#54 – The Expat Files: Deforestation, Illegal Logging, and Expats’ Property Risks in Latin America

Automatically transcribed from the original recording; names and wording may contain errors.

[00:01] South of the border, down Mexico way. That's where I fell in love when the stars above came out to play. Hi everybody, I'm Johnny Mueller. And you're listening to the Exped Files. Living in Latin America. The one of a kind show that tells you what it's like to live, work, play and or retire in Latin America. So let's get started. I'm going to start today's show by reading a letter to the editor that I came across in a large Nicaragua newspaper this week. And I hope you don't mind if I translate this into English. It says, on May 10th when I wasn't home, three large cedar trees were cut down and removed from my property.

[00:48] And besides the theft of the wood, what really saddens me is that these trees were planted by my great grandfather and maintained through three generations till now. And I know the perpetrators must have been persons who lived in the area because these big trees were in my back garden and far from the road. So if anyone knows of or has seen somebody hauling or cutting larger logs in the last few days in my area, please inform me or the authorities. And then she gives her town and her address and her email and all that. And what I say is, good luck lady, it's never going to happen. Especially when a big old teak tree or a Honduran royal cedar can bring anywhere from five to twenty thousand dollars on the open market. So just imagine a three man team of thieves in this case with a flatbed truck and some chainsaws staking out this lady's house.

[01:33] And in a few hours they pulled on four big trees like that. And even if they get the low end price of five grand a piece, they got twenty thousand dollars between three guys, which is around seven thousand dollars a piece for only one day's nefarious work. Each of these guys has collected for himself about four years or so of the average minimum wage down here. Now to put that in perspective, imagine a first world minimum wage worker making about six bucks an hour. In that case, it would be like he was making fifty thousand dollars for one day's dishonest work himself. Now I don't know about you, but I don't know of anyone up in the first world who steals trees and sells the logs. I don't think you'd find too many guys in prison on that charge. First of all, you'd have to have the equipment. Second of all, someone's bound to spot you because you're going to be in one of two places in a national or state park or on private property.

[02:24] And lastly, up in the first world, park rangers and natural resource people enforce the law. So almost any other crime it seems has a bigger payoff than stealing trees. But down here in the third world, again, it's completely different. They have all the laws all right, but they just don't enforce them. In fact, in some of the outback areas where there's a sparse population, cutting down trees wherever you happen to find them and selling them for construction lumber or just for firewood has become a kind of a national pastime. Especially in the last two or three years, ever since gasoline and diesel got up above about two dollars and fifty cents a gallon. And right now down here, gas and diesel prices are hovering between three and four dollars a gallon. So what does that have to do with deforestation and illegally cutting down trees?

[03:10] Well, it's like this since a little under half the population of Latin America, that is, about 250 million people live on less than two dollars a day. Well, those people have to cook with something. And traditionally, these people would cook with wood burning stoves. And it might add very inefficient ones, too, which means most of the heat didn't cook the food at all and just got wasted and radiated out to the ambient air. But since wood, or what they call leña in Spanish, was virtually free for the collecting, it didn't really matter that much to them. But you know, as populations increased, that couldn't go on forever. In around about the 1970s and 80s, the mostly rural indigenous poor population had cut down and stripped out the vast majority of the really easily obtainable firewood stockpiles and trees.

[03:57] In other words, they'd have to walk a long way from home or start paying for it. And at that time, as the population really took off and the wood shortage became more severe, those millions of poor people started switching over little by little to propane gas, usually 25 pound tanks, which down here is the most common tank size by far. For all you expats out there, it's the same size that you use on your outdoor barbecue grill. And for the longest time, for about 30 years anyway, from about 1970 up to the latest Gulf War, that's when the price really took off. Well, a refill back then, on a 25 pound tank of propane gas, only cost about 3 or 4 dollars, and that price remained stable for dozens of years. So even the poorest of people down here, even the ones making minimum wage, like 3 to 5 dollars a day, well even they could afford a tank of propane gas once in a while, at those rates.

