Analysis: Demand for clean energy indirectly threatens one of Ecuador’s most biodiverse areas

RIO DE JANEIRO, BRAZIL – Only a few months have elapsed since Ecuador’s balsa wood rush subsided. But the consequences of two years of frenzied extraction of this timber are visible and alarming.

Demand skyrocketed because Chinese investors, encouraged by a state subsidy, came in with plenty of cash to get their hands on tons of this wood, which is in demand to manufacture wind generator blades.

The rush for the raw material and the Ecuadorian government’s lack of supervision due to pandemic restrictions contributed to the chaos, particularly in the province of Pastaza, one of the Amazon’s wealthiest natural areas, where tens of thousands of hectares of this species are found.

The balsa boom (known as balso in other countries) fills the pockets of many, but also leaves problems in its wake. The frenzied logging of recent months threatened the habitat of protected animal species, increased illegal extraction, increased job insecurity for workers and divided indigenous communities, say different sources.

“It was a disaster,” described Pablo Balarezo, coordinator of forest economics for the Pachamama Foundation in Ecuador. The area’s indigenous communities, ancestral owners of many of the hectares where the balsa logging occurred, activists and entrepreneurs are calling on the government to intervene, further regulate the sector and protect it from the damage that some fear may be irreversible.

Ecuador’s Ministry of Environment and Water has conducted operations to intercept the displacement and illegal balsa logging, but several associations believe that the effort has not been adequate.

What is balsa wood and what is it used for?

Balsa is a tree that grows in tropical forests, at an altitude of between 300 and 1,000 meters. “In South America you can find it in the Andes, the Amazon, Peru, Colombia, Venezuela and Panama. To the north, you can find balsa in Costa Rica and also in southern Mexico,” said Ricardo Ortiz, who has been exporting balsa for over 25 years.

Balsa is a light wood, and each tree offers a considerable yield since it can reach 25 to 30 meters in height. In general, it dies after 6 or 7 years, but “to maximize profit, it is cut after 3 or 4 years, when its wood reaches the best quality,” Pablo Balarezo explained.

Balsa is mainly used to manufacture wind energy generator blades. Ortiz said that as wealthier countries seek renewable sources of energy, demand for balsa has increased in Ecuador.

“In the last decade it has been growing, but nothing compares to what has been experienced in the past two years, since China’s strong entry into the market. What happened in 2020 was a frenzy. It got out of control,” said Ortiz.

Balsa rush

As Ortiz recounts, in recent years China has pumped billions in subsidies to encourage the installation of solar panels and wind generators across the country. That is a substantial number of wind generators to be manufactured and to achieve this plenty of balsa wood is needed.

Ecuador is the world’s leading seller of balsa. Ricardo Ortiz estimated that it exports 75% of the total amount of this wood worldwide. China, the United States and Europe are the main buyers.

“In 2019 and 2020 I saw something unparalleled in my 25 years in this business. The Chinese came in with lots of cash to grab all the balsa wood they could. The price of the raw material tripled. Many poor people living in the areas with the highest concentration of the species have made a lot of money,” Ortiz described.

The “frenzy” was further encouraged in the second quarter of 2020, when confinements were relaxed, China announced subsidy reductions and investors rushed more than ever to get their hands on the wood. “They were even taking the balsa on airplanes. It was more expensive to charter flights than to buy the wood. That says it all,” Ortiz commented.

The entrepreneur explained that buyers from the United States and Europe purchase certified timber and are more compliant with contracts. The Chinese, he says, work more in surges and operate somewhat “more disorganized,” which also contributed to the flood in demand.

The need for balsa and its undeniable profits have attracted many more players to the trade than the traditional companies already in the business. Indigenous communities are also profiting and “mafias outside Ecuador act as intermediaries and launder money to exploit the balsa,” denounced Balarezo of the Pachamama Foundation.

For a piece of about one and a half meters of wood, the price has reached between US$10 and US$12. “Everything came together. The demand, the profits and the lack of government control due to the limitations of the pandemic. It became a disaster here,” added Balarezo.

An environmental and social issue

Balsa extraction by itself is not a serious deforestation issue. It is a primary species and grows so fast that where one tree is cut down, another grows back to 20 meters in about 4 years.

The “concern”, agreed entrepreneurs, indigenous representatives and environmentalists, is when it gets out of hand without adequate state supervision. “With such a boom, the balsa has been exploited without the technique it requires. Wood has been wasted and by accident and ignorance other trees that are critical have been cut down,” said Balarezo.

Many of the balsa areas are habitat for protected animals such as jaguars, turtles, various species of birds and other mammals. “By logging it uncontrolled very vulnerable habitats are threatened. The Pastaza ecosystem is one of the wealthiest and best preserved in Ecuador. We are playing with fire,” explained Balarezo.

The expert also warned that the mafias camouflage fine wood from other trees in the balsa truckloads. “It was something I documented and wanted to report in February 2020, but they saw me and threatened me with a gun to my chest. I was forced to delete the photos. These people are very dangerous.”

The balsa rush created conflicts and divisions among the indigenous communities that populate the Pastaza river basin. The trade brought money, “and many very poor indigenous communities, owners of the territory, are taking advantage of it,” said Ortiz, the timber trader.

But money “corrupts” and some are using it in a “bad way”, leading to drug addiction, alcoholism and social “decomposition” problems.

“Many young indigenous people, with the new money from the balsa, are going to the cities to spend it on parties. It is not as if the profits from extraction are being put to good social use,” denounces Andrés Tapia, member of the communications team of the Confederation of Indigenous Nationalities of the Ecuadorian Amazon (CONFENIAE).

That, however, is not what worries him the most. “Our main threat is social division. Much polarization was created between those who wanted to work out of need and those who oppose extractivism. Many spoke out against and banned extractivism, but others, individually, ignored these decisions,” said Tapia.

Balarezo and Tapia, while recognizing that the balsa boom was an important source of income for many families, also recognize that it resulted in job insecurity. “Often they negotiate directly with the indigenous communities and these, lacking alternatives, accept unfair conditions,” described Balarezo.

“It is true that they are paid for the wood, but if you consider all the labor effort, what they are paid is unfair. The middlemen who take the balsa to cities like Guayaquil and Quevedo take the largest share,” he added.

“My workers are regulated, but the massive extraction in the east by indigenous people is not regulated at all,” Ortiz denounced.

The lack of control and the penetration of intermediaries from the big cities in a year of pandemic also caused the coronavirus to spread fatally among the Amazon villages, added Tapia.

Amid what many have seen as an environmental and social crisis, sources agree that, if controlled and managed by authorities, balsa wood logging can be a major economic opportunity.

It is true that the 2020 boom is now fading, but it appears to be the perfect time to plan for this activity. Major powers are looking to find renewable energy sources and progressively reduce the carbon footprint. “Faced with such demand, a tree like the balsa, which regenerates quickly, can offer high profitability without seriously damaging the environment,” Ortiz said.

“If the state controls it and logging is done in a sustainable and environmentally friendly way, it’s a great opportunity. That is why we are trying to promote Amazonian balsa in degraded areas and thus lower the pressure on territories that have suffered greatly,” said Balarezo.

Ortiz also called for more investment in infrastructure. “Europe and the United States have been buying for a long time, but not much has been invested in the country. It is true that tens of millions are needed to plant and build, but the profitability could be impressive,” said the entrepreneur.

Source: La Nación