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Human Development Report The other frontier:

Alternative uses of naturales resources in Bolivia

Sinopsis

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THE CHALLENGE OF OUR GENERATION

Last year, the Bolivian economy grew by more than 4.5%, but the number of people living in poverty increased by more than 166,000

1. Boliviaistrappedinapatternofgrowingimpoverishment.Lastyearthecountry’seconomygrewbymorethan4.5%,butthenumberofpeople livingbelow thepoverty line increasedby166,869.Toachievetheeconomicgrowth,petroleumandnatu-ralgasandminingcontributedalmostUS$3billioninexports,andtheagriculturalfrontierwasexpandedby300,000ha.Asnormallyoccurswitheconomiesbasedonprimarynaturalre-sources,theBolivianeconomywasunabletotransformtheseresourcesintogoodqualityjobs.Withalonghistoryofdepen-denceonsilver,tin,rubberandhydrocarbons,thereisadevelop-mentpatternbasedon fewactors and sectors.Boliviahas anarrowlybasedeconomy.

2. However,thereisanalternativeeconomybeyondthefrontierofprimarynaturalresources,the other frontier,basedonenviron-mentalservices,ecotourism,forestdevelopment,naturalprod-uctstrade(biocommerce),andorganicagriculture,whichgen-erateemploymentpreservingtheenvironmentandimprovinglabourconditions.Thousandsofproducers,communitiesandassociationshavealreadybuiltthisotheragriculturalfrontierinthemostvariedplaces:coffee,Brazilnuts,andorganiccacaointhenorthernpartofLaPazandPando;quinoaandvicuñawoolproducersassociations in theHighPlateau (Altiplano); lizardleatherproducers inBeni; indigenouscommunities thatpre-ventthedeforestationoftheNoelKempffMercadoPark,pro-moteecotourismintheMadidiNationalPark,andleadsustain-ableforestmanagementinthenorthernAmazonandsoutheastforests.

3. Theaimofthisreportistoexplorepotentialitiesofthe other frontierinBolivia.Thosethousandsofproducersinthisalterna-tiveeconomycontributeaboutUS$300millioninexportsandgeneratetensofthousandsofnewjobs.Despiteitssmallsizeandterritorialfragmentation,theotherfrontierrepresentsthebasisofanalternativedevelopmentpattern.Itshighratesofreturn,itsaggressiveinsertionintointernationalmarkets,andascendingdemand inglobalmarketsgenerateanenormouspotential.Thefuturechallengeistoexpanditsimpactbydevel-opingsynergiesbetweensmallandlargeproducersandtojoinregionsusingadevelopmentpatternmoreproductiveandsus-tainable.Overtime,theotherfrontierhasthepotentialtodefineanewidentityfortheBolivianeconomy.

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Prices of oil and food constitute an additional challenge for the Bolivian economy

4. Forthefirsttimesincethe70s,theworldeconomyisfacingadoublecrisisdue to therise inhydrocarbonand foodprices.Analystsagreethatintermsofpovertyandwelfarethemostseriousproblemisthatoffoodprices.Atthegloballevel,be-tweenJune2006andJune2008thepriceofcerealsdoubled.Wheatpricesincreasedmorethan75%andvegetableoilpricesrose 60% during the same time period. The change in foodpricesfollowsdietarychangesinareasofrapidgrowthintheworld(especiallyChinaandIndia).Anotherreasonforfoodpriceincreasesisthechangeinsoilusepatterns,nowfavoringcorn,sugarcane,soy,andoilseedsforuseasbiofuels.

GRAPHIC 1Inflation: Consumer prices and food component, 2008

0 4 8 12 16 20 24 28 32 36 40 44 48 52

México

Brasil

Perú

Colombia

Uruguay

Chile

Argentina

El Salvador

Ecuador

Panamá

Rep. Dominicana

Honduras

Paraguay

Costa Rica

Guatemala

Bolivia

Nicaragua

Venezuela

9

16

10

12

16

19

8

16

20

15

14

20

23

21

19

32

5

6

6

7

8

9

9

9

10

10

12

12

13

13

14

17

23

3251

33

CPI Food CPI General

Source: CEPAL (2007-2008).