[04:50] And if a family like that used it only for cooking, it could last more than a month. But now, in the last few years, things have changed drastically. In fact, I remember back around the year 2000, right before the Twin Towers incident, when a refill on a 25 pound tank of propane gas still only cost about 7 dollars, which was yet within the budget of even the poorest people down here. But since then, the price of a refill has shot up, and now it's about 20 dollars. Now that's about 4 days pay if you're working at minimum wage down here. Now I know that wouldn't mean much to anyone up in the first world. 20 dollars for a family of 4, for a month's worth of gas for your stove? Why, you'd spend that much on a night out clogging your family's arteries at McDonald's. But down here, at 20 bucks a refill, that's had drastic environmental consequences.

[05:39] Not to mention tremendous negative health and pulmonary effects. Now that so many millions of people have switched back to cooking with firewood. I mean, it's like having a campfire going in your house 5 hours a day. But that's the way it is down here, for maybe a third of the population. And you're starting to see wood scavengers all over the place. Especially at night, you hear people chopping and hacking away, and almost exclusively on the outskirts of the big cities. Because the major cities themselves are concrete jungles. There are practically no wooded lots left. But like I said, it's not the city people that are burning the wood. Well some are, but not many. Not yet anyway. The thing is, poor city folks don't have much access to wood. Not anymore. But you just take a drive through any one of the smaller towns and villages,

[06:27] roll down your windows and you'll think you're at Boy Scout camp. In fact, in some of the poorer towns, it seems like everybody's burning wood. And if you're a tourist, you might get a nice photo op when you see an old hunchback man or woman, or even a group of young kids hauling bundles of sticks on their backs alongside the roads. It may look cute in your vacation photo file. You might think it's quaint, but I tell you, it's a bad sign. And what that really means is that the local population is stripping out all the nearby forests and whatever else they can get their hands on. And that they've hit rock bottom. And I'll grant you that in these subtropical and tropical climates, things grow mighty fast, especially during the rainy season. Well it still takes some years for a fast growing pine tree to get to a decent size where someone would want to cut it down for firewood.

[07:14] And those big beautiful hardwood trees like teak, mahogany, and royal Honduran cedar. Now that's another thing altogether. It takes 15 or 20 years or more before you want to harvest one of those. And even the dirt poor folks down here know better than to cut one of those fabulous heavy hardwood trees down and use it for firewood. It's not that it would be a sin, though to us it would be. But they could care less about that. It's about the money. Because there's two kind of trees down here. Trees to burn for firewood and trees to sell to lumber yards. So if you think these big transnational lumber companies are the only ones guilty of mass deforestation down in these parts, you're wrong. Now I'd never stick up for one of those big companies, though they always replant a couple of trees for every one they cut.

[07:59] But that's not because it's out of the goodness of their hearts. For them, it's not about good stewardship. No way. I mean, they're really not tree huggers. They're tree cutters. It's only because they need to have another crop to cut in a few years. Now in some people's eyes, those multinational companies actually look like saviors, as compared to a few hundred million people out there scavenging, who are only thinking about what they can find and burn today and don't give one damn about the future. Or reforestation for that matter. And in fact, the concept of reforestation is as foreign to them as cold fusion. And the average guy down here who burns firewood for cooking, he's wondering if he's going to have enough firewood so his wife can cook that chicken dinner tonight. And the fact is, the 250 million people down here that live in that subsistence way,

[08:46] for them, any stand of trees, big or small, whether they have a right to it or not, is fair game. And if it's on public property or in a national park, that's even better, because there'll be no one there guarding it with a shotgun or a machete, like there might be on private land. And that's especially true out in the boonies, where there's vast tracts of public land, millions of acres, and practically nobody watching. And here lies the root of a big problem for expats. So many expats I've known, who've lived in one of the big cities down here, after a year or two of exploring the countryside, we get the itch to expand our horizons a bit. A lot of us, who happen to have a little extra cash, we often set our sights on a second residence or an agricultural or tourist proposition

