Landowners who broke Brazil’s environmental laws by clearing their farms of native forest used to have just one way to make right with government inspectors: Plant trees. Now, they can clear their names by just pointing and clicking.
After decades trying to protect rapidly shrinking forest, Brazil has turned to the digital world and launched a new platform called BVRio that allows growers with more untouched forest on their land than is legally required to sell “quotas” to farmers who fall short, one hectare at a time, for a price that will be determined by supply and demand.
From environmentalists to landowners, all sides agree the privately developed tool could revolutionize Brazil’s ability to protect the world’s biggest rainforest while enforcing the country’s just-enacted environmental law.
Under the rule, growers have to keep a “legal reserve,” or a minimum amount of native growth on their properties ranging from 20 percent to 80 percent of their land, depending on the type of vegetation. The trading platform launched this week allows farmers to find and negotiate directly with each other.
For landowners, the new tool will be a boon, said founder Pedro Moura Costa. Buying a forest quota will likely be cheaper, and it certainly will be easier, than replanting a corresponding amount of native vegetation. About 400 property owners pre-registered with BVRio before its start.
“Planting trees, for someone who might be in an entirely different business, is very hard,” Costa said. “Going into BVRio and meeting their legal requirements in seconds is much easier.”
Environmentalists believe the legislation will protect the integrity of each biome, or ecosystem, because quotas are only allowed to be bought and sold within biologically similar areas. For example, a farmer in the central Brazilian “cerrado” biome can’t sell his extra quotas to an Amazonian cattle rancher who clear-cut tropical rainforest and needs an acre of trees.
That creates an incentive for owners of intact biodiversity-rich forest to keep it that way, said Paulo Barreto, a senior forestry researcher at Imazon, an environmental watchdog agency.
“This was something that was really needed,” he said.
Saving what’s left of Brazil’s rainforests, and reviving swaths of destroyed vegetation, is key to the planet’s health.
The Amazon jungle’s capacity to absorb carbon dioxide is held as one of the world’s most important defenses against global warming. The country’s second-largest biome, the coastal Atlantic forest, is a biodiversity hotspot with 60 percent of the country’s threatened species.
With such protection in mind, a diverse group of farmers, environmentalists and business have welcomed BVRio, with the BV standing for Bolsa Verde or “Green Stock.” Two key elements, however, still need to be in place for the market to actually prevent environmental destruction, Barreto said.
First, the system has to remain transparent, so environmental organizations can check satellite images of areas being used as offsets to make sure they remain untouched. State governments also need to continue registering landowners and ramping up pressure to ensure the forest code is obeyed.
Under the new law, farmers have to register their properties with state governments and get land-use licenses, which provide additional guarantees that the forest quotas being traded through BVRio correspond to real standing trees. Enforcement and verification remain up to state governments.
“There is a demand now because the pressure is strong,” Barreto said. “Now they’ll have to continue in their role of enforcing the rules regarding the ‘legal reserve.’“
To be sure, that demand created by the new environmental legislation has given the forest exchange tremendous lucrative potential, Costa said. Brazil has about 5 million rural properties, and about 4 million of them don’t meet the minimum vegetation requirement, he said. It’s hard to estimate the potential value of the market once it matures, but it could reach into multiple billions of dollars, he said.
Costa should know, as one of the first to bet on carbon credits trading. In 1997, he co-founded EcoSecurities, a for-profit business that developed carbon credits and greenhouse gas offsets a full year before the UN convention on climate change that resulted in the Kyoto Protocol.
“We saw the birth and growth of the carbon market and thought it would be interesting to replicate that,” he said.
While critics had charged that carbon-offset markets created legal means to appease regulators without fostering real changes in behavior, Costa said BVRio provides incentives to keep forested areas intact, instead of replanting areas that have been cleared.
“The use of quotas can be a great mechanism for consolidation (of forested areas),” he said.
Business leaders such as Marina Grossi, president of the Brazilian Business Council for Sustainable Development, said it’s often difficult for companies to comply with environmental legislation. Laws are complex, and can require businesses venture into unfamiliar activities such as planting. Mechanisms such as BVRio make the whole process easier, she said.
“Companies want to follow the new regulation, but how? What’s the most effective way?” she asked.
Quotas existed under previous legislation, but enforcement of deforestation rules was so lax, and finding trading partners was so difficult without a platform such as BVRio, that nobody bothered to buy and sell quotas.
Growers such as Mauro Lucio Costa, president of the Association of Rural Producers of Paragominas and no relation to the founder of BVRio, are ready to jump on the opportunity. He said there’s great demand for the service among producers in his corner of the Amazon.
Once known for losing forest faster than nearly any other part of the Amazon, the rural municipality of Paragominas has virtually halted illegal tree burning and logging by ramping up enforcement, but also by promoting local economies that don’t require cutting down jungle.
An effort such as BVRio would help that by fixing monetary value to a tree left standing, making it potentially worth more than one that’s been cut. The landowner who sells a forest credit on BVRio can also sell carbon credits for the same property, and reap other fiscal incentives from keeping the forest untouched.
“This is the fastest, most intelligent way for us to make up the deficits we have,” the grower said via a video call, wearing the headset upside down so he could keep on his trademark cowboy hat. “We have many producers in Paragominas who want to become law-abiding. We have a lot of producers who want to buy in.”