5. WhatistheimpactonBoliviaoftheincreaseinfoodprices?Sig-nalsoffoodinsecurityhavebeendetectedinsomeregionsandespeciallyinsomehouseholdgroupsinthecountry.Inthelast30years,therapidprocessofurbanizationhasledtoachangeinfoodconsumptionpatterns.ArecentstudyoftheInternationalFood Policy Research Institute (IFPRI) and Von Braun (2007)showsthatfoodpurchasesinBolivia’spooresthouseholds–-netconsumers-–arefivetimeshigherthanthevalueofsalesofpoorhouseholds-–netproducers.Therefore,theincreaseinfoodpric-eshashadanetnegativeeffectonthewell-beingofpoorhouse-holdsinBolivia,bothinurbanandruralareas.TheIvanic-Martinstudy(2008)fortheWorldBankandtheCEPALstudy(2008)showthatfoodpriceincreaseswilltendtoraisepoverty2to3%indevelopingcountries.

6. Theothersideofthecoinisthat,totheextentthatdemandandpricesincrease,notonlyofbasiccerealsbutalsooforganicandagroindustrialproducts,aseamofopportunitiesfortheBolivianfoodindustryopensup.Thegrowingdemandforcerealsandoils will probably translate into opportunities for expansionamongnationalproducers.Thepotential for foodproductioncanbedeveloped through competitive advantages generatedduringthelasttwodecadesinsuchvariedareasassoy,cereals,andvegetables.However,achangeinthemodelofnaturalre-sourcesuseisrequiredinorderforthemtoentermarketsofgrowingaddedvalue.

7. Arecentstudyprojectsworldpricesforoilseedsandcerealsfortheperiod2008-2015.Thestudyfindsthatmanycerealswillshowapricetrajectorysimilartoaninverted“U”forthatperiod.Itisestimatedthatbaseprices,insomecases,particularlysoyandsoyoil,willbelowerin2015thanin2008.Thisisinpartbecausetherateofconversionofsoyintoabiofuelislow.Ac-cordingtoaWorldBankstudy,itisfourtimeslower(inUS$pergallon)thancornorsugarcaneethanol.Forthisreason,foodandbiofuelexpansionopportunitiesshouldbesubjecttocarefulandspecificanalysistoguidedecision-making.

Our generation’s challenge is to build an economy not based on cheap labour and primary natural resources

8. Thisisapropitioustimetoanalyzethepotentialitiesofalterna-tiveusesofnaturalresourcesinBolivia.TheTropicalAndescon-stitutetheepicentreoftheWesternHemisphere’sgreatestbiodi-versity.ItisestimatedthattheAndesareahostsfrom15to17%ofallthevascularplantspeciesoftheworldononly0.84%ofitstotalterrestrialsurface.AlargepartofBolivianterritoryisin-cludedinthisarea,meaningthatBoliviaisoneof15countrieswiththegreatestbiodiversityintheworld.TheAmboro-Madidiconservation corridor possesses the highest levels of speciesrichnessandendemismintheworld.


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9. Boliviaisamongthe11countriesintheworldwiththehighestnumberofvascularplantspeciesandalsoamongthe10coun-triesrichestinbirdspecies.Forestsurfacesurpasses53millionhectares, equal to 48% of the national territory and 10% oftropicalforestinallofSouthAmerica.Thisforestrichnessplacesusasthecountryintheworldwiththesixthgreatestquantityofnaturaltropicalforestintheworld.

MAP 1Species Diversity(average of the ecoregional percentages of diversity)

Source: Own elaboration, based on Ibisch y Mérida (2003).


From market niches to market pockets: No. 25 in natural gas but No. 1 in certified forest

10.Boliviaistheworldleaderincertificationofnaturaltropicalforestandisoneof12countrieswiththemostorganicagri-culture,bysurfacearea,intheworld.Boliviarankstoday,withitstinyexportsofspecificproducts,amongthetenmajorex-portersoforganiccoffeeandcacao,thefivemajorexportersofcertifiedtropicaltimber,andthethreemajorexportersofBrazilnuts.

11. Thesizeofalternativetrademarketshasinactualityshownac-celeratedgrowth.Thosebornasnicheshavenowbeentrans-formedintomarketswithconsiderabletransactionvolume.In2006,thevalueoforganictradeworldwidereachedUS$40bil-lion,fourtimesthesizeoftheBolivianeconomyregisteredforthat year. The International Federation of Organic Agriculture Movements (IFOAM)has689membersdistributedin108coun-triesaroundtheworld.Theexpansionofthismarketbetween2005and2006impliedagrowthofUS$5billion,equivalenttothetotalvalueofBolivianexportsin2006.Theexpansionoftheorganicmarketregistersanannualaveragegrowthrateof16%andapricethatexceedsbyabout20%thatintheconventionalmarket.TheBolivianAssociationofEcologicProducers(Asocia-ciondeProductoresEcologicosdeBolivia)(AOPEB)calculatesthatthevalueofBolivianorganicexportscouldreachUS$450millionin2016.

