Reforestation and restoration: Two ways to make the Pan Amazon greener

One of the benefits of agroforestry and plantation forestry is the ability of tree crops to capture and store carbon in their above-ground biomass. Although they must be renovated (cut down and replanted) at approximately twenty-year intervals, agroforest and plantation landscapes can sequester ~20% of the carbon stored in a natural forest. Even more carbon can be captured via the restoration of natural habitat; there are ~10 million hectares of land that should never have been cleared because it was legally protected by the Forest Code. Presumably, this land will eventually be reforested, and hundreds of initiatives are underway to facilitate that outcome. It is not, however, an inexpensive proposition.

Brazilian foresters have developed models that reflect the cost and benefits of different reforestation strategies. Passive restoration approaches, which rely on natural ecological succession, are less expensive and function well for lands that retain a certain level of vegetative cover (shade and soil organic matter). Active approaches, which employ soil amendments, nurseries, weed control and periodic culling, are more expensive; however, they allow the landowner to manipulate tree populations to favor native hardwoods (silviculture) and obtain a comfortable financial return – if the landholder can afford to wait three decades.

Investments in reforestation and restoration must be protected from fire and grazing, particularly during the early years of their establishment. This is an additional cost but also a long-term commitment that may not accompany all passive approaches focusing on natural systems.

According to hydrological models, tropical landscapes need to retain about sixty per cent of their canopy cover to maintain the atmospheric recycling that supports historical levels of precipitation. This would require the reforestation of approximately fifteen million hectares in the most heavily denuded municipalities of the Southern Amazon. A reforestation programme of this magnitude would require at least a decade to implement, if not longer, and demand a total budget of between $US 20 billion (passive) to $US 100 billion (active).

Large-scale ranchers and farmers can access the ESG finance necessary to realize an investment of this magnitude, but they will only do it if they are forced to comply with the Forest Code. Most will use passive methods wherever possible, particularly on land that is off-limits to any future economic exploitation (Áreas de Proteção Permanente). They will use active protocols on landscapes that allow them to recover their costs (Reserva Legal) and many will opt for cultivating commercial (exotic) species in monocultural plantations, which is allowed in some instances. This type of forest investment will be eligible for loans that have been underwritten by green bonds or, perhaps, via direct equity investments for investors with an appetite for an illiquid long-term asset.

Smallholders are not likely to attract investment in reforestation from private capital markets. However, local and regional jurisdictions could access climate finance via carbon markets and use those funds to subsidize programmes that target this constituency. Environmental advocates tend to favor reforestation schemes and offer landholders a modest stipend as a form of payment for ecosystem services. Regardless of the fate of climate finance linked to carbon markets, however, agroforestry systems will be more popular among small ranchers and farmers in need of a reliable source of income.

Agroforestry systems can cost between $US 1,500 to $US 2,000 per hectare but would require a parallel investment in logistical systems to collect and process a diffuse supply chain scattered across thousands of smallholdings, particularly for a production system based on vegetable oil subject to spoilage. Investments to create a tree-based production system on approximately half of the denuded landscapes of central Rondônia would require at least $US 10 billion, which translates into ~$US 100,000 for each small farm in Rondônia.

Rebalancing the Tipping Point in the Southern Amazon

The threat of climate change has highlighted the importance of the Amazon Rainforest in the global carbon cycle, while underscoring the fragility of its atmospheric water recycling system. Deforestation risks pushing that system past a ‘tipping point’, which would trigger a collapse in precipitation across the South American continent. Ominously, some climate models project the Southern Amazon could pass this critical threshold even if the region’s inhabitants agree to end all future deforestation.

If a loss of forest cover tips the atmospheric scale towards drought, then an increase in tree cover should rebalance the ecological fulcrum. Support for reforestation is universal, but it is actually more difficult than stopping deforestation. Clearing a forest generates revenues over the short term, while restoring a forest is extraordinarily expensive and inherently slow.

Moreover, the word ‘reforestation’ means different things to different people: an ecologist uses the term to describe the restoration of a [quasi] natural ecosystem, while some foresters use it describe commercial tree plantations. Both concepts are valid and both must be harnessed to rebalance the tipping point in the Southern Amazon.

Amazonian societies have never asked for a handout, but their representatives have stated, repeatedly, the need for economic incentives to reward forest conservation and reforestation. Environmental economists have long predicted that carbon markets would provide those incentives, but they have failed, repeatedly, to materialize. Carbon offsets are being promoted again following the agreements at COP26 in 2021, and they may succeed finally in ending the modern era of deforestation. Unfortunately, subsidies based on offsets are unlikely to change the economic logic that constrains tree planting at the scale and speed necessary to rebalance the tipping point.

Amazonian producers, large and small, grow commodities for global and national markets. They are not likely to abandon their conventional production systems for reforestation projects that are overly reliant on regulatory subsidies, particularly if they take two or more decades to provide substantive revenues. The farmers and ranchers of the Southern Amazon might, however, use climate finance to invest in tree-based systems to produce green commodities that provide solid returns over the medium-term. Commodity markets have driven the deforestation of the Amazon.
Markets for green commodities can drive its reforestation.

What defines a green commodity? A green commodity must be absolutely and verifiably carbon negative. It cannot rely on a carbon offset to reach neutrality. Its production must actually sequester carbon. There can be no leakage or indirect land-use change. If it originates in the Amazon, its production must respond to the inequality that defines land ownership and provide governance mechanisms to prevent cheating and ensure transparency within its supply chain.

The key to rebalancing the tipping point in the Southern Amazon is to discover business models that provide landholders with an economic return that is demonstrably superior to conventional production systems. The goal, simple in concept but difficult to implement, is to make planting trees more profitable than clearing forest. Tree-based production systems established on the previously deforested landscapes in the Southern Amazon can meet that criterion.

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0 license).

Read the other excerpted portions of chapter 4 here:

To read earlier chapters of the book, find Chapter One here, Chapter Two here, and Three is here.