Environmental Cost of Livestock in Brazil 20 Times Higher Than Revenue

(3BL Media/Just Means) - Another report points to the devastating environmental and economic impact that livestock can have. We have previously reported on FAIRR (Farm Animal Investment Risk & Return), and now, some fresh data corroborates the view that livestock is bad business, in more ways than one.

According to a study presented by Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável (CEBDS), a Brazilian agency dedicated to sustainable development, in collaboration with the German Agency of International Cooperation (GIZ), for every R$1 million (US$244,000) of turnover from bovine livestock in Brazil, an equivalent loss of R$22 million (US$5.36 million) is generated in environmental damages, caused mainly by deforestation and greenhouse gas emissions.

The study highlights clearly that when such losses are factored in, bovine livestock is unfeasible. CEDBS’s CEO Marina Grossi told Brazil’s O Globo daily newspaper that the objective of the study is to provide loaning guidelines for banks and other financing institutions. She quotes the country’s Central Bank’s resolution 4.327 that says the responsibility of environmental risk falls on both those who cause the problem and those who finance it.

Called Natural Capital Risk Exposure of the Financial Sector in Brazil, the report looks not only at livestock, but also petrol and gas, cement, energy, steel, forests and chemical products. It recommends banks and pension funds new ways to assess investment risk.

According to Marina, frontier livestock on the edge of important biomes such as cerrado and the Amazon, is the highest risk one. Soil where livestock has treaded takes years to recover.

An emerging issue

The livestock issue is a major battle front for Brazilian environmentalists, where the national government sends mixed signals about the issue. On one hand, it tries to curb deforestation. But, at the same time, it also provides financial support and facilitates investment for the livestock business.

Writing on livestock in the Amazon region, João Meirelles Filho, a well-known environmentalist and Amazon expert who wrote the book O Ouro da Amazônia (Amazon’s Gold), says 30 years ago there were about two million cattle heads in the region. Now, it is home to one third of the country’s herd, or 75 million animals. He estimates in 20 years it will reach 200 million, causing the replacement of forest with pasture.

Despite its major contribution to climate change and available data, livestock is often absent in the global conversation on the topic and policy-making strategies. Reports like this and initiatives like FAAIR may be the early signs that a paradigm change is under way as the activity is increasingly recognized as an investment liability.

Image credit: WWF