12.AccordingtothelatestreportofFairtrade Labelling Organization International (2007),thevalueofglobalfairtradereached2.3billionEuros,equivalenttoUS$3.39billion.In2007,fairtradealmostdoubledwithanexpansionof47%ofthevaluerecordedattheendof2006.Theactorswhobenefitfromthismarket-–farmersandproducers-–nowtotal1.5million,and thedirectbeneficiariesareestimatedat7.5millioninover58developingcountriesgroupedinto632organizations.

13.Thechallengeoffindinganewplaceintheglobaleconomyinthecomingdecadesisaddedtothechallengeoftranscendingthegrowthofimpoverishmentandtakingadvantageofbiologi-calmegadiversity.Thedynamiceffectsofglobalchangemakemoredifficultthetaskofpromotingeconomicgrowth,generat-ingemployment,andreducingpovertyineconomiesbasedonprimarynaturalresources.Atthesametime,theymakeitmoreurgenttothinkaboutstrategiestoarticulatesmalleconomiesintotheglobaleconomy.Boliviarequiresaninternationalinser-tionnotbasedonabundantnaturalresourcesorcheaplabourresources.


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THE CHALLENGE OF THE FIRST LINK

The wealth of the natural resources is not in the first link of the chain

14.Inthisreportweconcentratieattentiononthefirstlinkintheeconomicchain,theplacewheresoil,land,water,forest,andbiodiversityuseisdefined.Despiteitsstrategicimportance,thisisnottheplacewheregreatestvaluefortheeconomyisgener-ated.Let’sthinkaboutthecaseofspecializedcoffee.Thehun-dredsoffamilieswhopickcoffeebeansreceiveapproximatelyUS$0.33perkg.UnprocessedcoffeehasapriceofUS$0.75perkg;usuallythisisalocalprocess.Asvalueisaddedthroughpro-cessingandtransformation,thepriceincreasestoUS$1.63perkgforpergaminocoffee,US$1.98forgoldencoffee(infactory)andUS$2.64forthesamecoffeeuponexport.FromthatpointthepricerisestolevelsaroundUS$10perkgforinternationalwholesalersandUS$17inEuropeanandNorthAmericansuper-markets.HowcanwegeneratemoreaggregatevalueandatthesametimeretainmorevalueinBolivia?Thisisthechallengeofthefirstlinkintheeconomychain.

15.Themostvisibleresultofanextractivevisionofthefirstlinkistheongoingconflictovernaturalresourcesownershipandcontroland the targetingofpoliticalandmediadebateon this issue.However,beyondthis,accesstonaturalresourcesshouldbeun-derstoodastherightofpossession,use,andexploitationoftheseresources inrelation to thefirst link-–theearth–-butverticallylinkedtothenextlinksuntilthelastone,wheregreatestbenefitsfromearthrichnessarecaptured.Hencetheterm“access”shouldbeunderstoodasaconceptbroaderthan“property”.

16.Thepossessionofnaturalresourcesmustbeanalyzedwithintheframeworkofabroaderdebatelinkedtotheprocessoftrans-formingproductionstructuresasawhole.Thechallengeistoarticulatethesenewproductionstructuresorthisnewsocietythatgoesbeyondtherural,withthousandsofsmallandmediumactorsfromthepopulareconomyandcompetitiveactorsoftheneweconomyexternallycoordinated.Theideaistoredistributeratherthanarticulate,butnowthechallengeistothinkofanagrarianreformcoordinatedtothepopularurbaneconomyandtheinternationaleconomy,inordertochainthefirstlinktothenextinthechain.Theultimategoalisthatpeasantandindige-nousfamiliesgeneratesurplusesintheireconomicactivity.

The model of the other frontier revalues alternative uses of natural resources

17.InBoliviathecurrentconfigurationofsoilandnaturalresourc-esuseresultedfromexpandingtheagricultural,miningandhydrocarbonfrontier throughoutthe20thcentury.There isa


procedure, a “frontier model” behind the expansion of thenatural resources frontier.Thismodeldescribes theprocessthat resulted in current uses and exploitation of natural re-sources.Themodelemergesfromthedemographic,techno-logical,andeconomicchangesthatmarkedchanginglanduseinthelastcentury.

