Amazon: ending deforestation could generate BRL 1.2 trillion – 01/30/2023 – Market

Zeroing deforestation in the Amazon and in the Cerrado by 2030, as Brazil proposes to do, could generate gains of up to US$ 240 billion (R$ 1.2 trillion) for the world GDP (Gross Domestic Product).

The calculations are by the researcher at FGV Ibre (Brazilian Institute of Economics, of the Getulio Vargas Foundation) and senior economist at LCA Consultores, Bráulio Borges, and consider both the increase in the emission of greenhouse gases due to the fires and the reduction of the forest , which reduces carbon absorption.

He claims that he follows the logic of the CSC (Social Cost of Carbon). The calculation involves estimating the impacts caused by climate change, such as damage to human health and the environment, and the costs to remedy them.

Less global warming, for example, would mean less spending on energy for air conditioning, a lower rise in ocean levels (which can devalue properties in coastal regions and even destroy them) or greater agricultural and labor productivity ( in the latter case, due to the impacts on human health).

According to the economist, the drop in deforestation in the first two governments of President Luiz Inácio Lula da Silva (PT) and the reduction in the emission of greenhouse gases provided, in current values, a gain of US$ 818 billion (R$ 4. 2 trillion) for the world economy between 2003 and 2011, compared to a scenario in which the 2002 results were maintained.

On the other hand, the increase in deforestation and its consequences on the increase in greenhouse gas emissions from 2019 to 2022, already during the government of former President Jair Bolsonaro (PL), led to an estimated loss of US$ 201 billion (about of R$ 1.02 trillion, compared to the trend in 2008 and the estimate for last year).

Bráulio used net emissions data from SEEG (System for Estimating Emissions and Removals of Greenhouse Gases), the Climate Observatory, and INPE (National Institute for Space Research) for deforestation.

To estimate the costs, the so-called CSC (Social Cost of Carbon) per additional ton of CO was used._two (carbon dioxide) dumped into the atmosphere — from US$ 185 per ton in 2020 and reaching US$ 226 in 2030.

Considering a linear path of reduction, from 2027 onwards, the biomes would leave the level of losses and would start to generate gains for the world economy, which add up to US$ 240 billion.

With zero deforestation in both biomes in 2030, the capture of GHG by the forests would be greater than the gross emissions due to deforestation and burning, explains the researcher.

He recalls that it is also necessary to consider that the gains are diluted over time —that is, they will not necessarily fully materialize between 2027 and 2030— and if deforestation remains at zero from 2031 onwards, the accumulated gain will grow.

“These gains and losses affect the world economy over many years, as greenhouse gases have effects for centuries, and gains and losses are diluted over time. About five years ago, it was a utopia, but today it is clear the way in which Brazil can monetize preservation, through the carbon credit market”, says Borges.

In November of last year, still as president-elect, Lula emphasized in a speech at the COP 27 (conference for the climate), in Egypt, that the fight against climate changes would be a priority in the four years of his government.

“There is no climate security for the world without a protected Amazon, we will spare no effort to bring deforestation and degradation of our biomes to zero by 2030, in the same way that more than 130 countries committed themselves when signing the Glasgow declaration on forests”, said the PT.

“We are going to prioritize the fight against deforestation in all our biomes. During the first three years [do governo Bolsonaro]deforestation in the Amazon increased by 73%, this devastation will remain in the past”, he concluded.

Borges assesses that the shift in environmental policy, with the defeat of Bolsonaro in 2022, coincides with the progress in discussions on environmental preservation, which Brazil can lead in the coming years.

In this scenario, the prominence that the Minister of the Environment, Marina Silva, has received and her presence at the World Economic Forum, in Davos (Switzerland), lends the country a very positive reputation around the world, evaluates the economist.

“We are back with the Amazon Fund, we are back with the plan to combat deforestation and we are already recomposing budgets and ministries teams. Brazil has ambitious commitments in relation to being an economically prosperous, socially fair, politically democratic, culturally diverse and environmentally sustainable,” said Marina in Davos.

“But we need to run after it, some results will need to be delivered soon and it will be necessary to stipulate more daring goals and a plan to comply with these rules”, says Borges, who highlights opportunities in the expansion of the electric sector through wind energy and solar energy and definition of emission standards.

With the shift in environmental policy, Brazil may also benefit in the coming years from attracting capital through investors who take environmental preservation into account. In addition, the country can avoid sanctions on Brazilian products and unlock the agreement between Mercosur and the European Union, as already signaled by European leaders.

“And we can earn royalties to keep the forest standing and earn to reforest. The carbon credit market is becoming increasingly global. If Brazil reduces deforestation to zero, it will have a surplus in relation to the targets and will be able to export this for other countries to fulfill theirs”, says Borges.

The researcher adds that, although the effects of deforestation are more clearly captured by economists —such as the increase in cattle raising in the states of the Legal Amazon or illegal logging— there are costs that deforestation generates and that are more difficult to capture, such as the reduction of rainfall in the Midwest and even in the Southeast and South.

IT IS NOT ENOUGH TO RESUME THE AGENDA, THE GOVERNMENT NEEDS TO MOVE FORWARD

In the evaluation of specialists consulted by the Sheetthe Lula government starts with the challenge of resuming the environmental policies that made Brazil a reference in international forums in the past decades, but it needs to advance in the forest protection strategy.

“It is necessary to have a sustainable development project for the region combined with the goal of reducing deforestation. The Amazon is not being cut down to make way for high quality agricultural production: almost two thirds are of very low productivity pasture, 10% of agricultural production, and a fifth of secondary vegetation [de áreas abandonadas]”, says PUC-Rio economist Clarissa Gandour.

In his new term, Lula will need to resume what had worked before and invest in points that have not seen much progress, such as the axes of sustainable development and territorial ordering, he says.

“It is necessary to touch on the issue of land voids, areas that are not registered and that have no defined function. On the issue of land grabbing [tomada de terras de maneira ilegal], little progress has been made. Without changing the territorial order, there will not be zero deforestation”, says Gandour, who is coordinator of Public Policy Evaluation with a focus on Conservation at the CPI (Climate Policy Initiative).

The researcher recalls that it is also necessary to look at the agrarian reform settlements, which represent almost a fifth of what was deforested, it is a question full of nuances, as it deals with families that need to survive and guarantee the viability of their lands.

Brazil can be synonymous with a biodiversity superpower, in the environmental area it has indicators that developed countries do not have. He is a champion of biodiversity, but has difficulty accepting this idea, evaluates Carlos Eduardo Young, from UFRJ (Federal University of Rio de Janeiro).

“The speech of [vice-presidente e ministro do Desenvolvimento, Indústria, Comércio e Serviços] Geraldo Alckmin, installing a green economy secretariat, and having a specific green economy directorate within the BNDES expand the discussion beyond the Ministry of the Environment. I am happy to see that we now have a different situation.”

The professor points out that the dependence that Brazil has created on revenue from the export of agribusiness and mineral resources will still have strong political weight for the coming years and it is necessary to consider the challenges for environmental preservation in this context.

“But now there will actually be a debate and the country needs to have the perception that it is much better for us to grow through activities that generate environmental conservation and well-being for the population.”