Environmental and Economic Risks of Populism

By Saleem H. Ali and Jose A. Puppim de Oliveira

With over 300 people feared dead, the disaster ensuing from the failure of a dam at a mine in Brazil on January 25, 2019, shows the dangers of weak or poorly enforced environmental regulations. Yet despite such dire events, there is a mounting political pressure from populist movements worldwide to weaken or even dismantle global and local institutions for environmental protection that were built over decades. Indeed, environmental protection has become a deeply polarizing issue in contemporary politics, despite a bipartisan history in the United States and abroad.

Richard Nixon’s name has come back in the news recently for unrelated political reasons but the Republican president’s singular domestic policy achievement was the establishment of the Environmental Protection Agency in 1970. This agency has become an exemplar for environmental regulatory infrastructure all over the world, including for our largest South American neighbor - Brazil. Over the past 50 years, Brazil made great strides in environmental protection and even reversed a dreadful trend of Amazonian deforestation.

Yet over the past two years both the United States and Brazil have followed a path of populist politics wherein maverick charismatic leaders have rallied the masses against environmental regulation. By deftly caricaturing ecological protection as a constraint on liberty and economic development both President Trump and President Bolsonaro have managed to spur resentment towards regulations whose positive impacts so many citizens have dangerously begun to take for granted. The recent U.S. government shut down disproportionately impacted the Environmental Protection Agency. Out of a workforce of 13000, only 700 were deemed “essential” and thus almost 95% of the agency was furloughed.

Bolsonaro came to power in a wave of populism that wiped out the previously well-established politicians on the left and right. He had a radical, though controversial, agenda on environmental and social issues. Concerning mining and agriculture, his views were that indigenous lands and environmental safeguards were impediments to generate jobs in these sectors. He dismembered and weakened the agency to protect the rights of indigenous people and threatened to have the environmental ministry (Brazilian EPA) merged with the ministry of agriculture or closed down all together. This impetus to weaken environmental regulations has been manifest in the approval of the 2017 Mining Code with former executives of mining companies having been appointed to senior positions in the ministry.

At the same time the rapid demand for minerals, including for green technologies, also drives some negligence on the quality of the preventative infrastructure and policies. As commodities, competitiveness of mineral production rely heavily on timely filling the demands and reducing costs, safety and the environment are easy places to cut corners. As soon as the prices go down, mining companies cut costs, generally affecting maintenance and monitoring. Regulations are the only safeguard in the boom and bust world of mining. Thus, weakening regulations are likely to lead to more disasters like the one at Brumadinho, which has united the country in sorrow and sympathy for the victims.

The challenge for the public in grappling with environmental risks, such as those coming from unregulated mining or climate change, is that they often present themselves in sporadic episodes across a wide and unpredictable range of circumstances. President Trump and President Bolsonaro should consider the environment, instead of tragedies caused by weakened regulations, as an issue to unite rather than divide their nations. Even the border wall being proposed has environmental implications which Red-state ranchers claim as a means of opposition. If ecological factors could be used as a bipartisan filter that is predicated on scientific assessments we could find a more constructive path forward. No doubt science itself can be politicized but the level of scrutiny that comes from the scientific method mitigates such eventualities more so than selective cries and demagoguery at rallies. 

It is unclear what long-term change in attitude Bolsonaro might show following this calamity though. State prosecutors were able to secure a freeze of 5 billion reais ($1.33 billion) of the mining company’s accounts to pay for damages from the disaster. Vale's market capitalization dropped by $70 billion in one day. There are clearly major economic costs of such a disaster and the connection between ecology and economics should also dawn upon the populists. North American or European mining companies should not consider themselves immune from such potentialities and must plan more effectively for such disastrous contingencies. A recent study revealed from the Responsible Mining Foundation revealed that half of the world’s largest miners do not keep track of their tailings risk management measures. The potential demise of Vale may benefit some non-Brazilian miners but it should certainly not lead to sanguine complacence. It is high time that environmental risks are considered economic risks as well by those who might create a false dichotomy between economic growth and ecological protection.

Saleem H. Ali is Blue and Gold Distinguished Professor of Energy and the Environment at the University of Delaware's J.R. Biden School of Public Policy and Administration and Professorial Research Fellow the University of Queensland's Sustainable Minerals Institute (Australia)

Jose A. Puppim de Oliveira is Professor at the Funda??o Getulo Vargas (FGV), Brazil.