18.Themodelofthecurrentfrontierreproducesatraditionallandusepatternoflowreturnsoninvestmentsandlowproductivity.Wecanobservethreemoments:thefirstisthatoffrontierex-pansiondrivenbypopulationpressures and technological oreconomicchangesthatmakeexpandingthefrontierprofitable.Thesecondmomentemergesduetosoilproductivityloss.Insomecases,theintensiveuseoffertilizersandpesticideshelpextendapieceofland’slifeuntilfallingproductivitycreatesnewincentivesforexpansion.Thethirdmomentrelatestothenewexpansionofthefrontierandaviciousgrowthcyclewithlittlevalueadded.

19.Theotherfrontierisalsobasedonathree-momentmodel.Thefirstmomentistheeconomicvaluationof landuse.Inordertochangelanduseatlocal,municipal,regionalorde-partmentallevels,economicincentivesaimedatpatternsofsustainableuseshouldbeinplace.Onlyiftheprofitabilityofproducingcertified timberororganicBrazilnuts is greaterthanthatofproducingrice,cattlemeat,orsugarwillanewfrontiermodelbesustainable.Thesecondmomentisthatofvalueaggregationinglobalproductionchains.Thevalueadd-edofhigh-profitproductsemergesfromqualitiesofthepro-ductiveprocess(labourandenvironmentalstandards,amongothers)andfromintangibleandsymbolicqualitiesincorpo-ratedduringthemarketingprocess(certificationsandlabel-ling,amongothers).Thethirdmomentinvolvesmedium-andlong-termsustainabilitywithhigherlabourandenvironmen-talstandards.

GRAPHIC 1Three-moment model of the other frontier

Source: Own.

Revalorizationof Soil Use

Changesin Soil Use

Enhancement of:Labour Standards,Environmental Standards

Moment 1 Moment 2 Moment 3

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The value of the intangible or symbolic allows skipping stages in development

20.Animportanttrendinthemicroanalysisofnaturalresourceval-uechainsistodistinguishbetweenthetangibleormaterialde-terminantsofthevalueforaproductorservice-–suchastastequalityorsanitarycontrols--andtheintangibleorsymbolicde-terminantsofthevalueoftheseproducts--forexample,iftheyareproducedwithoutchildlabouroriftheypreservetropicalfor-est.Revaluationofthefirstlinkrequiresquestioningofhowtocapture more value added. The literature is concentrated onthreeareasthatdetermineagreaterredistributionofintangibleorsymbolicvalue.Thefirstisrelatedtocertificationprocessesthatarecriticalforpricediscriminationaccordingtolabourandenvironmentalstandardsandnativespeciesorplaceoforigin.Thesecondaspectisrelatedtointellectualpropertyandthepo-tentialtoconfirmdenominationsoforiginatthelocalorregion-allevel.Finally,thethirdaspectisrelatedtothedevelopmentofappropriateinformationaboutthedistributionofvalueaddedinglobalvaluechains.

21.Countriesinthefirststageofdevelopmentbasetheircompeti-tivenessontheendowmentofproductionfactors,unskilledla-bour,andnaturalresourceexploitation.Boliviabelongstothisgroup,alongwith41othernationaleconomies.Inthesecondstageofdevelopment,theeconomy’scompetitivenessisbasedonefficientuseofitsfactors.Countriesmovetothisstagewhenthey need to develop efficient production processes and im-provethequalityoftheirproducts.Inthethirdstageofdevelop-ment,innovationistheengineoftheeconomyandthepromoterof competitiveness. Sophisticatedproductionprocesses allowthesustainabilityofhighincomeassociatedwithstandardsofliving,whenevertheseproductsareabletocompetewithnewanduniqueproducts.

22.Whycan’tweimagineaBolivianeconomywithinternationallabourandenvironmentalstandardsby2025?ThesmallsizeoftheBolivianeconomymakesitpossibletothinkabout“skippingstages”,thankstothevastintangiblevalueofasmalleconomythatdoesnotplunderitsenvironmentorexploititsworkforce.Thisdoesnotmeanturningitsbacktotheworld,nortosectors,fields,oractorsthattheBolivianeconomyalreadypossesses.Rather,itmeanstostrengthencompetitivenesswithnewkindsofexports--productsthatwillbeabletoattractsociallyrespon-sibleinvestmentcapitalthatneverusedtocometoBoliviaandthegreenandfairinitiativesthatneversucceededbecausestan-dardswereverylow.

