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The republic of paraguay has a long history of political strife. From 1865 to 1870, the country fought in the War of the Triple Alliance, which resulted in the loss of two-thirds of the male population. After decades of economic stagnation, the Chaco War of 1932–35 stripped Paraguay of important land areas previously acquired from Bolivia. At the end of the 20th century, Paraguay threw off 35 years of military dictatorship and held free elections.

With a per capita income of $4,900, Paraguay is ranked 137th in world incomes. Some 32 percent of the 6,347,884 population live below the poverty line. Unemployment is currently 16 percent, and there is a large informal sector that is engaged in the re-export business and various microenterprises such as street vending. Approximately 45 percent of the workforce are involved in the agricultural sector. The United Nations Development Programme Human Development Reports rank Paraguay 88th among 232 nations in overall quality-of-life issues.

The landlocked country has 3,649 square miles (9,450 square kilometers) of inland water resources. Roughly the size of California, Paraguay's climate varies from subtropical to temperate. The eastern section of the country experiences substantial rainfall, but the western section is semiarid. The terrain is also varied, with grassy plains and wooded hills to the east and low marshy plains to the west of the Paraguay River. Elsewhere, the land is dry forest and thorny scrub. From September to June, the southeast is subject to flooding. Because they are poorly drained, the plains are likely to become boggy between October and June. Paraguay's natural resources include hydropower, timber, iron ore, manganese, and limestone.

Environmental problems include massive deforestation, loss of wetlands, and water pollution. Around 17 percent of the population have no sustained access to safe drinking water. Over one-fifth of the people lack access to improved sanitation, and the lack of adequate waste disposal is creating health problems in population-dense urban areas of the south. Around 58.8 percent of land in Paraguay is forested, but the government has protected only 3.5 percent of land area. The most ecologically significant areas in the country are the Pantanal wetlands, the interior Atlantic rain forest, and the Chaco dry forest. These areas are rich in biological diversity, but the destruction of forests and wetlands has taken a toll. Since the mid-1980s, 19.8 million acres (8 million hectares) of forest have been lost. Ten of 305 endemic mammal species are threatened with extinction, and six of 233 endemic bird species are endangered. In 2006, a study by Yale University ranked Paraguay 62nd of 132 countries on environmental performance, in line with the relevant income group but below the relevant geographic group. The lowest scores were received in the categories of air quality and biodiversity and habit.

The Ministry of the Environment, the Ministry of Agriculture and Livestock, and the National Forestry Service share responsibility for implementing environmental laws and monitoring compliance. Based on an environmental mandate in the National Constitution, Paraguay has a large body of laws designed to protect wetlands and wild areas, implement environmental assessments, and punish those who destroy the environment. However, such laws are not uniformly enforced. In 1999, for instance, the Comptroller General reported that 26,333 hectares of the reserve of the Rio Negro National Park had been illegally allotted to private individuals. Illegal logging continues in defiance of specific guidelines, often with the assistance of government officials.

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