The region of Northwest Bolivia where the Andes meet the Amazon plain is alternately considered a rich natural treasure and an under-developed green void. In 1995, the Bolivian government officially protected 1.8 million hectares of rain forest, cloud forest, rare deciduous forest and an array of plant and animal species nearly unsurpassed in the world's nature reserves.
The new protected area is called the Madidi National Park and Natural Integrated Management Area, and is adjacent to the 400,000-hectare Pilón Lajas Biosphere Reserve and Indigenous Territory. In addition to their natural wealth, these side-by-side protected areas are home to Tacana, Tsimane and Moseten indigenous people. But to some, these reserves and their environs represent untapped economic opportunity. They hold land and natural resources Bolivia can ill afford to leave undeveloped. That view has led to the proposal of major infrastructure investments in and around the Madidi and Pilón Lajas protected areas.
In this report, I focus on three major infrastructure proposals in an attempt to determine what tradeoffs, if any, there are between economic development and nature conservation in the region and what sort of infrastructure is appropriate for the area. To do that, I use traditional economic analysis, as well as tools of environmental economics. The projects analyzed are the proposed Bala dam on the Beni River, a proposed road from Apolo to Ixiamas, via Tumupasa, and paving and extension of a road from San Buenaventura to the Peruvian border at Puerto Heath.
This analysis found that none of these projects is economically beneficial, even before considering environmental costs. The Bala dam investment would stand at most an 11percent chance of breaking even or better in financial terms and would have at most a 19 percent probability of economic viability. Its financial losses would likely be between $293 million and $1.011 billion in net present value (NPV) terms. The Apolo-Tumupasa road would produce a NPV of around negative $16.31 million and the San Buenaventura-Puerto Heath road would lose an additional $24.78 million. In per capita terms, the total loss from this suite of projects could top $137 for every Bolivian citizen. There is, therefore, no tradeoff between these particular development projects and environmental protection: Bolivia would save money by leaving the ecosystems of the Madidi-Pilón Lajas area alone, or pursuing very different development plans.
Similar factors are responsible for the negative results in all three case studies: First, the Madidi-Pilón Lajas area is an area with low population density and very limited access to large domestic or international markets. As a result, large-scale infrastructure investments do not have sufficient beneficiaries or stifled economic potential to offset their considerable costs. Massive colonization could potentially change that, but agricultural colonization is discouraged by the new land use plan for the area due to poor soils, legal considerations and significant environmental values.
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Two Roads and a Lake : An economic analysis of infrastructure development in the Beni river watershed
