the fastest growing populations-Guatemala, Nicaragua, and Honduras-populations will double in twenty-five years or less. As a point of comparison, it will take one hundred-twenty years for the population in the United States to double.

Meeting the needs of a growing population and increasing standards of living to reduce poverty will place greater demands on the resources and services the environment provides. Sustainable resource management is, therefore, not simply essential to protecting the environment but to reducing poverty and assuring future prosperity and security in the region.

IV. USAID Programs

Recognizing the relationship between poverty and natural resource management, USAID follows four basic principles in the design and implementation of our environment programs in LAC:

1. USAID develops and disseminates environmentally sound practices that ensure economic returns competitive with or superior to current wasteful practices, for it is essential that people have sound resource-use alternatives available to meet their needs;
2. USAID engages and empowers local communities and individuals, for community action and decentralization make government responsive to the needs of the people; and individual ownership and tenure provide motivation for stewardship;
3. USAID increases public awareness about the consequences of and alternatives to degradation, for sound environmental management requires a broad constituency; and
4. USAID promotes policy reforms that direct market forces toward sustainable use, for without the proper incentives the development and dissemination of best practices will be of limited utility.

Our environment program in LAC totals approximately $65 million each year. I would like to provide you with a few examples employing the above principles.

Sustainable Forestry- USAID supports sustainable tropical forest management through policy reform, capacity building, introduction of improved technical practices, and business/market development. In Bolivia, USAID helped develop a comprehensive forestry law that: (a) ensures greater accountability and transparency in awarding concessions, (b) establishes high technical standards for management, (c) establishes appropriate market pricing that provides incentives for sustainable management, and (d) provides a framework for local communities and indigenous groups to obtain legal rights to forest resources. The program successfully refines and demonstrates best management practices, strengthens the technical and management capacity of community and indigenous groups, and fosters partnerships with industry to access international markets for sustainably produced forest products.

Through the program, the area of tropical forests certified as well managed by such groups as the Forest Stewardship Council has increased fifteen-fold from 128,000 acres to two million acres-the most in the LAC region-and exports of eco-certified timber have increased from zero to nearly $8 million annually. By 2004 we expect that six million acres of forests will be certified and exports of certified products will surpass $20 million annually. USAID is implementing similar programs in Brazil, Peru, Ecuador, Honduras, and Guatemala.

Hillside Agriculture- In Honduras, USAID's Land Use and Productivity Enhancement project (LUPE) promoted improved hillside agriculture practices that increase agricultural production with improved management of natural resources. LUPE also assisted farmers with crop diversification and marketing, especially of high value vegetables. Environmental education was carried out in rural elementary schools to enhance environmental awareness, and municipalities were strengthened in small watershed management. As a result of the program, approximately thirty-eight thousand hillside farm families in southern and central Honduras adopted environmentally sustainable cultivation practices. Soil conservation practices reduced soil erosion losses on steep slopes from thirty-seven tons per acre to less than half a ton per acre, saving an estimated five million tons of topsoil annually from LUPE sites; and in the process farmers increased their income by more than fifty percent.

The effectiveness of LUPE's conservation practices was vividly demonstrated during Hurricane Mitch. Although many farms were destroyed by soil erosion and landslides, adjacent LUPE sites withstood the ravages of the storm. Central American governments and international donors, in their commitment to "build back better" after Mitch, are replicating LUPE models that protect the environment, address poverty, and reduce downstream vulnerability of people and economic investments to natural disasters. USAID has similar successful hillside agriculture programs in several other Caribbean and Central America countries.

Biological Diversity- USAID is a leader in assisting LAC countries to conserve and utilize their biological resources in a sustainable manner. Our programs have improved protected areas management, safeguarded key watersheds that provide drinking water for urban populations, strengthened local NGOs and community groups, assisted indigenous communities in securing land tenure rights, and provided environmentally-friendly economic alternatives for local people. For example, the Parks in Peril program - a partnership among USAID, The Nature Conservancy, local NGOs and local governments - builds local capacity to conserve biological diversity in protected areas throughout Latin America and the Caribbean. During the past ten years, the program has improved protection at thirty-seven park sites covering over twenty-eight million acres containing globally significant biodiversity. So far twenty parks have been transformed into fully-functioning protected areas that require minimal donor assistance. Equally significant, USAID has assisted twenty-seven local conservation NGOs to become self-sufficient organizations with effective voices in their countries for sound environmental management.

Environment Endowments- USAID has been a global leader in establishing and strengthening locally-managed environmental endowments. These endowments provide long-term sustainable financing to fund the proposals of local environment NGOs and community groups. USAID has strengthened and served on the Board of The Enterprise for the Americas Initiative's (EAI's) seven environmental trust funds (in Argentina, Bolivia, Chile, Colombia, El Salvador, Jamaica and Uruguay), totaling over $175 million. USAID also led the creation and capitalization of additional environmental trust funds in Ecuador, Guatemala, Honduras, Jamaica, Mexico, and Panama and has leveraged $42.8 million to support these endowments.

