June 14, 2012

New Forestry Code to Force Reforestation in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian Congress and President Rousseff continue to debate the details of the proposed new Forestry Code that has the potential to completely remake the environmental regulations of Brazil. If implemented in its present form, it is estimated that 30 million hectares of farmland and pastures would have to be reforested with native tree species. Most of that reforestation would be along rivers and streams, on steep slopes, and in environmental sensitive regions.

One of the regions in need of reforestation the most is the Atlantic Forest along the southeastern coast of Brazil. Only a small portion of the Atlantic Forest ecosystem still exists after several centuries of deforestation, agriculture development, and urban expansion. The Atlantic Forest encompasses the oldest settled region of Brazil and much of the land was originally cleared for cattle ranching many generations ago. A significant portion of those pasturelands are in a degraded state due to low fertility and high rates of soil erosion.

The director of the International Institute for Sustainability (IIS), Bernardo Strassburg, feels that farmers and ranchers could make more money by reforesting these degraded pastures with native tree species that by keeping them in pasture. His idea is that the landowner would gain from the recuperation of the soil, the sale of forestry products and lumber, and being paid for his environmental services.

The idea is to regenerate the native forest and then to use it sustainably for commercial activity. One of the models that he is promoting is to reforest an area with rubber trees mixed in with native tree species. A conventional rubber tree plantation in Brazil generates approximately R$ 4,500 of income per hectare per year as compared to a conventional cattle ranching operation in the region that generates only R$ 100 per hectare. Since the trees would not be planted plantation style but mixed in with native species, the income per hectare would be less, but even if it fell by half, it would still generate more income than cattle ranching alone.

Reforestation is a very expensive proposition especially if it is done with native tree species. The Institute for Forestry Studies estimates that reforestation with native species can cost between R$ 4,000 and R$ 14,000 per hectare. In comparison, reforestation with eucalyptus costs approximately R$ 2,500 per hectare. Eucalyptus plantations have long been a common agricultural practice in Brazil and the technology needed for these plantations was established years ago. The need now is to develop the same type of technologies that could be used for reforestation using native tree species. Once developed, the institute thinks the cost could be brought down to as low as R$ 4,000 per hectare.

In order to defray the cost of reforestation and to generate additional income, Strassburg envisions the landowners being paid in the future for carbon sequestration and improve water quality. He thinks that by the year 2020, Brazilian landowners could be paid as much as US$ 25 per ton CO2 sequestered in the newly regenerated forest. In densely populated areas such as the state of Sao Paulo, there may also be environmental payments for improved water quality as well. If that turns out to be the case, then reforestation with native species could actually turn a profit.

At this point all of this is still hypothetical and the transition from deforested rural areas to the regeneration of native forests is still many years away.