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Supporting forest-friendly supply chains in Acre, Brazil

  • Sustainable production in Acre is financially attractive to investors, with positive rates of return and reasonable payback periods.
  • Acre has strong conservation policies and safeguards, putting sustainable land use at the heart of development policies.
  • The pilot project built the business case for investment in seven key supply chains, alongside conservation activities and sustainable livelihoods.
Acre is one of the most remote states in the Brazilian Amazon. The state government is actively engaged in building investments in sustainable land use, with the intention of increasing productivity while addressing deforestation.
Farmland in Acre, Brazil. Taken by Kate Evans for Center for International Forestry Research (CIFOR).

Before the Unlocking Forest Finance project, the state was the subject of the first pilot study in 2013 led by Global Canopy Programme. This found beef cattle to be the biggest driver of deforestation. Other products, including timber, are also driving cutting of the forest. Most of the producers clearing land are smallholders.

Since 2006, policies have been largely successful in slowing the rate of deforestation. The state government has been a pioneer in putting sustainable forest policy at the centre of its economic planning, and has also increased enforcement of protected areas. It is notable that while deforestation has been slowed, this does not seem to have greatly affected economic growth, which has still grown faster than the Brazilian average.

Nonetheless, there are important reasons for initiating a sustainable landscape transition in Acre. Deforestation rates may be creeping up. And the economy is still very dependent on the state, so more private investment would be welcome.

Researchers brought together people from state and federal government agencies, companies, unions, civil society organisations and representatives of professional associations to build a detailed picture of the economic situation in Acre. This allowed them to selecting particular commodity chains and prioritise conservation activities. From this analysis it was possible put together cash flow models based on specific interventions.

Enhancing farming and production

The project focused on the following commodities: rubber, açaí berries, brazil nuts, sustainable forestry for timber, biomass and fish farming. Some of these commodity production chains are already quite productive, but can still be improved in terms of efficiency and sustainability. Others may add value because they have a strategic role in biodiversity conservation, climate change mitigation and reducing deforestation.

Rubber, brazil nuts and acai berries are compatible with agro-forestry methods of agriculture, where the crops are grown beneath trees. Adapting these supply chains would have significant environmental benefits.

In some cases, interventions are designed to increase processing capacity. This is the case for brazil nuts, where researchers have proposed investing in a processing facility, and fish farming, where the financial mechanism could drive investment in new aquaculture infrastructure and machinery.

Researchers considered a wide range of aspects when assessing the environmental and social benefits of interventions. For example, fish farming was selected for its overall environmental benefits as it reduces the pressure of overfishing on wild fish stocks. Compared to livestock, fish is also a good an alternative source of animal protein, using significantly less land than beef farming.

Interventions in Acre
Activity Planned interventions
Acai Increase average production from 30,000 tonnes per year to 120,000 tonnes/year using an agroforestry system
Fish farming Increase production of several species of fish on 5,000ha of degraded land, and offer training for producers.
Brazil nuts Increase the annual harvest from 6,000 to 8,000 tonnes in sustainably managed forests..
Forestry concessions Create 240,000 ha of state forest, to be managed sustainably.
Reforestation Reforest 20,000 ha with eucalyptus plantations for producing biomass for energy.
Rubber Increase annual production from to 5,000 to 10,000 tonnes/year in rubber plantations, by promoting modern extraction methods.
Community forestry Create 180,000 ha of forests designated for community management.
Restoration of the Rio Acre area Support restoration of 10,000 ha of forest in protected areas in the Rio Acre area. Train 900 rural producers to help manage water resources and protected areas.
State system of natural protected areas (SEANP) Design management plans for 30 Conservation Units and strengthen their monitoring capacity.
Community development plans Design and implementation of 400 Community Management Plans, training 4,300 in community capacity building.
Indigenous Land Management Plans Design and implementation of 118 Indigenous Land Management Plans (PGTIs). Training 100 indigenous forestry agents.

Protecting people and the environment

To be successful, the strategy needs to go hand in hand with conservation efforts, in order to ensure that deforestation is actually prevented, rather than displaced to another area.

The project proposes investing in stronger conservation of the protected areas across the state. It also considers restoration of degraded areas, particularly around the Rio Acre, the area with the highest deforestation in the state.

A large proportion of the rural population in Acre live traditional, indigenous lifestyles. The Unlocking Forest Finance project also hopes to support these groups in developing sustainable sources of income which preserve biodiversity and mitigate climate change.

Channeling investment

Researchers hope that the project may attract finance in the future, possibly in the form of loans given to farmers. Overall, the interventions in commodity production, conservation and indigenous rights are estimated to cost approximately R$257 million (US$80 million).

All the productive supply chains investigated have an internal rate of return which is attractive to private capital. Some of these may rely on public policy incentives or blending with concessional resources or grants to become attractive. This is the case of community forest management.  The investments in commodities are expected to break even at different timescales, from two years in the case of brazil nuts to 17 years in the case of rubber. 

Resources

The Acre project is described in more detail in the report below, in Portguese and English.

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