Government intends to restore 15,000 hectares in Bom Futuro National Forest in Rondônia state
09/04/2024
The government expects to complete Brazil’s first public concession for forest restoration by the end of this year. This is also the first project to restore degraded lands financed through carbon credits, which could be an important test for the functioning of this mechanism. The goal is to restore 15,000 hectares in the Bom Futuro National Forest in Porto Velho, Rondônia.
Still in public consultation, the bid has attracted interest from private-sector companies and was well-received by the Indigenous community neighboring the territory. However, it still raises questions regarding oversight, land regularization, financing, and security.
As planned, the Bom Futuro National Forest (Flona) will be subdivided into blocks and handed over to the administration of companies. They will need to restore the land by bringing the vegetation as close as possible to the region’s original vegetation, said Renato Rosenberg, director of Concessions of the Brazilian Forest Service, an agency linked to the Ministry of the Environment and Climate Change.
The restoration of each degraded hectare in that forest is expected to require around R$20,000 for irrigation, soil recovery, and seedling planting. As a result, restoring the area would cost around R$300 million. Companies will be able to capture the carbon credits related to the new trees that will be planted and a portion of this revenue will go to the Brazilian state in the form of a concession fee.
Mr. Rosenberg said revenue is not the focus, though. “The government’s primary objective is not revenue generation and that’s why we are minimizing the concession fee.” Under the model being designed in partnership with the Brazilian Development Bank (BNDES), the proposal that offers the highest percentage of revenue—with a cap close to 15%—and a fixed payment at the time of contract signing wins. The financial equation, however, may vary according to non-mandatory actions that the project wants to encourage. “Investments in research and purchasing seedlings and seeds from Indigenous communities could be some of these actions. It’s not mandatory, but if they do it, they get a bonus,” he said.
Neighboring the Bom Futuro Flona, the Karitiana Indigenous community views the project’s arrival with optimism, both in economic terms and for the security of the demarcated territory, which occupies about 800 hectares. “We need to restore reforestation. We are suffering a lot from invasions by miners and loggers, and I think they [the concessionaires] can help monitor our region as well,” said Edilene Karitiana, one of the group’s leaders.
However, the format of the security scheme for the territory to be granted, which has a history of invasions and actions by land grabbers and organized crime, has not yet been defined. Without police power, concessionaire companies will need relevant support from the State to operate with some security in the area.
From the government’s perspective, part of the risk “is inherent to the business risk itself and is the same as in the case of a project in a private area,” said Mr. Rosenberg. “On the other hand, only the public power has police power. Therefore, part of this risk will be allocated to the granting authority,” he added, noting that the limits of each actor’s role will be discussed in the public hearings scheduled for this month.
The Karitiana people also see opportunities for selling seedlings. The supply of seedlings for restoration projects is one of the possible bottlenecks for the government’s goal of restoring 12 million hectares, as revealed to Valor in July last year by the president of the Brazilian Forest Service, Garo Batmanian. At the time, he estimated a demand of about 5 billion seedlings of various species. Production at that time was around 150 million seedlings per year.
In the case of concessions, according to Mr. Rosenberg, this risk is private and with little chance of problems. “They [concessionaires] will have a very comfortable maximum schedule to carry out the restoration. During this period, they will have time to organize the nurseries, whether vertical or horizontal,” he said.
One organization interested in participating in the bidding, re.green!, emphasizes that it already adopts partnerships with local communities in other projects, especially seed collection courses, an essential activity in seedling production. The company’s director of institutional relations, Mariana Barbosa, says that the Bom Futuro Flona could be a milestone for forest restoration in the country but notes that there are still questions to be answered.
“It’s a unique and innovative model. We see it as a positive agenda and have been studying the bids over the past few months. The current stage is precisely this: understanding how it will work, moving from a place of looking at opportunities to now seeing the project taking shape,” Ms. Barbosa said.
Mr. Rosenberg came out optimistic from the initial surveys with potential interested parties. Biomas, a company created in 2022 by Itaú Unibanco, Santander, Rabobank, Vale, Suzano, and Marfrig to operate in reforestation and conservation, is also interested in participating.
Natalia Renteria, director of Regulatory Affairs at Biomas, believes that the concession proposal “makes perfect sense” for the company. She reiterates that the success of a concession of this type can be a milestone for scaling restoration projects. “For a sector that is still in its infancy, it is very important. To scale in line with the country’s climate commitments, an economic model that stands on its own is necessary. And concessions fit into this. We are evaluating this opportunity and view the opening of this process very positively.”
The bid schedule includes a public consultation with Indigenous peoples confirmed for next Monday (9) at the central village of the Karitiana Indigenous Land in Porto Velho. On the 10th, the advisory council of the Bom Futuro Flona will meet, and the public hearing will take place the following day.
After these events, there will be a two-week period for clarifying doubts before forwarding the final version of the bid to the Federal Court of Accounts (TCU). The public spending watchdog has 75 days to analyze the material.
*Por Murillo Camarotto — Brasília
Source: Valor Inaternational