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There are successful examples of Bolivian alternative products and services that have reached global markets

23.Howcanalternativeproductsandservicesbedescribed?Let’sthinkforamomentaboutatypologyofproductsandservicesbasedonsupplyanddemandcharacteristics.Graph2showshowtheBolivianeconomylookswhensupplyanddemandchar-acteristicsintersect.Wecanobservefourquadrants,oneofthem(thatoftheotherfrontier)showingincipientbutencouragingandhighlycompetitivemarkets.Itincludesproductsandser-vicesthatarehighlyprofitableandnoteasilysubstitutedininter-nationalmarkets.Dependingonthesizeofthefinalmarket,itdescribesmarketnichesorveins.Withoutadoubt,theBolivianeconomycannotdependonlyontheseproducts,becauseamongitscurrentcomparativeadvantagesareprimarynaturalresourc-es(gas,mines,extensiveagriculture,livestock)andmanufactur-ing (agroindustry, textiles, jewelry, leatherprocessing,amongothers).However,itcanexpandsupplyandtheimpactonem-ploymentandincomegeneratedbythealternativeuseofnatu-ralresources.

24.Whatfeaturesarecommontotheproductsandservicesfromsuccessfulexperiencesof theother frontier?Thereare three.First,thattheircompetitivenessisbasedmoreonthequalityoftheproductionprocessthanonthefinalqualityofeachproduct.Highqualityiscriticaltoenterintotheinternationalmarkets,especiallyforsomeexports,suchasquinoa,coffee,andreptileleather,butmostoftheirpricemarkupderivesfromthequalityofprocessing:theseproductsdonotusechemicaladditives,areenvironmentallysustainable,anddonotusechildlabour,amongotherfeatures.Therefore,theiraggregatevalueincreasesmorefrom labour and environmental standards certification thanfromproductivityincrease,technologyadoption,orproductin-novation.

25.Second, many products have demand characteristics thatmakethemandtheirsubstitutesrelativelyimpervioustopricechanges.Theinelasticityofdemandmeanstwothingsforafirst-link producer. On the one hand, he or she can betternavigatetheupsanddownsofinternationalconsumermar-ketsbecausetheproducthasahighbranddifferentiation.Ontheotherhand,duetotheproduct’swideprofitabilitymargin,the producer can improve labour and environmental stan-dards,which,inturn,willpositiontheproductinmarketswithhighereconomicreturn.Theproducerisinavirtuouscirclewhereheorshecompetes“upward”becauseoftheproduct’sdemandcharacteristics.

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26.Third,mostproductsfromtheotherfrontierhavesupplycharac-teristicsthatinthelongterminvolvechangesinlanduse.Ex-pandingsupplyoftheseproductsandservicesisnotbasedonexpansionoftheagriculturalfrontierbutoncapacitytoimprovethevalueoftheeconomy’sfirstlink.Thismeansbetterenviron-mentalconservationandsustainablelanduse.Together,theseattributesdescribea“mosaic”policyofsustainableconserva-tion.Totheextentthatthefirstlinkofthelargereconomyismorehighlyvalued,thereturnontheotherlinkswillbehigher,providedthatthereisaninsertionintomarketswithhighenvi-ronmentalandlabourstandards.Therefore,amodelforstop-pingtheplunderingoftheenvironmentanddegradationofthefrontierhasgreateconomicimportance.

THE CHALLENGE OF SPREADING SUCCESSFUL EXPERIENCES

27.Howcouldtheimpactbeexpandedbeyondafewlocalpocketsofalternativeproductioninruralareas?Howcouldtheimpactofthesepocketsaddedtogetherbespreadonanationallevel?And,towhatextentareweanticipatinganationalagendaofpolicieson natural resources, manufacturing, and international com-merce?ThesethreequestionsareinterrelatedandposeagreatchallengeforthefutureofalternativeusesofnaturalresourcesinBolivia.

GRAPHIC 2Typology of products for export

Jewelry items

Cotton shirtsfor men

Wood furniture

Wood seats

Soy oil

Wood Windowsand frames

Wood veneer

Alimentos

Palm heartsEthylic alcoholSoy flour

Cane sugar

Milk, creamand others

Cotton threads

Other seeds

Quinoa

Not roasted coffee

Brasil nuts

Other bovine leathers

Tanned ovine skins

Wood

Sesameseeds Llama and alpaca fine hair

Ovine leathers and skins

Leathers and skinsof other animals

Beans and legumes

Chemically pure saccharose

White refined sugar

Sawed wood

Sunflower flour

Other sawed woods

Soy flour

Fresh plantains and bananas

Soy beans

Natural gasZinc andits concentrates

Crudepetroleum oils

Gold inunwrought form

Unwrought tin

Silver andits concentrates

Other oils

Tungsten

Other fuels

Fuel oils

Antimony trioxide

Copper

Unwroughtsilver

Antimony and its concentrates

Aluminum

Ad

ded

Value

Elasticity of Demand

Fuente: Own elaboration, based on IBCE (2008).

