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Some say that emissions trading under the Kyoto Protocol should be used to preserve intact areas of the Amazon rainforest as well as to restore deforested regions. This is a commendable aim — but there are several reasons why it is unlikely to work in practice.

The Clean Development Mechanism (CDM) is a key function of the Kyoto Protocol and is already being used in the emissions trading markets. It allows companies in developed countries to invest in certain projects in developing countries in return for emissions credits. For a project to be eligible for CDM credits, it must result in a net reduction of greenhouse-gas emissions. Carbon capture projects, including reforestation, do qualify for CDM credits, but conservation projects that would avoid trees being cut down in the first place do not.

Some people say that projects that avoid deforestation should be eligible for CDM credits. They say that preventing deforestation would halt a root cause of carbon dioxide being released into the atmosphere. The conversion of forests to poorly managed agricultural land leads not only to the release of carbon from trees, but also from soils that subsequently erode away.

The problem is of particular concern in Brazil, where most of the Amazon rainforest lies. Data from the Instituto de Pesquisa Ambiental da Amazônia, a research institute in northern Brazil, suggest that deforestation is responsible for emissions of an estimated 200 million tonnes of carbon each year. That is equivalent to two-thirds of Brazil’s emissions of greenhouse gases and about 2.5 per cent of global carbon emissions.

But including projects that avoid deforestation in the CDM trading is unlikely to work in Brazil. Here are five reasons why.

First, the problem of deforestation in Brazil is tightly linked to internal migration. If an area were declared protected by a CDM project, farmers would be likely to continue their unsustainable agricultural practices by simply moving to unprotected areas. Leaving-dioxide emissions unchanged.

To avoid this, alternative economic opportunities would have to be offered to the farmers or effective sanctions would need to be applied. Controlling deforestation and the emissions that result from it would mean controlling migration. But this is difficult to do, say the authorities, because local institutions have limited funds and staff.

Second, political disagreement on this issue between different groups in the country which has prevented Brazil from taking a united position in international negotiations. The Brazilian government opposes the inclusion within the CDM of projects that avoid deforestation, arguing that farmers would simply migrate to non-protected areas and cut down the trees there. Some non-governmental organisations and government officials do support the inclusion of ‘avoided deforestation’ projects in the CDM to obtain much-needed funds for conservation efforts.

Third, 'perverse incentives' encourage deforestation in Brazil. It is cheaper to clear new land areas for the international beef and soya bean markets than to invest in already deforested regions. As long as the prices for agricultural commodities such as soya and biofuel exports remain high, illegal agricultural settlements will continue to use resources unsustainably. The reason for this is that soya is established on grasslands pushing cattle pastures further into forested areas.

Fourth, influencing the activities of small-scale farmers will have little impact on the deforestation problem. Some suggest that financing supplied through carbon credits might provide such farmers with much-needed incentives to switch to sustainable methods. However, small farms in Brazil only account for about 20 per cent of deforestation and larger farms are unlikely to adopt sustainable methods, such as no-tillage agriculture and agroforestry. So the use of such technologies will only be a marginal solution to the deforestation problem.

Finally, under the Kyoto Protocol, only one per cent of all CDM projects can relate to land use and forestry. It is also unlikely that the issue of deforestation will be resolved in climate negotiations as long as forums created to resolve the problem, such as the UN Forum on Forests, are unable to reach agreement.

Instead of debating whether or not the CDM should include conservation, the way forward for Brazil may be to focus on the existing system of fiscal measures to encourage forest conservation. This system has reportedly made significant progress in several states, including Minas Gerais. Another useful action would be to prevent perverse incentives, for example by using certification standards to ensure that soya beans are not grown on newly cleared lands or lands adjacent to forests. Such national policy measures could very well provide more tangible results than can be achieved under the international carbon market.

More information:

Garcia R. A., Filho B. S. S. and Sawyer D. O. Socioeconomic dimensions, migration, and deforestation: an integrated model of territory organization for the Brazilian Amazon. Available at:  (2005)

Laurance W. F., et al. The future of the Brazilian Amazon. Science 291, 438-439 (2001)

Read more about Brazil and climate change in our dedicated spotlight.