Who pays the bill for the Amazon bailout?
It's hard to ignore the devastation of the Amazon. Images of wildfires raging through the rainforest four years ago seemed like an imminent harbinger of the planet's doom. Last year's severe drought, which turned once-mighty rivers into crusts dug into the dirt, raised the specter of one of Earth's biggest carbon sinks turning from dense, green forests into savannas. It will take a lot of investment to change this trend. As Brazilian President Luiz Inacio Lula da Silva noted before the UN climate summit in Dubai in November: “There has to be a volume of resources that has perhaps never been proposed until today.”
Timothy Searchinger, a researcher at Princeton University and a forest expert at the World Resources Institute, noted that land use change around the world, including deforestation, adds up to 5 billion tons of carbon dioxide emitted into the atmosphere. weather annually. Brazil alone releases more than 600 million tons of carbon dioxide annually as a result of the exploitation of its forests.
Even at a fairly reasonable cost of $10 per ton to compensate Brazilian farmers for preserving rainforests, restoring degraded lands, monitoring forests and developing new models of sustainable agriculture, these costs would amount to $6 billion annually. Only about $1.7 billion has been allocated to cover the costs of preventing deforestation and degradation of the Amazon, mostly from Norway, through the Amazon Fund created by the Brazilian government in 2008.
This offset the approximately 300 million tons of carbon dioxide that were prevented from entering the atmosphere – less than 5% of the 6.4 billion tons of emissions avoided between 2005 and 2012, the period during which Brazil was able to reduce global deforestation. Amazon region by about 80%. More money must be allocated, coming from friends of Greta Thunberg (the Swedish activist) or enlightened governments like Norway's (which pays for its environmental altruism from taxes on its huge oil sector).
Rather, obtaining financing of the necessary scale will require contributions from companies, including oil companies, who recognize that preserving rainforests is a cost-effective way to combat climate change. However, allocating capital to efforts to prevent deforestation requires overcoming two forces: opposition from the political right to companies that devote their attention or money to societal challenges like climate change, and, perhaps more importantly, hostility from the political left toward using the tools of capitalism to solve problems. In Brazil, state governments across the Amazon region are working courageously and tirelessly to attract private funds. By next summer, Tocantins is scheduled to issue its first tranche of carbon credits under the UN verification program known as Reducing Emissions from Deforestation and Forest Degradation (REDD+) (REDD+).
These credits will be purchased by the Swiss oil trading company Mercuria. Dan Nepstad, a tropical ecologist who specializes in the Amazon and runs the Earth Innovation Institute, noted that a number of states in the Amazon region line up behind Tocantins.
The state of Pará should have assets to sell in early 2025, followed by the states of Mato Grosso and Acre, then Amazonas and Mato Grosso do Sul. He added: “There is a large amount of appropriations coming on the way.” But even as state governments across Brazil seek to create infrastructure to monitor forest exploitation, a big question mark looms over the compensation mechanism. “Will there be buyers?” Nepstad asks. Voluntary carbon markets have gained notoriety over the past year. Several studies concluded that many projects were booking fictitious benefits, implying that carbon credits are a waste.
This criticism has fed into a narrative from the left, in which carbon credits play the role of blood money – a means by which capitalism pays money to damage the environment. The market reacted quickly to activists' pessimism. Interest in paying carbon credits resulting from environmental conservation has declined. Credits covering just 63 million tons of carbon dioxide were released on voluntary markets in the first 11 months of 2023, down from credits of 93 million tons in 2022 and 160 million in 2021. Nepstad and others hope the new institutional structure will allay investor fears. . They point out that EITI credits are quite different from those in the voluntary market, which are issued by states or countries and subject to government oversight.
Environmentalists may claim that it is possible to save the Amazon without an infusion of corporate money. Indeed, during President Lula's first term in office, from 2003 to 2010, Brazil succeeded in reducing deforestation with almost no foreign money, mostly through new regulations and sanctions. But it is difficult to maintain political will in the absence of rewards. Once the Brazilian economy slowed, deforestation began again. From 2012 to 2021, it nearly tripled, returning to rates not seen since 2006.
* A writer specializing in Latin American affairs.
Published by special arrangement with the Washington Post Leasing and Syndication Service.
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