[09:31] far away from our regular residence. And most often, it's in a very lightly populated rural area, far away from everything. Sometimes in the middle of nowhere, and that's what we like about it. I call it the Expat Green Acres Syndrome. And this is a common pattern with expats, who've been down here a little while and who've got some time on their hands and are a little antsy to try something new. I mean, let's face it, there's a lot of us expats, who think we're good at everything. We can be better coffee, papaya, and pineapple farmers than they can, even if we don't have any experience. Because we're good at research, we can look things up, and we know all about technology. And of course, internet marketing and sales. That's all you need these days, right? Well, right so far, but one thing we fail to consider

[10:17] is that land that we just bought. We didn't buy it in the first world, we bought it in the third world. And that's where the trouble begins. So, let's start talking about that land you just bought. Oftentimes, a very big piece of land. Because honestly, unimproved land down here, especially farmland in rural areas, usually goes for a song. Sometimes even 10 or 20% of what you'd pay for an equivalent piece up in the first world. And when expats get a load of how cheap a piece of farmland is down here, they often jump right on it, thinking that it's only going to zoom in price in the future. Which it might, who knows. But almost every expat I know who's ever done this has also learned a hard lesson. Because unless you hire somebody to live on that land permanently,

[11:02] and not just a guard who comes around once in a while to make the rounds either. Well, I guarantee you if you don't, in no time, the locals will figure out that you're an absentee owner, and not only will they strip your trees out, but if you have a river on your land, they just might steal your water, your rocks, and your sand too. As well as any fruit you might have hanging on your trees. Because the way the Latin people figure it, if you own property or land and don't guard it, they figure it doesn't mean that much to you. In fact, one Latin worker, who I caught stealing a stereo from me one time, was very matter of fact when he told me why he stole it. He said, Don Johnny, and they almost always call you Don, that's D-O-N, if you're the boss. And just as an aside here,

[11:49] they'll call you Don if you're a man and Dona if you're a woman. That's D-O-N for a man and D-O-N-A for a woman. Which is a term of respect. Not to be confused with Jefe, which means boss of course. And Jefe is a more common street term, much less formal, used by taxi drivers and shoeshine guys and anyone who's trying to sell you something. But I'm telling you, when they call you Don, that's another thing altogether. The first few times that that happens, you have to laugh inside a little bit. Because it reminds me, and every expat I guess, of Marlon Brando and the Godfather, you know, Don Carleoni. Well, that's exactly the same term of respect your workers will use for you down here. So get used to it and don't laugh. Like I said in the previous show, down here, chivalry and politeness are not dead. Not yet anyway.

[12:36] And even in high-volume tourist destinations, like Costa Rica and parts of Mexico, there is a sort of veneer of politeness. But that's only because they want a bigger tip. In fact, one expat told me, chivalry is not dead down here at all. Even when you get robbed, they're polite about it. Anyway, back to my story, where my worker stole a stereo from me. When I asked him why he did it, he said, Don Johnny, I noticed that you have three stereos in your house. And a person can only listen to one stereo at a time, right? And I said, yes, I know, but that's my property. I bought those. And he said, you know, I was careful to take the one you like the least, the one you never use. And the way he said it, he almost had me convinced that he was doing me a favor by taking it off my hands. So anyway, that's the logic they use.

[13:23] If you don't use it or guard it, you must not value it very highly. And if it's something that they don't have, and you're letting it sit idle, well, they'll put it to better use. So how can you argue with that mentality? Anyway, that's a part of the problem that confronts all expats down here, who buy land for an investment that happens to be quite a distance from where they actually live. The problem is, expats who buy big tracts of land out in the boonies often let it sit for months and years and rarely make it a point to go check on it. Thinking, of course, that it's just raw land and what could possibly happen. But believe me, it's not like buying a piece of raw land up in the first world and just letting it sit. Because as the price of petroleum products and propane gas creeps higher and higher, it really brings out the scavengers.