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28.Thecasesdescribedinthisreportshowthatseedsofthealterna-tiveeconomyalreadyexist.Thesecasesmakevisiblehalfamil-lionproducerswhogenerateUS$300millioninexportsandhavethepotentialtobasetheircompetitivenessonhigherlabourandenvironmentalstandards.ThecentralchallengeforpublicpolicyinBoliviaistospreadthisimpactbeyondpockets,marketniches,andpilotexperiences.Therehasbeennobetteropportunityinrecenteconomichistoryfordoingsothannow.Highpricesforoilandfoodcreateaneconomicincentivetoswitchsourcesofem-ploymentandincomegeneration,andclimatechangecreatesanincentiveforstructuralchangeindevelopmentpatterns.

Bolivia can be a global leader in policies for the reduction of carbon emissions through deforestation

29.DeforestationinBoliviaproceedsatarateofaround300,000haperyear.Themainreasonsforthisdeforestationarelandusechangesforagricultureandlivestock,forestfires,illegallogging,andnewsettlements.Thischangeinlanduserepresentsanin-tangiblevalueofUS$1,500perhectareofbiodiversitywithatangiblevalueofUS$200-500perhectareforcattle,soy,orcocaleaves.Itistimetogiveaneconomicvaluetotheintangibleandthusinitiateashiftinthepatternofeconomicdevelopment.Thisisnotaboutsavingtheforestonlytoremaininpovertybuttoreducepovertytosavetheforest.Thesuccessfulexperiencesofdeforestationavoided inMatoGrosso(Brazil),Nicaragua,andtheBolivianNoelKempffMercadoNationalParksuggestnotonlythatthisispossiblebutalsothattherearefinancialandin-stitutionalinstrumentscapableofmakingthechange.

30.Howcanwetakethefirststep?TheBoliviangovernmentcanunilaterallymoveforwardbycreatingafundforthereductionofemissionsfromdeforestationanddegradation.Thefundwouldfocusitsfirstactionsintheareasmostvulnerabletofrontierad-vance--theMadidiAmboro corridor andvulnerable forestsofAmazonandChaco.Theexpectedimpactisdouble:first,induceagradualchangeinrelativepricesoflandsothatthevalueofahectareofbiodiversityforestwouldbehigherthanthatofahec-tareofcattleorsoy;second,spreadaprotectiveeconomicum-brellaover45.3millionhectaresidentifiedbytheNationalPro-gram on Climate Change as potential carbon sequestration,resultinginannualpaymentstocommunitiesandindigenouspeoplewhousetheforestinasustainableway.

31.Howmuchwould it cost to induceagradual change in landprices,andwhataretheinstitutionalchannelsforaccomplishingthis?AccordingtotheNationalProgramforClimateChange,thepotentialsurfaceforimplementingafforestationandreforesta-tionprojectsintheframeworkofcleandevelopmentis45.3mil-lionhectares.IfBoliviancarboncertificateswerecommercial-izedinthenewemergingmarket,usingtheaveragepriceoftheEuropeancarbonmarketin2007,thepriceofonemetrictonof

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carbonwouldbearound$20.ThisisequivalenttoalmostUS$550millionperyearexpressedincurrentnetvalue.Inordertomoveforwardwiththisagenda,itwillbenecessary,first,toestablishafundthatwillhavevalueoninternationalmarkets;second,todevelopaninternationalprogramtocertifycarbonemissionre-ductionbydeforestationavoided;andthird,createanationalfundtoadministerpaymentstocommunitiesthatarepartofthisplanforavoideddeforestation.

32.Maps2and3,simulatedfor2026,showasignificantchangeintheprofitabilityofdifferentusesofbiodiversityatanationallevel.Map2showsanorderofprofitabilitythatrespondstothetraditionaluseofnaturalresources.Bysuperimposingprofitabilityestimateson

MAP 2Conversion of soil by 2026 by erratic expansion of the agricultural frontier.

