Brazil's controversial new Forest Code grants amnesty to illegal deforesters, but creates new mechanisms for forest conservation.

This supplementary material contains the description of the Land-use and Energy-system models developed and applied in this study. It also presents the Scenario Building Procedure and more detailed results of the simulations made, including the georeferenced description of the land-use change, the composition of the energy mix and an analysis of the uncertainties of associated with the findings.

Brazil's inability to tackle illegal deforestation puts the future of its agribusiness at risk

The 2012 Brazilian Forest Code governs the fate of forests and savannas on Brazil's 394 Mha of privately owned lands. The government claims that a new national land registry (SICAR), introduced under the revised law, could end illegal deforestation by greatly reducing the cost of monitoring, enforcement, and compliance. This study evaluates that potential, using data from state-level land registries (CAR) in Pará and Mato Grosso that were precursors of SICAR. Using geospatial analyses and stakeholder interviews, we quantify the impact of CAR on deforestation and forest restoration, investigating how landowners adjust their behaviors over time. Our results indicate rapid adoption of CAR, with registered properties covering a total of 57 Mha by 2013. This suggests that the financial incentives to join CAR currently exceed the costs. Registered properties initially showed lower deforestation rates than unregistered ones, but these differences varied by property size and diminished over time. Moreover, only 6% of registered producers reported taking steps to restore illegally cleared areas on their properties. Our results suggest that, from the landowner's perspective, full compliance with the Forest Code offers few economic benefits. Achieving zero illegal deforestation in this context would require the private sector to include full compliance as a market criterion, while state and federal governments develop SICAR as a de facto enforcement mechanism. These results are relevant to other tropical countries and underscore the importance of developing a policy mix that creates lasting incentives for sustainable land-use practices.deforestation | Forest Code | tropical forests | governance | Amazon

Brazil faces an enormous challenge to implement its revised Forest Code. Despite big losses for the environment, the law introduces new mechanisms to facilitate compliance and foster payment for ecosystem services (PES). The most promising of these is a market for trading forest certificates (CRAs) that allows landowners to offset their restoration obligations by paying for maintaining native vegetation elsewhere. We analyzed the economic potential for the emerging CRA market in Brazil and its implications for PES programs. Results indicate a potential market for trading 4.2 Mha of CRAs with a gross value of US$ 9.2±2.4 billion, with main regional markets forming in the states of Mato Grosso and São Paulo. This would be the largest market for trading forests in the world. Overall, the potential supply of CRAs in Brazilian states exceeds demand, creating an opportunity for additional PES programs to use the CRA market. This expanded market could provide not only monetary incentives to conserve native vegetation, but also environmental co-benefits by fostering PES programs focused on biodiversity, water conservation, and climate regulation. Effective implementation of the Forest Code will be vital to the success of this market and this hurdle brings uncertainty into the market. Long-term commitment, both within Brazil and abroad, will be essential to overcome the many challenges ahead.

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