[14:09] Because the price of propane gas is five times as expensive as it was eight years ago. So that means any unprotected stand of wood is at risk of being chopped up for firewood. And even worse, if you have some hardwood trees, look out. And that's because, like I said before, a mature hardwood tree can go anywhere from five to fifteen thousand dollars. And if somebody could strip out a hardwood tree like that, they've just won the lottery. So naturally, you can bet the locals are keeping a sharp eye out. And that shouldn't make you wonder why, when you're driving around the boonies at night, you often spot a truck just loaded with fresh cut logs. And you have to wonder why you rarely see trucks like that driving around in the daytime. Seems like something fishy's going on, doesn't it? So I was curious, and I asked a few questions

[14:54] at one of the big sawmills and lumber yards myself. I told the foreman there that I wanted to cut out a few big hardwoods from my property. And I asked him if he knew anyone that might want to buy them. Well, he said I could either bring the logs down myself and he'd cut them up to any size I want for a small fee. Or he'd just buy them out right from me, of course, depending on the kind of wood, the grade of the wood, and the age and the condition. And I noticed that he had a couple of flatbed trucks around, and I asked him if he could come out to my place and pick up the logs. And he gave me a funny look and said, it's better you hire your own truck and bring your logs to me. That's the only way we take untrimmed lumber from private parties these days. And he had a kind of sneaky look in his eye. And as I was walking out of the place, one of the workers pulled me aside,

[15:40] handed me a phone number. He said if you need to haul anything big, call this guy. He's got a few big trucks and a winch, and he'll help you out. And I said, your boss here has three trucks in his lot. Why won't he come out and get my logs? And he said, my boss will be glad to pick up your logs if you've got a logging license. Do you have a logging license? And I said, no. Do I need one? And then he pointed to the phone number and said, not if you call this guy. So you can see what's happening. The lumberyard guy doesn't want to get in trouble. In case his trucks end up on private property, hauling stolen logs around. Now, that wouldn't be good. But he'll let anybody else bring stolen logs to him, and he'll cut them up for you or buy them outright. No questions asked, pun intended. So you get the idea.

[16:26] Anyway, if you don't think this is a huge problem, just check out a country like Honduras, which used to have one of the biggest natural hardwood forests in Central America, if not the world. In fact, I think everybody's heard about those great Honduran hardwoods, like, for example, Mahogany and Royal Sadro. I mean, in the 17th, 18th, and 19th centuries, European shipbuilders used Honduran hardwoods to build entire fleets and armadas. And these days, the top guitar makers in the world, Fender, Gibson, and Martin, used prized Honduran woods for their best guitars. Well, if you look at Google Earth, you won't see much forest anymore. And in South America, it's the same thing. They're cutting out the hardwoods, and the poor people are using the pine and the fast-growing lighter stuff for firewood. And as they clear those forests,

[17:12] the first thing they do is bring in the cattle. And if they don't have cattle, they try to grow corn and rice and wheat, and whatever else they can. But they never get around to planting trees, because they take way too long to mature. Then, after a few seasons of intensive crop cultivation, along with petroleum-based fertilizers, the top soil starts washing away. Because without those massive stands of trees, and the associated ground-level vegetation system to hold in the water, the flooding and the silting starts, which leads to even more flooding, which is another problem, but we won't get into that right now. The bottom line is, it's a problem that's way out of hand. And it's only going to get worse as the population continues to grow, and people switch back from propane to firewood, or whatever else they can get their hands on. But what you can count on is the fact that,

[17:59] even in the remote areas, the scavengers are going to find whatever's available to burn. And that means you expats who own farmland and undeveloped properties like that, if you're absentee owners, you're going to be in big trouble. So the trick is to have a family living on your property. But then, you have to be comfortable with that too. Because when you go to visit your property, you're going to have to face something else that you just might not be prepared for. Because if they have a bunch of kids and dogs and chickens and goats and cows, and they will have, you can't stop the fact that your rural house sitters are going to turn that place into a real menagerie. I've seen it happen so many times, and with so many expats. Anyway, just be prepared for that if you go that route. And watch out for the dog poo in the kitchen. Now, while I'm on that subject of buying property in the hinterlands,