Fuente: Own elaboration, based on Andersen (2006).


MAP 3Change in use of soil by alternative use of natural resources.

Fuente: Own elaboration, based on Andersen (2006).


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landusetendencies,themaphighlightserraticfrontierexpansiontoecosystemsnotsuitableforagriculture.Map3showsagradualchangeintheorderofprofitability.Itinvolvesthreechangesinthecurrentmap:thefirst,anemergingmarketforconservationusesinareasofforestfrontier(paymentsforenvironmentalservicesandavoideddeforestation);thesecond,amarketforcleandevel-opmentmechanismsandorganic,forest,andfairtradecertifica-tionforagriculturalfrontierareas,includingurbanareas;andthethirdisaconservationcorridorstrategyinmosaicareasthatcom-bineshighconservationprofitabilitywithopportunitiesforeco-nomicdevelopment.

Bolivia can also be a leader in the certification of organic, forest, and fair trade standards

33.Theimpactofsettingupafundforavoideddeforestationdoesnotlieintheforestitself.Itisonlythefirststephelpingtogener-ateanew“orderofprices”forthefirstlinkoftheBolivianecono-my.Thesecondstepistoextendcertificationfororganic,forest,andfairtradestandardstoplaceswheretheagriculturalfrontierhasalreadyadvanced,potentiallyallthesuitableagroforestterri-toryofthecountry.Inthisway,theexistingproductsofagricul-turecanenternewmarketsdemandingenvironmental,organic,specialized,andfairstandards.Inthisregard,theBoliviangov-ernmentalsohasthepotentialtobealeaderinLatinAmerica.

34.Toachievesuccess,thecertificationprogramsshouldbevolun-taryaswellasprofitable.Theestimatedcostofcertifyingallthepeasanteconomicorganizations(OECA)inthecountry-–about775atthenationallevel–-isUS$1,360,000peryear.Thecertifi-cationcostisverysmallcomparedtothepotentialbenefitofat-tracting investments with high environmental standards andwithahigherpricedifferential.Forinstance,thepriceofcoffeeinfairandorganictrademarketsisUS$3,090perton,whichisthepriceobtainedbycoffeecooperativesassociatedwiththeBolivia Federation of Coffee Producers (FECAFEB); the profitobtainedisUS$1,682perhectare,farabovetheprofitobtainedwithconventionaluncertifiedcoffee,US$1,440perhectare.

35.Acomprehensiveagendaforcertificationwillneedtoincludechangesinthecurrentsystemofcertification,onethatmovesforwardbybitsandpieces,onesometimesopposingtheother.Howwill itbepossible tocapturegreatervalueadded in thehomecountriesoforganic, fairorspecializedtrade?Thefirstaspectisrelatedtocertificationprocessesprovidingthekeytopricediscriminationaccordingtolaborandenvironmentalstan-dards,aswell as speciesendemismandplaceoforigin.Thecountriesoforiginneedtoachievegreaterharmonizationandcontrolofproceduresinvolvedininternationalcertification.Thesecondaspectisrelatedtointellectualpropertyandthepotentialtoestablishdenominationsoforiginatthelocalorregionallevel.


Thisisacriticalsubjectinthenegotiationofinternationaltraderules.Therehasbeenprogressinbilateralagreementsbutthereisstillmuchtoachieveinthemultilateralagenda.Thethirdas-pectisrelatedtogenerationofappropriateinformationonval-ue-addeddistributioninglobalvaluechains.Inmanycountries,both generation of primary information and its distributionamongproducers,traders,andfinancialentitieshavecharacter-isticsofpublicbenefit.Government support is frequently re-quiredforthegenerationofreliableandaccessibleinformationinrealtimefordecision-making.

We can retain greater added value by betting on “fair trade zones”

36.TheobjectiveofpromotingalternativeusesofnaturalresourcesistoraiselivingstandardsoftheBolivianpopulation.Forincentivesgeneratedinthefirstlinktoproduceprofits,itisnecessaryalsotogenerateeconomicincentivesintheindustrialandtradelinksofthevaluechain.Toclosethecircleofeconomicincentives,wecanlearnfromdozensofsuccessfulexperiencesofindustrialclusters,manufacturingparks,andtradeareaswithatwist:raiseenviron-mentaland laborstandards insteadof lowering them.Raisingstandardshastwodesiredeffects:first,generatingincentivestogetoutofmarketnichesbasedoncheaplaborandprimarynatu-ralresourcesand,second,generatingincentivestoattractnewinvestmentsinsociallyresponsibleandgreenportfolios.

