In environmental services lies part of the solution

The Amazon rain forest has become an important topic within the climate change discussions, given its importance not only as a carbon sink, but also as a depository of biodiversity, and a natural water and climate regulator. Its conservation is a necessity, no longer subject to argument. Gone are the days of ruthless clash between tree-hugging environmentalists and single minded developmentalists. Both camps have moved: environmentalists for the most part recognize and appreciate the imperative of improving living conditions and governments/developers begin to understand the need for cooperation on environmental topics that have both local and global implications. Fresh in everyone´s mind are the simultaneous drought in the Amazon of 2005 and the Katrina-led hurricane season in the Caribbean.

Amid unprecedented understanding of environmental harm, one might conclude that the Amazon conservation should be but a consequence. However, for the 25 million Brazilians that inhabit the forest, lies an unchanged equation: the forest is still worth more lying down than standing. Cattle breeding, logging, and agriculture prove more profitable than sustainably extracting nuts, oils and essences. Traditionally, legal logging is too bureaucratic for small landowners, land is too cheap and abundant for anyone to conserve it, and monitoring and enforcement too lax to make formality worthwhile. However, Brazilian institutions have improved in the areas of monitoring and enforcement, thus increasing the costs of informality. Such a change to the equation has had the desired effect of reducing deforestation. An unintended consequence, however, has been the reduction of productivity in many of the poorer and traditionally more informal areas.

The Brazilian Federal Government has partially dealt with it through the Bolsa Família program, which is a transfer payment to poor families. State Governments have developed other solutions. In Amazonas, the largest Brazilian State (2.3 times the size of Texas), located in the Western part of the Brazilian Amazon, state policies have focused on increasing incentives for sustainable activities through:

• the establishment of minimum prices for sustainably produced goods, such as oil, essences and rubber;
• the establishment of the Bolsa Floresta, a transfer payment for forest dwelling families in exchange for a no-deforestation commitment, monitored via satellite;
• a five-fold increase in Science & Technology investment, looking for the development of technologies that tip the economic balance towards sustainability;
• technical assistance for existing small landowners as well as distance learning courses across the state on forestry, forest management and fish farming;
• land tenure concessions in order to give ownership to those who occupy the land, imputing to them rights and duties;
• the concession of preferential financing for small scale projects in segments designated as sustainable, such as fish farming, lake wildlife management, honey production, etc.

Monitoring and enforcement have been also increased, but as a form of support for the above mentioned initiatives.

All of these efforts aim at rebalancing the equation of forest lying down versus forest standing to those living within it; they are aimed at including the externalities within the equation. It is important to remember where the externalities lie: climate changes across the globe, rain patterns changing regionally and loss of biodiversity in the world. Most of these are externalities that will be felt outside Brazil and hence we arrive at the topic of valuation of environmental services. Currently, the State of Amazonas and the Government of Brazil incur these costs mostly out of their own budgets. Amazonas´ budget of roughly USD 1,000 per citizen per year is hardly enough to cover universal health care and education for our population of 3.5 million, let alone incentives to reduce deforestation that are not supported by any other source. A round trip ticket to fly from Manaus, the State capital, to Tabatinga, within the State´s border, is often above USD 1,000.

The possibility of valuing environmental services, the most well known of which is carbon credits, provides for the Amazon the greatest opportunity in history. In an innovative structure, the state partnered with Marriott hotels to preserve a conservation area of 500 thousand hectares, providing improvement of living conditions to the population inhabiting therein, in exchange for the provision of environmental services of reduction of future likely carbon emissions. This reserve, at the Juma river, is on the arc of deforestation (i.e. would likely be deforested in a business as usual scenario) and addresses social improvements, sustainable development support, transfer payments and strength monitoring to be rewarded with VERs (voluntary carbon emissions reduction) as per the CCB standards, mainly due to the reduction of the expected deforestation.

Most important in this project is the advent of a powerful economic incentive in favor of the standing forest. With strong international partners such as Marriott, the State of Amazonas will be able to achieve a scenario in which deforestation, already at a low level (roughly 750 sq. km or 0.05% of the State is deforested per year), will be zero. However, such actions are still a drop in the ocean as result of political efforts and some corporative environmental initiatives. A global environmental services framework regime is required. The new version of the Kyoto Protocol, currently being negotiated under the UN Framework Convention on Climate Change (UNFCC), should include the valuation of environmental services if we are to move forward, not only in the Amazon, but also across the land of tropical forests. As committed as we are to this goal, state government funding alone cannot support the immense variety of actions needed, and yet given that the benefits are to be shared by us all, it would not even be fair to rely solely on our local budgets.