The Amazon’s Relentless Poverty Cycle

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In Brazil’s Amazon, people are trapped in a vicious cycle in which deforestation begets poverty, and poverty begets deforestation.

Already, more than a fifth of the country’s rainforest has vanished. High atop the list of culprits is agribusiness—commercial soybean growers and cattle ranchers who represent the country’s most economically important sector. 

That's put the typical Amazonian in a precarious situation. Of the 28 million Brazilians in the region, about 11.8 million live in extreme poverty. Many are subsistence farmers who burn down sections of the forest to plant crops to feed their families. They lack money for fertilizer, so when their soil is depleted they stake out a new patch of land. 

“We talk a lot about the climate emergency, but there is a social emergency in the Amazon territory,” says Tereza Campello, whose responsibilities as director of the socio-environmental division of BNDES, Brazil’s national development bank, include overseeing the Amazon Fund. “There is no way to keep the forest standing without income, decent employment and good living conditions for the millions and millions of Brazilians who live in the Amazon.”

The Amazon Fund is at the forefront of Brazil’s efforts to promote sustainable micro-economies that don’t damage the rainforest. The roughly 4 billion reais ($710 million) in its coffers include contributions from Norway, Germany, Japan, the UK and the US.

The fund is also key to the Brazilian government’s lofty ambitions to end deforestation by 2030 and also President Luiz Inacio Lula da Silva’s aspirations to return Brazil to a leadership role in climate negotiations. 

However, the fate of the fund is dependent on political will. Lula launched it during his first term in 2008. But foreign donors halted contributions in 2019 when Lula’s predecessor, Jair Bolsonaro, was in office, after his administration undermined conservation efforts. Lula rebooted the fund soon after returning to the presidency in January 2023.

While spending on programs supported by the fund has soared, critics say the scale of its efforts fall short of what’s needed to address the Amazon’s social crisis. 

Every part of the tree is valuable: Its fronds can be woven into thatch roofs and mats; the nuts contain an edible oil and can also be ground into flour; the empty shells are turned into charcoal for cooking. Babassu nut harvesting has long been a side hustle for subsistence farmers in Maranhão, one of the nine Brazilian states that make up what’s known as the Legal Amazon.

“Babassu trees play a key social, environmental and economic role in Maranhão,” says Agenor Nepomuceno, a spokesman for Assema, a nongovernmental organization that runs some of the fund’s projects in the region. “There is more poverty in the communities where there are fewer trees, where babassu forests were extensively cut.”

Early each morning, residents from Lago do Junco, a rural municipality in Maranhão, head into the forest by the thousands to collect nuts that have dropped from the 30-meter-high babassu palm trees. As they work, some of the women sing a plaintive song that harks back to when the area became home to settlements of runaway African slaves: “No one hears my scream / They don’t know my oppression, hiding here in the forest, hungry, breaking coconuts / I hide among the trees, hungry, breaking coconuts.”

Dora de Matos Teixeira spends her days cracking open the nuts her 18-year-old son, Ismael, brings home on a donkey. A veteran quebradeira de coco like herself—she started at the age of 10—can make about $5 a day if she works assiduously, placing the fruit atop a sharp metal point and then banging it with a crude wooden mallet to separate kernel from husk. “It’s very tiring,” she says. “I get back pain.” Still, the work earned her enough money to raise two boys.

Maranhão, the most densely populated of the states in the Amazon, has lost more than three-quarters of its original forest cover. Not coincidentally, it has some of the worst social indicators in the whole country. Almost 58% of the population lives below the poverty line, close to double the proportion nationwide, according to a 2023 report published by the Amazon Entrepreneurship Center and the Amazon Institute of People & the Environment (Imazon), a pair of Brazilian NGOs. Imazon’s research shows that across the Amazon region, municipalities with high levels of deforestation exhibit bigger social deficits. In other words, environmental degradation and economic degradation are inextricably linked. Less than half the households in Maranhão have adequate sanitation, and about one-third of children don’t make it to high school.

Lago do Junco’s babassu economy revs up as holidays such as Carnival approach. Residents lug bags of the nuts to grocery stores and exchange them for condensed milk, pasta and beverages. From there, they’ll be transported to a nearby processing plant, where the kernels are crushed to make oil. Most of the plant’s output finds its way into soaps and body lotions. Customers include Brazilian beauty conglomerate Natura & Co. and Body Shop, a UK-based chain with a presence in dozens of countries.

The network of eight grocery stores and the factory are owned by the COPPALJ, a cooperative that was founded in the 1990s and has grown to include 248 families. Once a year, the cooperative pays out its profits to members, in proportion to the amount of babassu nuts each brought in.

