- In this opinion piece, Jonah Wittkamper, Mariana Senna, and Ricardo Politi argue that donors should urgently step up support for the development of a bioeconomy in the Amazon based around the protection of the world’s largest rainforest.
- Without such an intervention, there is a risk of the collapse of the Amazon rainforest ecosystem, a development that would destroy the region’s rainfall, release huge carbon emissions, and trigger the extinction of many species.
- “Starting a bioeconomy in the region could create a permanent solution by shifting local financial incentives away from deforestation,” they wrote. “Philanthropy for the development of the bioeconomy in the Amazon will only be necessary for many years. Catalytic funding will enable the economies of forest protection and regeneration to overcome the economies of deforestation,” the op-ed argues.
- This article is a commentary. The views expressed are those of the authors, not necessarily Mongabay.
According to a 2020 study, private philanthropy, at that time, dedicated to the conservation of the Amazon forest amounted to about $100 million a year. That’s about one-tenth of the estimated global philanthropy. This number should be higher because of the Amazon’s role as a central pump in the global water cycle and its current fragile state, on the edge of a critical abyss.
Many studies have warned of a tipping point in the Amazon, the moment when deforestation causes the forest’s water cycle to collapse, trees die, and rainfall patterns around the world deteriorate, all the way to Tibet. The process could wipe out thousands of species, lower water tables, make major cities unlivable, destroy major bread baskets, threaten global food security, cause new pandemics, release more than 90 gigatons of carbon into the atmosphere and more.
In 2018, the leading scholars, Thomas Lovejoy and Carlos Nobre, argued that the destruction of 20%-25% of the Amazon could create a tipping point. Some believe that it will be reached by 2025, others suggest that it will take longer, while others argue that it has already reached the news that forests are switching from a carbon sink to a carbon source. In any case, there is already evidence of a long-term collapse of the ecosystem and a drying process that can be seen in parts of the forest today. If the problems are imminent or longer term, they are preventable and require action.
The collapse of the Amazon will lead to a series of disasters. Locally it will be hit hard, as 70% of South America’s GDP is produced in the regions that receive rain from the Amazon. A study suggests that the Western United States, and especially the Sierra Nevada snowpack, which hydrates California and surrounding regions, could lose 50% of its precipitation. Another study outlines how the destruction of the Amazon threatens global food security while others say that the collapse of the Amazon could be the cause of the next global pandemic. Even solar absorption, at the planetary level, can be disrupted. Tropical forests produce clouds, enhance the planet’s surface albedo, and reflect sunlight. The loss of the Amazon would greatly disrupt ecosystem services, with unknown effects on global warming.
With the burdens of climate change evident everywhere, many are looking for the cheapest carbon sequestration and emission-avoidance strategies. Amazon conservation can be one of the most cost effective solutions.
According to an article by the Center for Global Development, between 2004 and 2013, CO2 emissions were reduced in the Brazilian Amazon by 80% at a cost of between $1.09 and $3.25 per ton through conservation efforts. In comparison, according to a Harvard study, on-shore wind energy operations can reduce CO2 emissions by $25/ton, land management by $57/ton, livestock management by $71/ton, China/India solar power expansion by $100/ton, etc. Amazon-related carbon is one of the cheapest options, by far.
Starting a bioeconomy in the region will create a permanent solution by shifting local financial incentives away from deforestation.
Philanthropy for the development of the Amazon bioeconomy is only needed for a few years. Catalytic funding enables the economies of forest protection and regeneration to overcome the economies of deforestation. A 2021 study shows how switching from soy and cattle ranching to agroforestry could create many new jobs and increase local income by 1000% while generating billions of dollars in new wealth, repairing canopies and replenishing water cycles. The study points out that cattle earn only $250/hectare/year, while a grove of guava trees can earn more than $10,000/hectare/year.
Philanthropic investment to help launch carbon markets in the Amazon could be equally catalytic. In 2019, cattle in the Amazon earned farmers an estimated $13 billion in a footprint of 53 million hectares. If the regional soil can sequester 11 tons of CO2/hectare/year and farmers get a price of more than $30/tonne (available in the carbon markets of Australia, California, and the EU), they can earn $330/hectare or $17.5 billion per year, in total, for the whole region. With the hope of expanding local income by 35% in cattle breeding, carbon will soon surpass beef. Such possibilities are not far off. A recent article in the Wall Street Journal estimates that the Brazilian carbon market could generate $120 billion in 2030. Even if the carbon market is not mature enough today to finance the replacement of the entire herd of Amazonian cattle, it is certainly large enough to offset the annual opportunity cost of not expanding cattle into new parts of the Amazon. Valued at $2 billion last year, the voluntary carbon market could easily offset a cattle growth rate of 1.8% and Amazon’s theoretical revenue of $234 million. In addition, intensifying cattle production can also produce more meat in a smaller area.
From a macroeconomic perspective, the carbon market and/or philanthropic investment in Amazon conservation can have a return on investment of more than 3000%. According to the US government, the average social cost for 1 ton of CO2 emissions is about $100 (calculations from $51, from 2021 estimates, and $190, for 2022 estimates). Since 550 tons of CO2 are released from one hectare of Amazon deforestation, prevention should cost $55,000 in the global economy. Given that 2 million hectares were destroyed by 2020, an estimated $110 billion in damage was done that year. Therefore, if preventing Amazon deforestation costs between $1.2 and $3.6 billion per year (according to the prices in the CGD article mentioned above), it would save $110 billion per year, offering an ROI between 3100% and 8600%.
Reduction of deforestation is possible. Many have studied how the Brazilian presidential administration of Luiz Inacio Lula da Silva reduced deforestation by 85% between 2004 and 2014. New philanthropy is needed to help make forest protection efforts successful today, and bioeconomy philanthropy is especially needed to help make solutions permanent.
Starting later this year, the Amazon Investor Coalition will launch a new program to match donors with some of the most cost-effective bioeconomy strategies in the region. Donors and allies can learn more here.
Header image: The Amazon rainforest in Peru. Photo credit: Rhett A. Butler for Mongabay.
This piece was originally published on the Amazon Investor Coalition web site.
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