Authors: Andrea Lucchesi; Paula Carvalho Pereda; Maria Alice Móz Christofoletti; Keyi Ando Ussami; Eduardo Gusson; Girlei Costa Da Cunha
Addresses: School of Arts, Sciences and Humanities, University of São Paulo, Brazil ' Department of Economics, University of São Paulo, Brazil ' Department of Economics, University of São Paulo, Brazil ' Department of Economics, University of São Paulo, Brazil ' Biodendro Forest Consulting, Brazil ' Biodendro Forest Consulting, Brazil
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.
Keywords: ecological restoration; forest restoration; forest economics; intended nationally determined contribution; UNFCCC; forest carbon capture; Brazil.
International Journal of Global Environmental Issues, 2019 Vol.18 No.1, pp.41 - 70
Accepted: 11 Jun 2018
Published online: 26 Mar 2019 *