Many international agencies such as the World Bank have invested billions of dollars in tropical countries for various development purposes – expanding agriculture and building dams and roads, for example. Moreover, the lending and repayment policies of both the World Bank and the International Monetary Fund are such that countries must deplete resources to repay their loans to these agencies. Although the World Bank has environmental guidelines, of its several thousand employees, only three were conducting full-time environmental reviews in the 1980’s (Holden, 1986). Government subsidies – direct or implicit – often operate to the detriment of many aspects of the environment, such as soil, fisheries and rainforests. Governments in tropical countries subsidize rainforest destruction in many ways – by promoting unsustainable agricultural activities, logging concessions, lumber finishing, and so forth. These subsidies, which Myers (1998) calls “perverse,” are more expensive than the result warrants, and encourage unsustainable and inefficient activities. This does not cover the true costs of such subsidies, which must also include increased taxes, unemployment, the depletion of natural resources, the diversion of financial resources from better uses, the unequal distribution of benefits (mainly to the rich), and many others. But these consequential costs of subsidies are incalculable. As Roodman (1996) asks, “How does one…calculate the costs in dollar terms to indigenous Dayak people in the Malaysian state of Sarawak of the loss of forests on their homelands, which the government has brought about by sanctioning large-scale logging by outsiders?”

Brazilian government support for 12 million hectares of existing cattle ranches has cost it more than US$2.5 billion as of more than 10 years ago (Repetto, 1990). In all of these activities, the government fails to protect the public interest. Subsidies, selling logging concessions below market value, allowing environmental destruction – are all paid for by the taxpayer. Pimm, et al., (2001) estimate that subsidizing environmentally destructive policies costs US$2 trillion every year globally; a figure of US$1.45 trillion is given by Myers (1998); US$950 billion to $1,950 billion by Balmford, et al., (2002), almost the same as Pimm’s estimate. As the latter points out, this amount is two-and-a-half times as much money as the Rio de Janeiro summit’s budget for sustainable development, which the governments involved claimed they could not afford! The United States alone provides more than 20% of these perverse subsidies, so that U.S. taxpayers are bled of $2,000 per year to fund them, not to mention the $2,000 more through environmental degradation and increased costs for goods (Myers, 1998).

As an example, the World Bank has assisted the entry of Thailand into the global economy, but not without cost. Thailand has received many millions of dollars in World Bank funds, credits and loans. A key part of the Thai development program was a focus on expansion of rubber production. In 1961 the Rubber Replanting Project began under the auspices of the Thai Ministry of Agriculture, and it has been funded in part since 1976 by The World Bank. By 1991, 480,000 hectares of mature rubber forest had been converted to new varieties of rubber trees and rubber exports had increased by 5%. For a token sum, planters could obtain forestry department land and also substantial subsidies for fertilizer, new varieties of rubber trees, and herbicides. Much of the conversion activity was illegal, as legal logging roads cut into forests opened them up to incursions by illegal logging operations. As a consequence of this project, in 1988 Thai farmers received, not only more income, but also disastrous floods, caused by excessive logging and agricultural conversion, although The World Bank had estimated that the replanting would result in minimal ecological problems or erosion. The environmental impact statement in the 107-page document for the third replanting project was one paragraph long (Hamilton and Chatterjee, 1991). In this, as well as many other cases, large international agencies in collaboration with national governments have, until recently, given short shrift to the environmental consequences of their policies, instead focusing on economic returns, rapid economic growth, and increased export capacity.