It is a fact that the Amazon forest has a large impact on the regional area of South America. South America has a population of over 430 million and houses twelve countries and many local tribes. The environmental impact of the forest needs to be thought of in conjunction with its economic impact. It feeds a large portion of the continent by just providing the water.
The Amazon forest is so large that it creates its own rainfall by recycling the moisture it gets from the rain it made and this process is repeated in multiple cycles. The moisture created in the air contains so much water that it can be compared to a larger river than the Amazon river. It can be easily deduced from here that the Amazon forest is responsible for all the food it creates for the people. Less food and less resource create regional conflicts. And regional conflicts disturb economic stability for all nations involved.
However, the Amazon forest also creates an economic constraint to nations. Tourism can’t create enough GDP for nations to progress and compete on the world stage. Growth in technology can create GDP without the usage of land. Higher GDP is translated to better lives and makes it possible to exist along with rainforest. And technological advancement is hard to take place with a limited amount of capital. In short, it is harder for nations to grow economically if they can’t utilize the land. This is the classic definition of opportunity cost.
ESG and impact investing can be used to create the incentive for people to start businesses that are environmentally friendly. A clear list of the requirement by the investors can be a good start. This is possible using ESG Index funds.