Industrial Pollution Prevention- Industrial pollution impairs human health, degrades economically important ecosystems, and decreases the competitiveness of LAC businesses in a global economy. USAID supports pollution prevention and cleaner-production activities in seven LAC countries. These help to: (a) increase awareness of the economic and social benefits of cleaner production, (b) develop regulatory frameworks that favor pollution prevention over end-of-pipe pollution control, (c) build local capacity for advancing cleaner production, and (d) increase available investment capital by educating lenders about the financial soundness of the pollution-prevention approach.

In our programs we have clearly demonstrated that pollution-prevention practices are a win/win approach-reducing pollution while enhancing business performance. Pollution is often the result of not efficiently using and recycling resources. Pollution-prevention technologies can reduce the consumption of water, energy, and raw materials-improving production efficiency and reducing business costs. In Bolivia for example, eleven plants invested $131,000 in pollution prevention and generated annual savings of nearly $228,000, a seven month payback on investment. In the process they reduced the amount of pollution they produced by seventy percent. In Ecuador, sixteen plants invested approximately $4 million and generated annual savings of more than $5 million, a ten month payback on investment.

Water Management- LAC governments are increasingly decentralizing the provision of water supply and sanitation as part of broader reforms. USAID has taken the lead in developing low-cost, low-maintenance water supply and sanitation models for small municipalities in Central America and the Dominican Republic. In El Salvador, USAID has helped protect watersheds to increase water supplies, reduce surface and groundwater contamination, decentralize potable water authorities, and create sustainable local water groups. USAID's approach to providing rural water and sanitation services has strongly influenced the Inter-American Development Bank (IDB) water sector loans in El Salvador and the Dominican Republic. During the past two years in El Salvador, nine municipalities have developed water-resource management plans, twelve municipalities have implemented potable water systems, sixteen have constructed or rehabilitated water systems, five hundred households have adopted improved wastewater management, and soil conservation practices and tree planting have stabilized nearly 12 thousand acres of land.

Urban Development- LAC is marked by a concentration of political power, economic wealth, and opportunity in capitals and the largest cities. USAID programs have focused on promoting decentralization of political, administrative, and fiscal authority to local municipalities so that local people have the authority and resources to address their needs, including environmental services. USAID's efforts at increasing the availability of financing for urban infrastructure provide an example of the success of our approach. In 1993, the Municipal Infrastructure Finance Program was launched by USAID in partnership with the Central American Bank for Economic Integration (CABEI), establishing a $26 million credit fund. The program started in Guatemala and Costa Rica as a pilot. In 1999, the success of the program attracted an additional $50 million in funding from Taiwan and Germany, and was extended to El Salvador, Honduras and Nicaragua. CABEI lends to public and private financial institutions, which in turn lend to municipalities to finance infrastructure projects such as potable-water and sewage systems, and solid-waste management. By the beginning of this year the program had financed three hundred sixty-four projects, benefiting over one million households.

V. Partnership with Others

The previous examples illustrate USAID's partnerships with other donors, host country institutions, the private sector, NGOs, communities, and other USG agencies. These partnerships are essential. Our programs are successful, but the problems are beyond the resources of any individual organization. Consequently, USAID's strategic planning focuses on engaging the interest and resources of others, providing guidance and leadership, and supporting innovations of others. Collaboration is so important to overall success in promoting sustainable development, that I would like to outline the basic components of our approach.

1. Build local capacity and commitment-Without local capacity the end of donor funding is the end of that activity. With it, not only does the program continue but also has the opportunity to expand and spread as it engages the resources and energies, and creativity of the host country and people.
2. Develop models that can be adopted by others-Practical, simple, and culturally appropriate models have the best opportunity for being disseminated and adopted on their own merit with minimal or no further external resources.
3. Form partnerships with NGOs, Universities, and other Federal Agencies-These institutions are the source of extensive technical expertise and commitment, which are complemented by USAID international development experience. USAID provides guidance based on our years of development experience, our in-country knowledge, and the framework of US foreign-policy interests to create effective partnerships with US entities for advancing our country's development assistance goals.
4. Encourage the "greening" of private investment-Private investment in the region far outstrips donor assistance. It is essential that these investments be environmentally sustainable. USAID helps countries develop capacity for evaluating investment proposals, and assists in developing and promoting environmentally improved modifications and alternatives.
5. Cooperate with other bi-lateral donors and the Multilateral Development Banks-USAID's in-country presence and knowledge places us in a position to contribute to close donor coordination. USAID has been successful in providing the up front grant resources that host countries and International Financial Institutions (IFIs) frequently do not have for doing the analyses and pilot activities needed for the design of large loan programs. Developing a consensus among donors can also be essential in encouraging developing countries to make tough decisions and reforms necessary for sound development.

VI. Conclusions

In conclusion environmental degradation threatens sustained social and economic progress in the region, including aspirations in the region for a better life.

We will continue to maintain environment as a key element in our development strategy, and will continue to implement and build upon the approaches outline above. To make the most of limited resources and in recognition of the inter-sectoral aspects of environment and its relationship to poverty, we will continue to integrate environment goals into our economic, health, education, and democracy, programs.

Finally, we greatly appreciate this subcommittee's interest in environment and development issues and thank you for the opportunity to present our views.

This is an archived USAID document retained on this web site as a matter of public record.

FOIA Requests : Privacy Policy : Email This Page Plug-ins : FAQs : Help Desk : Contact Us : Site Map : En Español