Forest compensation program

PROJECTSRound 2

May 11

Written By Climate Policy Initiative

Forest Compensation Programs: Improving the Design and Regulation to Limit Legal Deforestation and Promote the Restoration of Priority Conservation Areas

Brazil is currently the world's largest soybean producer, and studies suggest that the country will maintain its leadership throughout the decade. In the 2020/21 crop year, Brazil not only increased its soy output by 8.9% over the previous season, but also expanded the area by 4.2% to a record 95.16 million hectares (CONAB). Although the Forest Code requires the conservation of native vegetation on private landholdings, it takes more than efficient legislation to contain deforestation, especially in areas of rapid expansion of the agricultural frontier, such as the Cerrado.

The Climate Policy Initiative seeks to leverage the Brazilian Forest Code’s financial compensation instrument to promote sustainable development, while also increasing transparency, data access, and information integration to improve decision-making and strengthen the country's ecosystem mechanisms. The project will use in-depth research, structured dialogues, and broad dissemination to ensure the regulation and implementation of forest compensation by Brazilian states. It will support changes in the soy supply chain, and in other sectors, by strengthening policies and regulatory instruments designed to promote sustainable land use.

The project's scope includes all soy-producing states in Brazil, especially the Cerrado and Amazon biomes. To implement it, the Climate Policy Initiative intends to elaborate and regulate the forest compensation mechanism at the federal level and in all the states covered by the project to slow the opening of new plantations and stimulate the restoration of priority conservation areas; and improve access to and transparency of information about deforestation and forest compensation authorizations, facilitating access to data from the National System for Control of the Origin of Forest Products (SINAFLOR) and integrating it with other environmental databases, such as the Rural Environmental Registry (CAR). The goal is to enable the creation of ecological corridors and the protection of priority conservation areas, while stimulating agricultural production with no deforestation or conversion of native vegetation, especially on soy farms.