The Brazilian state of Pará has launched a new compensation scheme to incentivize further cuts in deforestation.
Using a stipulation that allows Brazilian states to determine how a quarter of taxes on sales of goods and services are distributed, last week Pará established the Green Value Added Tax (ICMS). The system will provide payments to counties for landowners’ compliance with the country’s forest code, which governs how much forest a forest a private landholder must maintain.
A statement from the Environmental Defense Fund (EDF) explains the program:
Counties will also receive compensation for parks and reserves (25% of the re-directed VAT), but the lions’ share (50%) will go to counties where property owners register with the Rural Environmental Registry (CAR), a major step toward compliance with the new Forest Code. According to the Forest Code, all 5.4 million rural private properties in the country will have to submit a satellite map of their property to register with CAR and have a minimum percentage of native vegetation (varying from 20% to 80% of the property, including forest buffers along rivers and streams). Those not in compliance must submit a restoration plan. Compliance is monitored by satellite.
Some 330,000 km² of Pará’s 1.2 million km² (double the size of France) are already registered in the CAR and on their way to compliance in a state satellite monitored system. That corresponds to 58% of the area eligible for CAR registry.
The program expects to redistribute 35 million reais ($16 million) this year, according to Justiniano Netto, the coordinator of Pará’s Green Municipalities program. That amount will rise to 140 million reais ($64 million) by 2016.
The move is significant for Pará, which has lost more Amazon forest than any state in the region. Pará includes a large block of the “Arc of Deforestation”, the frontier area where new forest clearing is concentrated.
“This is a pioneering tax incentive program for combatting deforestation”, said José Colares, Pará’s State Environmental Secretary, in a press release.
“This is the first state level policy to create fiscal incentives for reducing deforestation,” added Governor Simão Jatene.
EDF says the program may offer a way forward for the stalled Reducing Emissions from Deforestation and Forest Degradation (REDD+) mechanism, which proposes paying tropical countries for protecting forests but as of yet lacks a source of finance.
“Pará’s public policies with Green VAT may pave the way to pay for avoided deforestation with public funding,” said the group in a statement.
Brazil’s deforestation rate for the Amazon has fallen by 80 percent since 2004. The drop has been attributed to several factors, including satellite-based monitoring, increased law enforcement, new indigenous territories and protected areas, pressure from civil society and commodity buyers, lending policies, and macroeconomic trends. However Brazil has seen an uptick in deforestation since last year when it passed a revised version of its Forest Code. Some environmentalists complain the new Forest Code relaxes some regulations, but the government says stricter enforcement will help Brazil meet its 2018 deforestation reduction target.
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