[18:46] there's also something that every expat just has to be aware of. And that is, if you don't have your land properly surveyed and very well marked, and I mean with a real fence, and not just a bunch of wooden stakes and a barbed wire, enough to keep out the cows. Well, if you do what a lot of expats do and to their regret, they come down to a place like Costa Rica, or Honduras, or Peru, or Paraguay, or Bolivia, or wherever, and they buy a nice big chunk of undeveloped land for very cheap. For example, a friend of mine in Costa Rica bought about a thousand acres, or only about a hundred thousand dollars some years ago, in Guanacaste. In other words, he paid the ridiculously low price of a hundred dollars an acre. And he just couldn't believe his luck. And to him, it was money in the bank. He bought it and left it alone for about seven years.

[19:32] And he didn't return to Costa Rican all that time. Although, he did have a lawyer on retainer in San Jose, who'd taken care of all the paperwork, and was supposed to be there to handle anything that came up, like taxes, or utility right-of-ways, and things like that. Well, about seven years after he did buy that property, he'd been talking it up to his friends up in Michigan, where he came from, telling his friends what a great deal it was. So, he came down with a couple of potential investors from the States. But, when he went down with the investors and his lawyer to visit the property, they discovered seven separate families were living there. And, of course, these were very poor families, who'd decided to move on to this piece of land, which they considered abandoned property, with their chickens, and goats, and turkeys, and dogs, and laminated shacks.

[20:18] And let me tell you, it was not a pretty sight. And when the real owner and his party arrived from the States, the squatters themselves were as belligerent as can be. And they claimed they had certain rights as squatters, because the land had been abandoned. And that's what every expat should know. Down here in Latin America, some countries actually do have squatters rights written into their laws. In other words, if after a certain period of time, an owner doesn't have a guard, or a family living on his property, or he doesn't show up at all himself during that time, and make his presence known to the neighbors or the nearest municipality, well, in some Latin countries, if not most, squatters can move in and make claim to that land. And the fact is, even if the law is on your side, and you go to court and you're actually able to remove them,

[21:03] you're going to have some pretty pissed off poor people on your hands. And remember, if you've got nothing, you've got nothing to lose. And these people can cause big trouble for you. And I've heard of cases where expats have had squatters removed, and it didn't take long before bad things started happening. Sabotage, theft, gunshots, and bullet holes, and broken windows. You get the idea? So once again, expats, I'm warning you, you buy some land, you better guard it. And if you do choose to have guards, and you decide that you're going to be away for long stretches of time, you're going to have another problem on your hands. The problem is that it's an easy and boring job, and most of these guards, when left with nothing to do, and nobody to watch him would rather drink. The point is, if you're not going to be there, there's a good chance that your guard is not going to be there either.

[21:50] Instead, he just might be at home swinging on a hammock on his porch, or down in town at the local cantina getting drunk with his buddies. Because when the cat's away... Anyhow, down here in Latin America, sometimes you need a guard to watch the guard. And to go into a little more detail on this squatters rights thing, I've actually had some first-hand experience with squatters myself. Now, some years ago, I bought into a resort project in Costa Rica. Middle to low budget, nothing fancy, but it was nice. And back when things were still cheap down there, it consisted of about 25 freestanding small rental cabanas circling a pool and restaurant complex about two blocks from the ocean. Now, I bought one of these cabanas, and after all 25 of them were sold,

