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Brazil launches forest trading system
December 19, 2012

Deforestation in the Brazilian Amazon

Brazil has launched a new platform that enables farmers and ranchers who have cleared forest beyond the legal minimum to come into compliance by purchasing forest "quotas" from landowners who have more than the mandated level of forest cover, reports the Associated Press. The system could spur increased compliance with the country's Forest Code, according to some experts.

The platform, launched as part of the Bolsa Verde do Rio de Janeiro (BVRio) or Rio de Janeiro Green Exchange last week, is a private, market-based system with prices determined by supply and demand. About 400 landowners pre-registered with BVRio before its launch.

Until now, landowners who failed to maintain the required amount of native vegetation on their land — ranging from 20 percent in some ecosystems to 80 percent in the Amazon rainforest — faced potential fines if they were caught. However the law was widely flouted, with enforcement often used as a tool for extracting bribes from landowners. As a result, compliance in parts of the Brazilian Amazon is very low, contributing to a general climate of illegality, fueling other problems ranging from violence to illegal logging.

The new platform potentially makes it much easier for a property owner to comply with environmental laws. A landowner can simply buy the necessary forest "quota" one hectare at a time, provided the forest area is within the same biome.

"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," according to the AP.

BVRio founder Pedro Moura Costa says the system will enable landowners to focus on their core competencies, rather than trying to plant trees — which won't be as biologically diverse or ecologically functional as natural forest — to come into compliance.

"Planting trees, for someone who might be in an entirely different business, is very hard," Costa told the AP. "Going into BVRio and meeting their legal requirements in seconds is much easier."

Stricter enforcement of environmental laws could increase demand for forest quotas, which existed prior to BVRio but had little value with such widespread non-compliance with environmental laws. According to Paulo Barreto of Imazon, a Brazilian environmental NGO that operates a deforestation tracking system, roughly 80 percent of property owners in the Amazon don't have the minimum amount of forest cover on their land. These landowners are now potential buyers.

"There is a demand now because the pressure is strong," Barreto told the AP. "Now they'll have to continue in their role of enforcing the rules regarding the 'legal reserve.'"

Brazil revised its national Forest Code earlier this year. While some greens said the changes weakened regulations, the new Forest Code maintained the minimum forest cover across various biomes.

Last month Brazil announced that deforestation between August 1, 2011 and July 31, 2012 was the lowest since annual record-keeping began in 1988.

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