Vanishing rain forest. Many experts blame the destruction of the Amazon rain forest on misguided policies and government incentives which make it profitable to clear trees. Efforts to deal with the problem will test Brazil's young democracy.

IN a forest clearing in the north-central part of the Brazilian state of Acre, a ranch hand steps back from the sudden flash of searing heat as a kerosene-soaked brush pile before him bursts into flame. Four hundred miles to the west, in the state of Rond^onia at the edge of a government colonization project, a bulldozer operator aims a six foot high blade at a copse of trees and opens the throttle.

Seven hundred miles to the northeast, in the highlands of the state of Par'a, an 18 cubic yard electric shovel bites into the pink clay of a hill which was once covered in rain forest.

Burned, cut, knocked down, scooped out -- bit by bit, acre by acre, the Amazon rain forest is falling, not only here in Brazil, but in the eight other countries the forest straddles: Ecuador, Bolivia, Peru, Colombia, Venezuela, Guyana, Suriname, and French Guiana. As this 1.8 million-square-mile wilderness yields to the hand of man, the random and uncontrolled nature of much of that development, and the speed with which the forest is disappearing, are raising serious concern -- both within the basin and beyond.

At risk ultimately are not only timber worth billions of dollars, but possibly as many as a million plant and animal species, many as yet undiscovered. While the consequences of massive deforestation are certain to be felt by the few million people who live in the Amazon, the long-term impact on plant and animal life could reach far beyond the basin.

It is estimated that, through evaporation and transpiration, the forest produces half its own rainfall. As the trees have disappeared, so has the plentiful rain which characterizes the forest. Already, in large clear-cut areas along the forest's eastern and southeastern flanks, there has been a measurable drop in rainfall -- and even localized drought has been reported.

How much of the original forest is already gone is hard to say. Satellite photos have enabled scientists to chart recent annual changes in the vegetative cover over most of the basin. These pictures, together with corroborative studies carried out on the ground, tell a disturbing story:

Colombia, which has about 120,000 square miles of rain forest, is currently losing it at an estimated rate of nearly 235 square miles a year, mostly to cattle and rice production.

Venezuela, with over 20,000 square miles of rain forest, has lost an estimated 6,500 square miles to cattle and subsistence farming.

Brazil, which has over 1.3 million square miles of forest (half the entire Amazon Basin), is losing it at a rate of approximately 5,000 square miles per year -- an area roughly the size of Connecticut. Cattle ranching and farming have been the primary replacements for an estimated 125,000 square miles of rain forest.

Not only has Brazil lost the most forest in absolute terms, it has the highest rate of destruction among the countries in the basin. What has scientists from many nations and some Brazilian government policymakers worried is that the rate of deforestation appears to be increasing. They are also concerned that what remains after the trees have been cleared is often soil leached of nutrients, compacted, eroded, and permanently useless to agriculture.

The rain forest is different from many other ecosystems in that the land's life-supporting nutrients are locked in the trees, not in the soil. Some 75 percent of the basin's soil is too deficient in nutrients to support traditional cash-crop agriculture for extended periods.

This is a reality which, after many years, the government of Brazil is beginning to accept. Flavio Peixoto, former head of Brazil's Ministry of Urban Housing and Environment, acknowledges as much. ``We must occupy and develop the Amazon . . . but we must do that in a balanced and rational way.'' Here he pauses, then adds: ``In the Amazon, we are working against a very long, historic tradition of exploitation.''

It is a tradition for which a succession of Brazilian governments has been in large part responsible. Over the past 20 years an array of government incentives has fueled internationally financed, large-scale commercial projects in the Amazon basin: hydroelectric projects, mining and lumbering operations, and a host of other big-ticket development projects. But the most frequent beneficiaries of these incentives, by far, have been large agricultural enterprises -- particularly cattle ranches.

At the same time, the government has attempted to move a portion of the nation's restive and growing population of landless peasants to the Amazon basin. Numbering more than 10 million, most of Brazil's peasants crowd today in conspicuous squalor in and around nearly every major urban area.

While large-scale corporate enterprises in the Amazon have generally flourished, colonization programs have often floundered. Typically located on poor land at the outset, settlement projects have often been further hindered by conflicting guidance from the underfunded, understaffed agencies created to run them, by corruption at numerous levels of bureaucracy, and by policy changes engineered by politically powerful financial interests with a stake in Amazonian land.

The upshot has been a high failure rate among the settlements (approaching 60 percent in southeastern regions of the Amazon), consolidation of land in fewer hands, and a marked acceleration in deforestation.

Most of the destruction has followed the roads and has been confined to the Amazon's eastern and southern fringes -- Maranhao, Par'a, northern Goi'as, and Mato Grosso States. With the recent paving of BR-364 through Rond^onia, development and settlements have moved west, displacing forest at an unprecedented rate.