[22:36] the developer said he was going to add phase two. In other words, build another pool and restaurant complex right next door, along with another 25 cabanas. So, after that project was done, and all 25 were sold, everyone was quite happy, and things were going really great for about one year. Now, the thing about most of these projects, especially in Costa Rica, is that you buy one of these units, and when it's finished, you put it in a rental pool, which you hope pays some of the expenses and maybe even gives you a little profit. In other words, tourists come down and rent it, like they rent a freestanding cabin or hotel room. And 95% of the owners are investors, and they live up in the States full time. And they only come down to Costa Rica when they're on vacation. And of course, they stay for free for a few weeks out of the year

[23:22] in one of the units in a complex. The rest of the time, their unit is in the rental pool, but I was one of those odd gringos that was actually living in Costa Rica full time. So, I got to see firsthand how naive first world investors, especially absentee owners, get manipulated to the point of extortion down here. Well, one day I got an email from the lawyer of the complex calling an emergency meeting for all the owners. And since 90% of the owners were up in the States, only me and a handful of others attended. And this is what happened. There was another lawyer at the meeting, a lawyer none of us knew. He said that a lawsuit had been filed against all the owners of phase 2 on behalf of his client, who the lawyer said was the actual owner of that phase 2 property, which was news to us because we'd built on a property

[24:09] that had free and clear title. And of course, we had all the papers to prove that. And to try to uncomplicate this a little bit, it turns out the contractor that built those units had bought that undeveloped phase 2 property from a guy who was the legitimate owner and had all the right paperwork registered, except for one little detail. The owner was a 15 year squatter on that property. And after that 7 year squatter period, when no one showed up on that property to claim it, he went down to the local municipality and registered himself as the legal owner, which he could by squatter's rights. But the real owner, the owner before him, who the lawyer who was explaining all this represented, anyway, he had paperwork dating way back saying that he was the original owner, which in fact he was.

[24:55] That is, until he left for the United States some 20 or 30 years earlier, and then the squatter moved in and took over his claim. But all that came before the Costa Rican tourism boom and when that property wasn't worth a plug nickel. But now that there was a giant completed first world tourism project there, the vultures were circling. So the lawyer proposed this. He said, look, I'm going to put an embargo on this property. Now what that means in Latin America is you cannot buy or sell your unit. In fact, the property is technically in limbo until it's all sorted out in court. And since there were some 25 Cabana owners involved in that project, most all of them living in Europe or the United States. And in court, they'd all have to get lawyers, Costa Rican lawyers, they'd have to come down to Costa Rica and give depositions and have them translated.

[25:43] And with all the usual delays and postponements and schedule conflicts in the Latin legal system, a case like that could drag on five or ten years. And during that time, owners could not sell, lease, or transfer those properties. So the lawyer offered a compromise. He said he could make the whole thing go away if each owner would cough up $15,000. Then his client would be satisfied and he'd issue a quit claim deed to everyone. And all 25 people were extremely unhappy about it, but they knew that if they didn't chip in that 15 grand, they'd probably have to spend at least that much in time lost from work and travel expenses just to settle the claim. And in the meantime, they wouldn't be able to sell or transfer or use their property as collateral in any transaction. But to cut through all that crap, the 25 property owners just paid the extortion

[26:32] because that's what it was. It was extortion. And that original owner, who technically lost his property to the squatter, walked away with $375,000. Because you know, the $15,000 that each one of those property owners forked up was small potatoes compared to their original investment of over 100 grand each. So the moral of that story is, once again, expat beware. Now there was a case when everything looked great. All the paperwork was filed correctly, but none of those absentee first world owners, when they signed that paperwork initially, knew anything about squatter's rights. I mean, whoever heard of such a thing in the first world, but they know a whole lot about it now. None of them is much of a Costa Rica booster anymore. I'll tell you that.

[27:19] And just another warning about Costa Rica. It's been a tourist and retirement destination for so long, some of the scams have become quite sophisticated down there. So even a lot of very smart guys have been taken to the cleaners. South of the border. You've been listening to The Expat Files, living in Latin America. And don't forget you can email me on anything at all about Latin America. The Expat Files at gmail.com. That's theexpatfiles at gmail.com. See you next time. Nos vemos. South of the border.