Economic evaluation of massive restoration in Brazil: how to achieve the iNDC-Brazil target
by Andrea Lucchesi; Paula Carvalho Pereda; Maria Alice Móz Christofoletti; Keyi Ando Ussami; Eduardo Gusson; Girlei Costa Da Cunha
International Journal of Global Environmental Issues (IJGENVI), Vol. 18, No. 1, 2019

Abstract: The Brazilian Government has established a target to restore 12 million hectares of the country's forest area by 2030. In this study, we address the economic and financial feasibility of this massive restoration, as well as job creation and government receivables, by applying a traditional valuation method and assumptions from the environmental literature. Conservative scenarios, based on an agricultural producer perspective, indicate that the recovery is economically unviable: the net present value is negative, and though the internal rate of return is positive, it is lower than the cost of capital. However, sensitivity analysis suggests that it may become feasible when considered as an outsourced business and a market for forest carbon capture is included. In terms of public policy, there is still room for creating instruments to improve its feasibility, since we have not addressed other positive externalities and also the sale of non-timber forest products.

Online publication date: Tue, 09-Apr-2019

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