37.“Competingupwards”alsomeanstostimulateinternationalin-sertionnotbasedonabundantnaturalresourcesoroninexpen-sivelabor.TheexperiencesofCostaRicainenvironmentalstan-dards and of Cambodia in labor standards show a range ofpossibilitiesforcountrieswillingtoeffectmarketchange.Fromtheinternalpointofviewthetransformationofanarrowlybasedeconomy,withfewactorsandfewsectors,intoonewidelybasedcontinues tobea fundamentalchallengeof theBolivianeco-nomicagenda.Thecoordinationofsmall-andmedium-sizedproducerswithruralandindigenouscommunitiesandwithas-sociationsofproducersandcooperativesshouldbecentraltothecurrentagendaandcouldstimulateapatternchangeinnatu-ral resource use. International experience shows that the so-called“curseofnaturalresources”isnotfatalforcountriesthatintendtodiversifytheirproductivebasis,beinsertedintotheglobaleconomywithaddedvalue,andcreate institutions formedium-andlong-termdevelopment.

38.Boliviahaspotentialtobeamongthetopcountriesintheworldwithaneconomyoflaborstandards,fairtrade,andsustainableenvironmentalstandards.That’swhyactionissourgent.Con-structionoftheotherfrontierbeginswithvisibilityoftheactors,developmentoftheinstruments,andestablishmentofterritorialagreements.Thegreatestobstacle,however,liesinconnecting


tHe otHeR fRontieR

alternativeusesofnaturalresourcestoanagendaforbetterliv-ingconditions,humandevelopment,andwell-beingofthepop-ulation.ThethousandsofBrazilnut,organiccoffee,andcacaoproducers,thehundredsofcommunitiesandpeoplemanagingforests,andthedozensoforganizationsthatprovideenviron-mentalservicesinBoliviasuggestthatweareonschedule.

The institutional challenge is multileveled:It is necessary to develop “packages” of pubic policies appropriate for each municipality, region, and prefecture.39.Thenewpackagesofpublicpolicyshouldbebasedonfeasibility

studies,investmentandpre-investmentprofiles,andsocialandenvironmentalimpactassessmentsforeachregioninBolivia.The“packages”willbringnewpublic-privateinstrumentstotheregionsandwillbeadaptedtospecificneedsofproducersandofemergingcategoriesineachterritorialspace.Leadershipinthedevelopmentanddisseminationofpublicpolicypackageswillbetheresponsibilityofthegovernmentandofthesocialandproductionactorslinkedtotheregions.Overtime,eachregionwillnotonlyacquireaprivate“productiveidentity”butwillalsogeneratelocalknowledge.

40.Decentralizedagendaswillfacilitateestablishmentofregionalpro-ductionagreements.Aroundhalfamillionproducersconstitutethecriticalmassoftraditionalandalternativeproductionsectorsinfourpolesofterritorialdevelopmentinthecountry.Theseagendasincludearound300exporters,hundredsofruralandindigenouscommunities,andthousandsofsmallproducersineachregion.Theyalsohaveanindirectimpactonthousandsofproductiveac-torslinkedtotrade,transportation,andmanufactureinthemaincitiesofthecountry.Theseactorsaretheheartofadifferentdevel-opmentpattern,withthepotentialtoproducewithhigherlaborandenvironmentalstandardsandtogenerateagreaterdistribu-tiveimpactatthebaseofthepyramid.Eachpoleofterritorialde-velopmentrequiresanewproductionpactbasedongoalsandobjectives.Thisisthefirsttaskrequiredtomakethousandsofac-torsvisibleanddevelopanewtypeofrelationshipbetweenthegovernmentandproductionandsocialactorsintheregions.

41.Theotherfrontierdescribessuccessfulexperiencesofenviron-mentalservicesmanagement,sustainableforestmanagement,useofcleandevelopmentmechanisms,biocommerce,andor-ganictrade.Isolated,theytellfragmentedstoriesofcommunity,business,orgovernmentalsuccess.Together,theycandepicttheheartofanalternativedevelopmentpattern.Theyshowthatitispossibletoconstructaneconomynotbasedontheuseofprimarynaturalresourcesandprovethatthereisaplaceforhigh-valueBolivianproductsintheglobaleconomy.Theygiveauniqueiden-titytotheBolivianeconomy,anchoredinthemulticulturalismofitssocietyandthemegadiversityofitsnaturalresources.

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