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Analysis

Conservation Strategy Fund helps local conservationists use economic tools to find smart, efficient solutions to the most urgent environmental problems. Since its creation in 1998, CSF has conducted dozens of analysis projects in forests, rivers and coastal environments. Most of our work has focused in the tropics, where extraordinarily high levels of biological diversity are found. To maximize the reach and quality of our work, we involve leading experts and conservation organizations in all of our projects.

Promoting Forest Conservation in Brazil: Identifying Challenges and Opportunities of the Design and Implementation of the Environmental Reserves Quotas (CRAs) Market's State Regulations

CSF is currently conducting a study to subsidize the design and implementation processes of the Environmental Reserves Quotas (Portuguese acronym, CRAs) market regulations by the Brazilian States to help conserve the forest in a more economically efficient and environmentally sound way.

Rural properties in Brazil play an important role in biodiversity and natural resource conservation. Under Brazilian law, owners must maintain at least 20% of their total land area with native vegetation. These areas are called “Legal Reserves” (LRs) and are intended to maintain forested areas and their ecosystems, ensuring ecological balance in the region. However, many properties have yet to meet these requirements consequently creating a deficit of LR. Established in 2012 by the Forest Code, the CRA is one of the Brazilian law compliance mechanisms. The CRA program creates a market through which landowners, with LR deficits from as early as 2008, can meet their legal obligations by purchasing quotas, and thus protect an equivalent ​​native vegetation area located on others’ properties. This market mechanism has the potential to be a very efficient conservation tool for native vegetation areas with high environmental value.

The CRA market regulation at the federal level may be concluded as early as June 2017, according to the Forest Code Observatory (OCF) - an NGO group that monitors the implementation of the Forest Code and its projects. This was supported by wide debate that involved the Brazilian Ministry of the Environment, Brazilian Forest Service, Brazilian Rural Society and environmental NGOs, among others. Once the federal market regulations are established, it will be up to Brazilian States to regulate CRA transaction conditions within and among states.
Given the present state of CRA, the second half of 2017 seems an appropriate time for an exchange of experiences and discussions on challenges and opportunities for the CRA market implementation at the state level.

Thus, CSF is conducting a study to identify the best strategies for the efficient operation of the CRA mechanisms within and among states, as well as to report on the lessons learned among various states.
In partnership with the OCF, CSF will first organize a workshop to promote an exchange of experiences, visions and technical information about the CRAs among state and federal government managers and researchers on this topic. Interviews will also be conducted with these key-actors. CSF will then systematize the suggestions on these issues of the states more advanced in the process, and its main challenges with the implementation and functionality of this regulation.

Several studies, such as the one carried out by CSF in the state of Bahia in 2016, indicate the importance of prioritizing areas of high environmental relevance, so-called "priority areas", so that the CRAs market achieves better environmental results.
This can be done in several ways, including: restricting the CRA’s transactions only to priority areas; time-fixed commercialization restriction only to priority areas; use of variable compensation rates among areas with different ecological values; use of taxes or subsidies to encourage the commercialization of priority areas; intensification of communication campaigns in priority areas, etc.

Ultimately, we hope this study will support the design of CRA market regulations in a way that both environmental and economic objectives are achieved by Brazilian states.

This project is being conducted in partnership with the OCF and with support from the Good Energies Foundation.

Photo: An area of ​​a native forest in the Amazon next to deforested land being used for agriculture.
Photo credit: Sam Beebe.