What is happening in Rond^onia is vintage Amazonian development. As highways cut through the forest, settlements are established along their routes. Peasants, enticed by promises or rumors of free land, seed, and easy credit are the first to move in to clear their assigned plots of trees. Clearing is generally a matter of knocking or cutting down the trees and burning them where they lie. Generally upland rice or maize is then planted.

Nutrients released into the soil from the ashes of the burned trees support marketable harvests for a year or so before pounding rains leach them out. Thereafter, falling production forces the farmer to either abandon the land to second-growth scrub, or to plant the cleared land in pasture grass. Given the skyrocketing value of pastureland, the latter is the usual choice.

At this point, the land is often sold to large landholders, especially ranchers. The ranches are frequently subsidiaries of businesses and large corporations headquartered in Sao Paulo and Rio de Janeiro. Some of these holdings are immense, particularly around older colonized areas in the states of Par'a and Mato Grosso, along the Bel'em-Bras'ilia highway and its feeder roads, and along portions of BR-364 -- the now-paved Cuiab'a-P^orto Velho Highway.

In the chaos that characterizes land ownership on the Amazonian frontier, this pattern of land consolidation is vigorous and difficult to control. Midsize, noncorporate ranchers often get peasant plots by buying up old or lapsed titles. In some areas there is a brisk business in forged and fraudulently registered deeds.

Often peasants are paid just to walk away from their land. In many cases, however, the peasants are simply forced off.

The most frequent victims of these harsher methods have been squatters -- unofficial colonists who swarm around any kind of development in the basin. Sometimes outnumbering ``official'' colonists by four to one, the illegals overrun an area, setting up makeshift shelters and shanty towns, clearing the land wherever they find room. Recognizing no official boundaries, the squatters invade Indian reservations, forest reserves, and government-established settlements.

There are also 200,000 to 250,000 Indians living in scattered groups throughout the Amazon basin. Penetration of the region -- first by road crews, then by settlers, and then by ranchers -- is frequently attended by vigorous and sometimes armed Indian resistance.

The Indians, outnumbered and outgunned, either flee further into the forest or are placed on official reserves which may or may not be invaded by later waves of settlement or development.

Meanwhile, peasants dislocated by the advancing front of larger landowners either leave for the slums of big cities or stay on as employees of the corporations and ranchers who have bought them out. Many push on into the forest to begin anew the process of occupation, clearing, and abandonment.

It is at this point that further development of cleared land slows. As the leached soil yields poorer crops and the conversion is made to pasture, smaller landowners can make a profit by reselling their land. Those with enough capital to amass large land holdings are able to make fortunes as a result of incentives offered by the government.

These incentives have ranged from direct subsidies to negative interest rate loans to multi-year tax holidays. One important incentive has been a law allowing individuals earning income on enterprises outside the Amazon to avoid a portion of their taxes on those earnings by investing that amount in cattle and agricultural projects inside the Amazon.

In 1979, the Superintendency for the Development of the Amazon, a major conduit for government development funds, ceased granting further incentives for new ranching projects in areas of forest characterized by a closed canopy and mature trees. This appears to have slowed new ranching start ups. But incentives are still in place for projects launched before 1979.

Such government incentives have increased significantly the value of land planted in pasture grass. It is this growth in land value as well as the incentives which is fueling the push to convert forest to pasture. It doesn't matter if ranches produce little or sometimes no beef, because money can be made on the resale of the land. Many companies have found investment in such land to be a good way to shelter their earnings from the ravages of Brazil's current 400 percent annual inflation rate.

Where this will lead is uncertain. Much depends on Brazil's ability to deal with the international pressure to increase exports to earn the money needed to pay off its staggering $104 billion external debt.

But even more depends on the political will of the new democratic government of President Jos'e Sarney to end exploitative development policies of the past. There are signs the government is taking steps to deal with the problem, such as the creation of the Ministry of Urban Housing and Environment, Brazil's first full ministry with a specific mandate to protect the environment.

Another positive sign is the current debate over the proposed adoption of an Amazon-wide land-use plan. Presented to the National Congress in February 1985 -- in the waning hours of Joao Baptista Figueiredo's military government -- the original draft was farsighted and ecologically enlightened.

``Our approach has been to find the best possible use for the land -- something that is good for everyone,'' said Dr. Paulo Nogueira Neto, Brazil's Special Secretariat for the Environment and one of the government officials pushing the plan. ``The ranchers could see our point,'' he said. ``They weren't particularly happy, but they weren't furious either. I'm optimistic.''

Finally, control of development in the Amazon will hinge on the extent to which the government pursues serious land reform. Forty-five percent of the land in Brazil is owned by only 10 percent of the population -- a situation which has left some 10.6 million people without land or a means of livelihood. Unless a genuine effort is made to establish a more equitable balance in land ownership, no development or settlement scheme in the Amazon -- no matter how well-conceived -- is likely to control the subsequent flood of land-hungry peasants into the region.