RIO DE JANEIRO, BRAZIL – The Organization for Economic Cooperation and Development (OECD) recommended on Wednesday that the Brazilian government put an end to deforestation, as one of the “new priorities” on a list of reforms for the country.
This is one more signal for Jair Bolsonaro’s government to review its environmental policy, condemned in the international scene. European countries, starting with France, and now more and more the United States with President Biden, will only accept the OECD to start initiate negotiations for the country to join the organization if Brasilia takes concrete actions for the protection of biodiversity.
The annual “Going for Growth” report provides a comprehensive assessment of reforms to boost long-term growth, covering the 37 OECD member countries and some emerging ones, including Brazil.
In an assessment of Brazil’s performance before the Covid-19 crisis, the entity calculates that Gross Domestic Product (GDP) per capita and productivity in the country are 73% lower than in the best performing OECD countries. In neighboring Argentina, the figures are -65% and -58% respectively.
In terms of inequality, the poorest 20% earn only 3.1% of total income in Brazil, compared to 4.7% in Argentina and 5% in Mexico.
In the environmental area, the estimate is that more than 3/4 of the Brazilian population is exposed to harmful levels of air pollution, similar to the risk in most of the countries examined. The finding is that carbon dioxide emissions were stable in recent years before the health crisis.
In this scenario, the OECD re-emphasizes the need for Brazil to increase the effectiveness of social protection, improve education and professional training, in the transition to new jobs and new business models.
It also assesses that Brazilian companies face limited incentives to become more productive, and that this shows the need to reduce barriers to trade, entrepreneurship, and competition. At the same time, a complex tax system distorts incentives to increase productivity and results in high tax compliance costs.
It suggests that the country consolidate all six consumption taxes into a simple broad-based value-added tax, full refund for VAT paid, and zero-rating on exports would reduce distortions in the tax system.
In addition, the OECD lists a “new priority” involving environmental policy for Brazil to “preserve natural resources and stop deforestation,” reinforcing a call internationally and from more and more sectors of the national economy.
It says that deforestation, an important source of greenhouse gas emissions, has recently increased again, and that this shows the need to reinforce the effective protection of natural resources, including the Amazon rainforest. It argues that current laws and protections, which were able to reduce deforestation in the past, should be maintained and combined with more enforcement to combat illegal deforestation, which will require additional resources.
The OECD recommends that the Brazilian government “avoid a weakening of the current legal protection framework, including protected areas, the forest code, and focus on the sustainable use of the economic potential of the Amazon.”
Overall, the entity focuses recommendations on three points. First, build resilience and sustainability: structural policies can improve the first line of defense against shocks (health and social safety nets, critical infrastructure), improve public governance, and strengthen companies’ incentives to better take into account long-term sustainability considerations.
Second, facilitate reallocation and boost productivity growth. Steering growth in a more durable, resilient, and inclusive direction requires structural policy action to increase employment dynamism and support firms to become more innovative and greener.
Third, support people through transitions: policies must ensure that people are not left behind in transitions, so that relocation is socially productive and builds resilience.
Source: Valor