Amazon - In the midst of efforts to achieve ‘zero deforestation’, it’s important to remember that halting deforestation is not just about forests, and it is not always good for local people, depending on how it is done. Commitments should therefore also involve finding investment and production models that work for all stakeholders – public or private, big or small – and supporting the smallholder farmers who depend on agricultural commodities for their living.
We have entered an era in which governments and companies are heading in a similar direction: governments are actively putting in place policies and regulations aimed at reducing deforestation, while the private sector is increasingly making voluntary commitments to deforestation-free supply chains. At the same time, we are witnessing the rapid development of technologies and tools for monitoring impacts at scale.
It is crucial, in this context, not only to enforce any progressive regulations aimed at halting deforestation but also to monitor the efforts of companies to accomplish their own self-imposed commitments.
Yet any solutions that emerge must be acceptable to the wider society both within and outside forest areas.
Striking the right balance between all these factors is crucial if efforts to shift toward more sustainable land uses, businesses and investments are going to last.
For a solution to be long lasting, it needs certain characteristics: It should make economic sense for all stakeholders, it should support the equitable sharing of costs and benefits related to the new policy environments and market constraints, and it should empower local stakeholders to use natural resources in more sustainable ways.
TAKING ON THE TRADE-OFFS
The Brazilian Amazon and Indonesia, as regions with two of the world’s largest remaining tropical forests, attract considerable attention when it comes to managing forest loss and the associated environmental impacts. As emerging economies, they face the great challenge of balancing social, economic and environmental goals. They must find effective ways to reduce deforestation without also reducing their national earnings from land-based sectors, or undermining the economic options that many people rely upon for their livelihoods and which sustain rural development.
For many government and business decision makers in Brazil and Indonesia, as in other countries, the trade-offs associated with ‘zero deforestation’ commitments are not yet clear. Governments aim for zero illegal deforestation while businesses aim for zero (net) deforestation. However, these aims can undermine social and economic goals if the appropriate conditions for transitioning toward more intensive and eco-efficient agriculture are not in place.
Some efforts to contain deforestation have already had leakage effects, resulting in indirect land-use change in other regions, or have risked the exclusion of smallholders. For example, efforts to contain deforestation in the Amazon have led to higher tree cover loss in other ecosystems, whereas new quality and environmental standards in the palm oil sector in Indonesia could lead to smallholder exclusion, as argued by the Indonesian government. Company commitments are also seen as leading to increased market asymmetries, as actors downstream in the value chain might take greater market control and effectively disempower landholders.
Brazil and Indonesia face similar social and sustainability challenges, but their development trajectories and institutional and economic configurations differ markedly
It is of the utmost importance, therefore, to find the right way to coordinate disparate public and private interests, across multiple scales. Indeed, finding more effective and durable solutions to reduce deforestation may require establishing strong synergies between legal and regulatory frameworks and private commitments to govern value chains.
PRODUCE AND PROTECT
Increasingly, some research organizations, environmental NGOs and consumer goods companies are favoring specific territorial and jurisdictional approaches under ‘produce and protect’ approaches. The concept of ‘produce and protect’ is simple enough, but it is difficult to implement; it could, for example, combine land-sharing and land-sparing strategies to strike a balance between agricultural development and biodiversity conservation in a way that takes into consideration any local socioeconomic constraints and trade-offs. Taking a landscape approach could offer one way to move ahead.
Brazil, for example, has made important progress in adjusting the environmental regulations with its Forest Code, along with other key agreements with industry and landholders for supporting law compliance, all of which have combined to significantly reduce deforestation in the Amazon. Yet deforestation in the country continues to be driven by smallholders, who often do not have the right conditions and resources to change their production systems.
In Indonesia, there are attempts to enforce the national sustainability standards (ISPO), as well as increased interest in reducing pressure on peatlands, and even forcing companies and local actors to restore burned areas in peatlands. This is occurring under rapid expansion by independent oil palm growers who embrace low-yield systems and depend on complex intermediation networks. Greater efforts are still required to upgrade existing production systems and support more sustainable and inclusive business models for smallholders.
PUBLIC MEETS PRIVATE IN BRAZIL
Annual deforestation rates in the Brazilian Amazon fell by 77 percent between 2004 and 2011, but have stabilized in the past few years at around 5,000 km2. This slowdown can be attributed to several initiatives that involve complementary public and private efforts.
First, a ‘soybean moratorium’ driven by the private sector and civil society, and finally signed in 2006, was influential in reducing soy expansion into forestland and restricting it to already converted lands, mainly on pasture.
Then, in 2005, several government plans were put into place to reduce deforestation, such as a major incentive for landholders to voluntarily commit to protect and/or restore their Areas of Permanent Preservation (APP) and Legal Reserves (LR).
The state environmental agency developed its ‘Terms of Accession and Commitment’ (TAC), which required landholders who subscribed to the TAC to register in the Rural Environmental Cadaster (CAR). Registration made them immune to sanctions for damaging forests or natural vegetation, as long as they remained committed to the restoration of affected APPs and LRs.
Two other major events prompted landholders to agree on the TAC. The first was the decision in 2009 by three major supermarkets in southern Brazil to suspend contracts with suppliers found to be involved in the deforestation of the Amazon. The beef industry began to purchase only from landholders possessing a CAR. The second was the so-called ‘cattle agreement’. Since 2010, the Public Prosecutor’s Office has supported this program with the beef industry to certify ‘legal beef’ bought from landholders with a signed TAC. The latter measures the efforts of the beef industry to trace their supply, so as to comply with environmental laws. This has helped to reduce deforestation by medium- and large-scale landholders, but deforestation persists among smallholders in frontier areas.
