The implementation costs of forest conservation policies in Brazil

Highlights

• We analyzed implementation costs of federal forest conservation policies in Brazil.

• Real costs amounted to US$ 1 billion/year on average from 2000 to 2014.

• These costs increased by 44% after 2004, when deforestation sharply dropped.

• Incremental cost per mitigation unit amounted to US$ 308–923/ha or US$ 0.87–2.60/tCO₂.

• Subnational expenditures increase costs to US$ 385–1153/ha or US$ 1.09–3.25/tCO₂.

Abstract

Tropical forest conservation is considered a low-cost option for climate change mitigation. But mitigation cost assessments have featured opportunity costs, neglecting policy implementation costs. Here we use official data to identify the Brazilian federal government's operational and institutional budgets related to forest conservation policies implemented from 2000 to 2014. We distinguish the allocated and executed budgets of these policies, and provide scenario-based estimates of their cost-effectiveness. On average, Brazil spent US$ 1 billion/year on forest conservation policies at the federal level. Brazil's substantial reduction in annual forest loss after 2004 was accompanied by a higher operational budget execution of disincentive-based policy instruments, and an absolute increase in both allocated and executed institutional budgets. The post-2004 successful mitigation effort represented additional implementation costs to the Brazilian federal government of US$ 308–923/ha of avoided deforestation, or US$ 0.87–2.60/tCO₂ of avoided emissions. Factoring in also approximate municipal and state expenditures, these costs increase to US$ 385–1153/ha or US$ 1.09–3.25/tCO₂. We conclude that implementations costs are non-trivial in size, including compared to estimates of land users' opportunity costs. This has important implications for REDD + policy design, in the sense that implementation costs need to be adequately considered.

Introduction

The conversion of forests to agriculture, pasture and other alternative land uses in developing countries has been identified as a major source of greenhouse gas emissions that could be avoided at comparatively low costs (Pan et al., 2011, Stern, 2006). This assertion has motivated much research into how an international mechanism, such as REDD + (reducing emissions from deforestation and forest degradation and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks), could be designed to improve the cost-effectiveness of global climate change mitigation, while hopefully providing a wide range of environmental and social co-benefits (Phan et al., 2014).

In this body of research, the costs of REDD + are often divided into opportunity, implementation and transaction costs. Opportunity costs are benefits foregone when forests are not cleared or otherwise degraded for socio-economic activities, e.g. the profits from the best alternative land use, such as logging, crop production and cattle ranching, minus the benefits from non-destructive forest uses (Angelsen et al., 2012, Pagiola and Bosquet, 2009, World Bank, 2011). Implementation costs are incurred by governments or other bodies (e.g. NGOs and the private sector), which undertake policies or other interventions that reduce forest loss, and can be defined as all the necessary operational and institutional costs of executing forest conservation policies on the ground, e.g. enforcement of land-use regulations and institutional capacity building (Angelsen et al., 2012, Pagiola and Bosquet, 2009, World Bank, 2011). Transactions costs occur when stakeholders negotiate agreements about forest conservation, or in monitoring, reporting and verifying the carbon and non-carbon benefits of REDD + (Pagiola and Bosquet, 2009, World Bank, 2011).

However, most applied studies on the potential costs of forest conservation under REDD + focus on opportunity costs of land users under various conservation scenarios (Kindermann et al., 2008, Overmars et al., 2014, Strassburg et al., 2009). While most of these studies confirm the existence of low-cost opportunities for mitigating climate change, they tend to ignore the costs of implementing the necessary policies to promote forest conservation on the ground (Fosci, 2013). Implementation costs of forest conservation policies thus represent a major knowledge gap, and policy makers considering engagement in REDD + have lacked important information for decision processes and policy design (Fosci, 2013, Gregersen et al., 2010, Kesicki and Ekins, 2012, Pagiola and Bosquet, 2009, UNEP (United Nations Environment Programme), 2014). This knowledge gap could be explained by the great difficulty in getting accurate and organized data on the costs of forest conservation policies (Fosci, 2013, Pagiola and Bosquet, 2009).

In this paper, we address the aforementioned knowledge gap in the context of Brazil – the prime forerunner globally for REDD + type of policy implementation in a forested country. More specifically, we meticulously gather and classify official budget data to create a time series of implementation costs related to forest conservation policies, incurred by the Brazilian federal government from 2000 to 2014. In this period, Brazil implemented major changes to the enforcement strategy of its forest law, and stood out as the country that achieved the largest reduction in tropical tree-cover loss globally (Hansen et al., 2013). While various factors were at play in explaining this drastic reduction, an emerging body of research suggests that the slow-down in forest loss was to a notable extent a result of national-level efforts to boost the effectiveness of forest conservation policies (Arima et al., 2014, Assunção et al., 2015, Hargrave and Kis-Katos, 2013, Nepstad et al., 2014, Pfaff et al., 2015, Soares-Filho et al., 2010). This allows us to gauge policy cost-effectiveness under literature-based assumptions and scenarios about policy impacts. We also provide gross estimates of the implementation costs incurred by subnational governments and discuss their importance.

The paper is structured as follows. Section 2 reviews previous studies about the costs of forest conservation. Section 3 provides a conceptual background on corresponding policy instruments. Section 4 presents the background on forest conservation policies in Brazil. Section 5 describes our data and methods. 6 Results, 7 Discussion present and discuss the findings of this study, respectively. Finally, Section 8 concludes the study, highlighting its implications for forest conservation and REDD + policy design in Brazil and beyond.