Brazil's Market for Trading Forest Certificates

Britaldo Soares-Filho; Raoni Rajão; Frank Merry; Hermann Rodrigues; Juliana Davis; Letícia Lima; Marcia Macedo; Michael Coe; Arnaldo Carneiro; Leonardo Santiago

doi:10.1371/journal.pone.0152311

Brazil's Market for Trading Forest Certificates

PLoS One. 2016 Apr 6;11(4):e0152311. doi: 10.1371/journal.pone.0152311. eCollection 2016.

Authors

Britaldo Soares-Filho¹, Raoni Rajão², Frank Merry³, Hermann Rodrigues¹, Juliana Davis¹, Letícia Lima^{1

4}, Marcia Macedo⁵, Michael Coe⁵, Arnaldo Carneiro⁶, Leonardo Santiago^{2

7}

Affiliations

¹ Centro de Sensoriamento Remoto, Universidade Federal de Minas Gerais, Belo Horizonte, Brazil.
² Laboratório de Gestão de Serviços Ambientais, Universidade Federal de Minas Gerais, Belo Horizonte, Brazil.
³ Department of Forest Resources and Environmental Conservation, Virginia Tech, Blacksburg, Virginia, United States of America.
⁴ IRI-THESys, Humboldt-Universität zu Berlin, Unter den Linden 6, Berlin, Germany.
⁵ Woods Hole Research Center, Falmouth, Massachusetts, United States of America.
⁶ Agroicone, Av. General Furtado do Nascimento, São Paulo, Brazil.
⁷ Copenhagen Business School, Solbjerg Pl. 3, Frederiksberg, Denmark.

Abstract

Brazil faces an enormous challenge to implement its revised Forest Code. Despite big losses for the environment, the law introduces new mechanisms to facilitate compliance and foster payment for ecosystem services (PES). The most promising of these is a market for trading forest certificates (CRAs) that allows landowners to offset their restoration obligations by paying for maintaining native vegetation elsewhere. We analyzed the economic potential for the emerging CRA market in Brazil and its implications for PES programs. Results indicate a potential market for trading 4.2 Mha of CRAs with a gross value of US$ 9.2±2.4 billion, with main regional markets forming in the states of Mato Grosso and São Paulo. This would be the largest market for trading forests in the world. Overall, the potential supply of CRAs in Brazilian states exceeds demand, creating an opportunity for additional PES programs to use the CRA market. This expanded market could provide not only monetary incentives to conserve native vegetation, but also environmental co-benefits by fostering PES programs focused on biodiversity, water conservation, and climate regulation. Effective implementation of the Forest Code will be vital to the success of this market and this hurdle brings uncertainty into the market. Long-term commitment, both within Brazil and abroad, will be essential to overcome the many challenges ahead.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Brazil
Conservation of Natural Resources*
Forests*
Models, Theoretical

Grants and funding

This work was supported by the Climate and Land Use Alliance, Deutsche Gesellschaft für Internationale Zusammenarbeit, Conselho Nacional de Desenvolvimento Científico e Tecnológico, Fundação de Amparo à Pesquisa do Estado de Minas Gerais, Servamb, and the Gordon and Betty Moore Foundation. The funders had no role in the study design, data collection and analysis, decision to publish, or preparation of the manuscript. AgroIcone provided support in the form of salary for one author [AC], but did not have any additional role in the study design, data collection and analysis, decision to publish, or preparation of the manuscript. The specific role of this author is articulated in the 'author contributions' section. This does not alter the authors' adherence to PLOS ONE policies on sharing data and materials.