The Road Best Travelled: How Economics Can Support Improved Road Planning in the Amazon Basin

By any measure, the Amazon rainforest is a global conservation priority and critical resource in the fight against climate change. Hosting 10 to 15% of global terrestrial biodiversity, the Amazon basin safeguards the largest source of freshwater in the world, is home to more than 30 million people, regulates local hydrological cycles and climate patterns, and sequesters roughly 150 to 200 billion tons of carbon dioxide annually1. Yet, despite these facts, the Amazon rainforest is increasingly being cleared to support a wide variety of new development projects.

Chief among these projects is the extension of existing road networks into formerly inaccessible regions. In part, this expansion is led by the belief among governments and development banks that new roads will reduce transportation costs, increase regional connectivity, and spur development. However, very few of these road projects have even basic economic feasibility analyses to back up these projections, and even fewer account for the potential negative socio-environmental impacts and irreversible damage caused by deforestation of the Amazon. To better understand the impact of these planned road projects in the Amazon, Conservation Strategy Fund (CSF) and its partners — Amazon Environmental Research Institute (Instituto de Pesquisa Ambiental da Amazônia, IPAM) and the Foundation for Conservation and Sustainable Development (Fundación para la Conservación y el Desarrollo Sostenible, FCDS) — set out to study 75 road projects to determine the economic, environmental, and social ramifications of each project. In the 2020 study, “A better Amazon road network for people and the environment,” CSF and its partners found that roughly half, or 45%, of planned road projects would cost more to build and maintain than the benefits they would generate.

“Even when we don’t consider the socio-environmental impacts, almost half of the projects are economically unfeasible,” explains CSF Senior Economist Thaís Vilela, the lead author of the scientific article. “These projects should be excluded, or at least reevaluated by the governments.” Research focused on 75 highway projects covering over 12,000 kilometers across Bolivia, Brazil, Colombia, Ecuador and Peru. If completed, these roads would require a total investment of $27 billion USD and result in the deforestation of 2.4 million hectares over the next 20 years. Through their analysis, the study’s authors found that selecting a smaller subset of carefully chosen roads could deliver 77% of the economic benefits at just 10% of the socio-environmental cost. What’s more, by cancelling the road projects that had no economic justification whatsoever, the country governments could prevent 1.1 million hectares of deforestation and avert $7.6 billion USD in wasted funding for development projects.

These findings prove that it is possible to generate large economic returns at a lower environmental and social cost. In other words, well-designed projects can reduce transportation costs and support regional development. But more importantly, this study demonstrates the value of conducting timely economic analysis to support better development pathways for future projects - and generations. As Vilela says, “Where projects have a positive economic return, it’s important that the governments, and the people, determine the acceptable level of environmental and social loss in exchange for economic gain, especially, when it comes to preventing deforestation of a global resource as important as the Amazon.” To read the full study published in the journal, Proceedings of the National Academy of Sciences of the United States of America, please click here.