Today, according to data processed by EMBRAPA, the Brazilian Agricultural Research Corporation, roughly 60 percent of deforested lands in the Brazilian Amazon are pasture supporting relatively extensive cattle beef production. Smallholders carry out roughly 20 percent of cattle ranching under more diversified farming systems that depend upon a mixture of subsistence and cash crop agriculture. Nevertheless, there are still challenges associated with guaranteeing the legality of beef from landholdings, resulting in leakage and laundering associated with the existence of complex supply chains.
INTENSIFYING CATTLE RANCHING
Concerns have emerged about the insufficient progress made toward intensifying cattle ranching. Intensification is often limited to a few well-capitalized, large-scale ranchers; some other large-scale ranchers, a larger number of medium-scale ranchers, and smallholders who depend on cattle ranging struggle to improve their production systems. Their situation is made more severe given their constraints to accessing finance.
Investments are required to produce more and better-quality beef per unit of land. There is a land market in the Amazon, and many investments have come from outside the region to support the expansion of beef and soy. Yet investments from outside the region that could potentially contribute to greater land-use intensification in the Amazon are being constrained because land tenure is unclear and there are associated environmental risks.
Several projects and government programs are in place to support ranching intensification. For example, the Brazilian Roundtable on Sustainable Beef (GTPS) has listed 12 initiatives in Brazil that support models to make sustainable beef production possible.
Yet two main factors continue to hamper progress.
First, the technologies recommended for supporting the intensification of cattle production, as contained in the good management practices for beef cattle production, tend to depend on a relatively large use of chemical inputs. This makes them more expensive to adopt, and hence limits their use to a small number of large-scale ranchers.
Second, it is not necessarily the most suitable pasturelands that have been used for plantation of crops, as frontier expansion took place in a disorganized manner. Furthermore, although the soy moratorium has indeed stimulated the expansion of soy on pastureland, it has also caused the crop to take over the most productive pastures in the most suitable lands with better access to infrastructure. However, although large areas of degraded pasture are available, it makes little economic sense to restore them.
Interestingly, the Brazilian Amazon has great potential for sustainable beef production because of its abundant resources, including its deep soils, abundant solar energy and high rainfall. Even in the dry season (which is exacerbated by deforestation), these factors could allow production in the Amazon to achieve significantly higher levels of efficiency, superior to other regions, for the same unit of land, with appropriate management.
There are alternatives to a high-input production system, which are based on the introduction of legumes, trees or shrubs to improve forage production during the dry season. Particularly worth noting are crop–livestock–trees integrated production systems, which could fit the needs and capacities of medium-scale and smallholder farmers. However, the incentives and financial resources for farmers to adopt these systems are not yet in place.
A few other initiatives have emerged, such as giving credits for supporting low-carbon agriculture, under the ABC program, but this promising initiative has faced challenges in scaling up, related to a lack of formal land titles and competition of lower-risk credit.
THE ROAD AHEAD
On the other side of the world, the Indonesian government also is struggling to harmonize and enforce existing tenure and land-use policies across different levels of government, including policies aimed at averting the use of fire to clear land for oil palm plantations and at reducing greenhouse gas emissions from peatlands.
Major corporate groups have embraced ‘no deforestation, no peat, no exploitation’ policies, which apply to both their parent companies and their third-party suppliers.
But corporate policies are facing opposition from the government, which is concerned that blanket ‘no deforestation’ policies will limit market access for smallholders, and contradict national regulations and authority. In addition, companies are facing challenges in implementing traceability systems where independent smallholders are involved.
Brazil and Indonesia face similar social and sustainability challenges, but their development trajectories and institutional and economic configurations differ markedly.
Brazil’s experience may provide Indonesia with useful lessons about ways to foster institutional arrangements that could be effective in slowing down deforestation. In this regard, it is important to reflect not only upon key institutional changes that have helped slow deforestation in Brazil, but also on those that have emerged as a result.
Key lessons from effective institutional arrangements indicate that it is important to:
- Have clear legal frameworks with little scope for ambiguity that can be consistently enforced.
- Build a transparent monitoring system that is accepted by wider society.
- Adopt a stepwise approach, mainly with regard to land regularization and commitments to forest restoration.
- Use economic policy instruments, mainly fiscal transfers and credit, to enforce environmental regulations
- Further tighten policies constraining land uses, while creating incentives for good practice.
- Support agreements between the different key actors, such as retailers, industry and the state.
Slowing down deforestation is important, but it should not be the primary target. Efforts to intensify as part of a broader transition to more sustainable land uses and inclusive investment and business models must be implemented in parallel.
Some key questions for the future remain:
- What positive incentives are needed to support smallholders in the context of the deforestation slow-down in Brazil?
- What synergies and tensions exist between the public and private sector in Brazil to facilitate transitions to more sustainable land use and production systems?
- What are the initiatives being implemented by the industry to foster more sustainable supply chains? Are there feasible systems to reward suppliers’ good performance?
- Is it possible to integrate supply chain governance and landscape management approaches? What innovative perspectives have evolved in the Brazilian Amazon?
- How can we develop more effective policy responses in Indonesia that halt the impacts on deforestation while simultaneously supporting more inclusive business models?