Amazon: ‘Reforesting will pay more than raising cattle’ – 01/30/2023 – Market

For economist José Alexandre Scheinkman, the economic cost of losing credibility and dismantling environmental policy in the years when Jair Bolsonaro (PL) held the Presidency are serious and have scratched Brazil’s image among investors — who are increasingly anxious to contribute resources in environmentally responsible areas.

But the government of President Luiz Inácio Lula da Silva (PT) has a great opportunity to reverse Brazil’s negative image abroad, by advancing in the reforestation of deforested areas in the Amazon and getting the country to be rewarded for it.

The professor at Columbia University, in the United States, believes that it is necessary to rethink the region’s economic activities, invest in research and sustainable development and inhibit low-productivity and high-impact activities, such as cattle raising.

Scheinkman also says he believes that the goal of zero illegal deforestation can be achieved even before 2030, if environmental policy is a priority for the new government, as reaffirmed by Lula since the climate conference last year.

Is it possible to quickly recover Brazil’s image in terms of the environment? The cost of the Bolsonaro government to the environment has been high. They managed to make Brazil considered, as they proudly said, a ‘pariah’.

This is reflected in the question of investments: the big financiers nowadays are delegated money, by huge funds that have been accumulated in pensions in the United States and Europe. These people are very sensitive to the news. I am part of the National Academy of Sciences of the United States, which has resources to invest and have returns for our activities, but the funds have a policy of only providing resources where there is no impact on the climate.

Brazil’s reputation as an investment destination has been tarnished, but the new government, with the ability of a person like [ministra do Meio Ambiente] Marina Silva, gives signs that the Brazil of today is not the same as yesterday. It has changed, but it is necessary to solidify the intentions, there is a proposal in Congress for a new amnesty for land invaders and I trust that the government will negotiate so that this proposal does not prosper.

How did the destruction of environmental policy take place in recent years? Especially in preservation initiatives. The previous government not only prevented inspection, but also said that it did not need resources that had the preservation of the forest as a condition, such as the Amazon Fund, formed mainly with resources from Norway and Germany.

Enforcement activities, which had been well conducted in the past, were abandoned. It is also necessary to punish, so that inspection is not a job thrown away. The Bolsonaro government prohibited the destruction of equipment found during the actions, he acted as if he believed that the forest is a bad thing.

And how to recover what was being done? We have to understand that Brazil already had a good system for monitoring the Amazon and that it still exists, it just wasn’t being used. The quality of satellites has only improved and the country knows how to do it, it just needs political will. We are struggling to reach even the modest global targets that have been set for reducing emissions, stopping deforestation and restoring deforested areas.

To advance in preservation, what can the new government do differently from the measures taken in its mandates previous? You can turn this tragedy that was the destruction of part of the biome into a great opportunity — it’s not that it’s good that it happened, but we need to start recovering this area, which today has a greater economic value than at the time it was overthrow.

Today, environmental concern is much stronger, it has changed levels. The Amazon, because of its biological diversity, is naturally a great center for green economics and biology research. Costa Rica does this, having much less diversity per hectare —the chance of finding something there is much lower than in Brazil. We have a scientific capacity that can be increased, all the major universities in the world are wanting to enter this field and do research.

Can economic activities in the Amazon region be revised without harming the local population? In the preliminary calculations I made with the [professor da Pontifícia Universidade Católica do Rio de Janeiro] Juliano Assunção and with the [Nobel de Economia, da Universidade de Chicago] Lars Hansen, it is very likely that if Brazil were offset at US$ 20 per ton of carbon, much of the economic activity in the Amazon would stop paying for itself — it would be better to reforest than to maintain it. A large part of the deforested land is used for cattle raising, with very low productivity and which does not solve the problems of the local population. Workers in this sector, the vast majority of which are informal, earn 85% of the minimum wage, on average, according to PNAD. [Pesquisa Nacional por Amostra de Domicílios, do IBGE].

Productivity is so low that one fifth of the deforested area is abandoned. Taking public land or indigenous territory is also an attempt at real estate speculation. The guy waits for the government to grant an amnesty and legalize his situation and thinks that soon a road will arrive there or a city will emerge. Like all speculation, it often doesn’t work out. It is possible to reforest these areas and also the legal ones, which have not yet been abandoned, compensating the people who are legally there.

The government’s role is to fight deforestation, carry out reforestation and allow certain activities that do not harm the forest to be considered illegal activities. It is not to say that the people who are living in the Amazon today will have to move elsewhere, they will just have to work in different activities.

What can be done to create new sources of income? If you walk into a high-end New York store, you’ll find chocolates labeled ‘Made in the Amazon’ — they’re all Peruvian. Peru is making an industry that produces fine chocolates with rarer types of cocoa and that give a great added value to the product.

Brazil has lost several activities that are carried out elsewhere — we were once the biggest exporters of ornamental fish, with species native to the Amazon, and Colombia is now doing it better. I see the Brazil nuts that we buy here in the United States being industrialized in Bolivia. The production of cosmetics and medicines also goes through this, one cannot confuse the guy who is harvesting an important product with the one who burns it to put cattle to graze.

Brazil also has to negotiate the price of captured carbon and, with that money, do whatever it takes to reforest and finance the start of more productive activities that can bring a better situation to people. There are good ideas that need to be implemented.

Is the goal of zero illegal deforestation by 2030 feasible, or is just pursuing this goal already a positive sign? I think we can have an even more ambitious goal. Deforestation will never be zero, there are always people who will break the law, no matter what the punishment, but it is important to create a system in which it is very expensive to break the law.

A goal like this can be achieved even sooner, it’s a matter of using the instruments that already exist to ensure that the law is respected. It is not that it is allowed to invade an area in the Amazon and burn the forest, the problem is that this is often violated and people who violate it may even receive a prize. Would the path be to go back to making demarcations, new reservations? First, it is necessary to enforce the law, what is happening with the Yanomami happens even if there is a reservation.

Is it possible, in fact, to be optimistic about the future of environmental policy in the coming years? I think we can be optimistic. Brazil has a good team in the country and people abroad, with the ability to get good negotiations around the preservation of the Amazon, which is something of value to the whole world.

I am confident that Brazil will get the emissions captured in the Amazon considered and rewarded. It’s not that we’ll be paid for not deforesting, that’s something more complicated, but we’ll be paid for what we can do, which is capture emissions efficiently.

Brazil has a considerable degree of emissions, in relation to its GDP, but if we stop deforesting, we will cut our emissions by about 40%. While many countries are fighting to reduce, we will gain a lot just by not deforesting.

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José Alexandre Scheinkman, 75

Brazilian and American economist. Born in Rio de Janeiro, he spent much of his career at the University of Chicago. He is the Charles and Lynn Zhang Professor of Economics at Columbia University in New York and a conservation activist.