The dividends were once meager, but they’ve grown steadily since 2014. That’s when the cooperative received its first grant from the Amazon Fund as part of a 5 million-real investment by the fund to upgrade the area’s babassu supply chain. The money paid for the purchase of new oil-extraction equipment at the processing plant and the addition of a small chemical laboratory, to certify the product as organic. Annual revenue more than doubled over the subsequent five years, allowing the operation to increase payments to nut suppliers.

Now the cooperative buys nuts from about 1,000 local suppliers at a price of about 4 reais per kilogram. That’s about triple the amount paid to harvesters in neighboring communities who aren’t connected to the cooperative. “Before the cooperative, our life was miserable,” says COPPALJ director Conceição de Maria Alves, who comes from a long line of babassu-nut harvesters. “We used to eat only once a day, just rice.”

The fund’s initial focus was on building an infrastructure for monitoring deforestation and curbing it. Yet its remit has expanded greatly in the past year to include a 318 million-real action plan to fight criminal activities such as illegal logging and mining, gold smuggling and also trafficking in endangered animals. In what constitutes a major win for Lula, deforestation halved in 2023 from the previous year, reaching its lowest level since 2018.

The Amazon Fund has approved about 1.9 billion reais in disbursements since it was restarted last year, a big jump on the 400 million reais a year it averaged annually. Much of this spending is for programs designed to improve the well-being of what’s long been one of the Amazon’s most neglected species: humans. “There is a change of perception on how to protect the forest, as it is necessary to also pay attention to the region’s population,” says Celso Silva-Junior, a researcher at the Amazon Environmental Research Institute and the lead author of a 2020 study on deforestation in Maranhão. “The forest is profitable, especially when it is standing,” he says.

Campello of BNDES says the more recent emphasis on projects that provide income support reflects the understanding that “sustainability can only be real if the social aspect is resolved, because otherwise it is a short-term solution.” She adds: “You have communities that today, due to lack of alternatives, end up being recruited by organized crime. Not because they want to deforest or because they want to pollute the rivers, but because they lack an alternative.”

José Ramos Leitão, who lives in Bacabal, a town about a two-hour bus ride from Lago do Junco, used to cut down and burn trees to clear land for crops to support himself and his family. When the soil became depleted, he would destroy more of the forest to create another plot.

With the help of the Amazon Fund, five years ago he began planting native trees: açaí, cocoa, cupuaçu, mango and soursop. Unlike his previous crops, which needed to be replanted every year, the groves are less work. And his harvests have grown to the point that he now has a surplus to sell. Next he plans to start producing fruit pulp at a nearby factory recently built with support from the Amazon Fund. “Nowadays, I get angry when I see fire,” says Ramos Leitão, lounging on the porch of his house with his wife. “When I die, I hope my children don’t sell the property but live off it.”

According to the Amazon Fund, grants for sustainable production projects such as the one involving the babassu harvesters cooperative now benefit more than 240,000 people–which is only a small slice of the population in need. Many in the country’s NGO community say the scale of the fund’s interventions is no match for the size of the problems. They also bemoan that the fund—created via an executive decree—is at the mercy of presidential whims.

Perhaps the Amazon Fund’s biggest limitation is that it almost exclusively focuses on projects in rural areas, whereas about 80% of the Amazon’s population lives in cities that are struggling to keep up with the influx of newcomers. Among those is Belém, the capital of Pará state.

A metropolis of gleaming skyscrapers and colonial-era buildings painted in pastel shades, Belém has been chosen to host next year’s edition of the annual climate summit, COP30. Even though authorities are hard at work sprucing up the city in preparation for the November 2025 event, the gentrification campaign is unlikely to reach very deep into the slums that house many of its 1.3 million residents.

One of them is Hugo Ribeiro, who grew up in a settlement deep in the rainforest and moved to Belém when he turned 18, in search of work. Today he and his wife make acai puree that Ribeiro delivers to customers on his motorbike. The couple and their daughter live in a makeshift red-brick house that sits along one of the city’s canals and is prone to flooding. “When it rains, your home floods, you lose electronics, you worry about bugs, and with small kid, you worry about snakes,” he says.

Belém leads all Brazilian cities in what policy wonks call disordered urban expansion. Half the population lives in substandard housing. Only about 3% of the sewage is treated, according to Trata Brasil, an NGO focused on protecting water resources. The homicide rate, at 19.6 per 100,000 people, is more than three times that of the city of São Paulo, Brazil’s business capital.

Beto Veríssimo, co-founder of Imazon, says the plight of places such as Belém gets lost in the larger conversation about the plight of the rainforest. “Brazil has to look at the Amazon differently,” he says. “The issues on Amazon cities have been forgotten, because in people’s minds the population lives in the forest.” —With Simone Iglesias, Andrew Rosati and Giovanna Serafim