Private forest management for sustainable commercial activity
Private forest management for sustainable commercial activity
Business Model Description
Invest in private forest concessions to operate consumer-facing ecotourism, ventures, and support local smallholder producers and value chains
Expected Impact
Support sustainable tourism activities that avoid harm to the environment and empower local producers & communities
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Brazil: Pará
- Brazil: Rondônia
- Brazil: Amapá
Sector Classification
Renewable Resources and Alternative Energy
Development need
Sustainability Development Report 2019 gives a score of 91.7 on SDG 13 (Climate Action) for Brazil, with 'Significant challenges remaining' subscores prevalent across indicators. (1) Brazil faces the risk of an energy blackout over the next decade due to increased energy demand driven by population and economic growth (2)
Policy priority
Brazil's National Energy Plan (PNE 2030) stresses the need to meet the increased energy demand over the next years and to diversify the electricity mix, favoring renewable energy (3) (4)
Gender inequalities and marginalization issues
Research in Brazil demonstrates that in rural areas, girls are 59% more likely to complete primary education by the age of 18 if they have access to electricity, and that rural women & men are 10.2% more likely to be employed if they have access to electricity in comparison to their counterparts without access. (21)
Investment opportunities introduction
Increased policy momentum creates a strong context for new and enhanced investment, with the contribution of solar and wind towards the Brazilian energy matrix expected to grow to 44% by 2040, up from 4.4% in 2015 (5)
Key bottlenecks introduction
The key bottlenecks include small-scale illegal commercialization in forestry management, the large amount of capital required to set up businesses, bureaucratic decision making durations, the immediate profit motive encouraging short-term exploitation over long-term sustainability and the reduction of existing subsidies.
Forestry and Paper
Development need
Deforestation is a prevalent issue across the Atlantic Forest and the Amazon. Cleared areas are often managed under degrading agricultural and livestock practices. (6) This phenomenon hurts biodiversity in forests like the Atlantic, which is the single Brazilian biome with the highest number of endangered fauna (7), and increases greenhouse gas emissions (6)
Policy priority
To deliver on the PNE 2030 and meet 2030 NDC aspirations, Brazil intends to restore and reforest 12 million hectares of forests by 2030 (8). The National Plan for Commercial Forestry aims to increase the country’s tree planting area by 20% until 2030. (9) There is a growing public sector interest in outsourcing forest management in Mata Atlantica and the Amazon.
Gender inequalities and marginalization issues
The Mata Atlântica is home to two indigenous groups: the Tupi and the Guarani. (19) Agroforestry is also a strong source of income for many women living in these areas. Industrial tree plantation should not induce land grabbing or the forced displacement of these groups.
Investment opportunities introduction
Programa ABC, Pronamp and Pronaf Eco are BNDES loans to investors in reforestation or forestry protection businesses (10) BNDES Climate Fund Facility lends at below-market rates (11) Private forest concessions are permitted and regulated by the Federal Government under the Law of Public Forest Management (12)
Key bottlenecks introduction
Small-scale illegal commercialization remains unchecked (tax evasion, labor rights, sustainable harvesting), driving the emergence of pockets of unfair competition. Market prices lack full transparency, given the floor set by illegal loggers (who represent over half of the market)
Forestry Management
Pipeline Opportunity
Private forest management for sustainable commercial activity
Invest in private forest concessions to operate consumer-facing ecotourism, ventures, and support local smallholder producers and value chains
Business Case
Market Size and Environment
Concessions occupy an area of 1.6 million hectares
The 29 private forest concessions currently available occupy an area of 1.6 million hectares (13)
Indicative Return
> 25%
Viability studies have set IRRs for private forestry concessions (focused on both tourism services and forestry) at 20-40% (15) (16) (17)
Investment Timeframe
Medium Term (5–10 years)
Concessions need to be won and a delay may be imposed to start commercializing. Minimum tenure is 5 years, and maximum is 40 years (17)
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
In the Brazilian Amazon, cleared areas designated for rural settlements are commonly managed under degrading agricultural and livestock practices (14)
Gender & Marginalisation
The absence of sustainable alternative livelihoods for local communities leads to the practice of land clearing and low-intensity cultivation, which lead to the elimination of forest cover and the increased risk of greenhouse gas emissions (14)
Expected Development Outcome
Improve forest preservation by outsourcing management to investors who commit to exploiting it sustainably under a federal regulatory framework
Gender & Marginalisation
Improve livelihoods and living conditions of inhabitants in the Amazon and Atlantic Forests by providing them with training and extension services for their agricultural activity and by employing them in ecotourism and other services provided in the forest concession
Primary SDGs addressed
15.1.1 Forest area as a proportion of total land area
15.2.1 Progress towards sustainable forest management
15.3.1 Proportion of land that is degraded over total land area
15.a.1 (a) Official development assistance on conservation and sustainable use of biodiversity; and (b) revenue generated and finance mobilized from biodiversity-relevant economic instruments
59.4% (20)
29.42% (20)
27% (20)
$178.20 million (20)
Secondary SDGs addressed
Directly impacted stakeholders
Planet
Indirectly impacted stakeholders
People
Outcome Risks
Excessive privatization of areas of forest may interfere with natural habitats and ecosystems that go beyond concession areas
Gender inequality and/or marginalization risk: If local ecosystems are disturbed, it may negatively impact the quality of life and the sources of income for the destination communities
Impact Risks
Drop-off Risk: If demand for ecotourism destinations increase rapidly, there is a risk that the sustainability component will not endure under increased commercialization
Gender inequality and/or marginalization risk: Stakeholder participation risk- The risk that the local communities living around intended ecotourism destinations do not welcome these interventions
Impact Classification
What
The outcome is likely to be positive, important and intended because this investment could help preserve the environment
Who
The Amazon rainforest and its communities to a lesser extent are underserved due to degrading farming practices and unsustainable livelihoods
Risk
The risk is low because the concessions are already defined
Impact Thesis
Support sustainable tourism activities that avoid harm to the environment and empower local producers & communities
Enabling Environment
Policy Environment
(Brazilian National Energy Plan PNE 2030): To deliver on the PNE 2030 and meet 2030 NDC aspirations, Brazil intends to restore and reforest 12 million hectares of forests by 2030
Public sector interest in outsourcing forest management in the Mata Atlantica and Amazon, where most deforestation and illegal timbering occurs
Financial Environment
Financial incentives: BNDES has supported the financing of these concessions, such as Grupo Votorantim's "Legado das Águas" in Vale do Ribeira, with US$ 11M out of a total project cost of US$ 13M (18)
Regulatory Environment
(The Law of Public Forest Management): Private forest concessions are permitted and regulated by the Federal Government under the Law of Public Forest Management (12)
(ICMBio Normative Instruction no. 08/2008): Declares the procedures and rules regulating visiation and tourism in federal protected areas
Marketplace Participants
Private Sector
Grupo Votorantim, Legado das Aguas
Government
The National Bank for Economic and Social Development (BNDES), Brazilian Forestry Service (SFB)
Target Locations
Brazil: Pará
Brazil: Rondônia
Brazil: Amapá
References
- (1) Bertelsmann Stiftung, 2019, https://dashboards.sdgindex.org/#/BRA
- (2) BNDES, 2018, https://web.bndes.gov.br/bib/jspui/bitstream/1408/16040/3/PRLiv214078_Visao_2035_compl_P.pdf
- (3) Empresa de Pesquisa Energética, 2019, http://epe.gov.br/sites-pt/publicacoes-dados-abertos/publicacoes/PublicacoesArquivos/publicacao-165/topico-173/PNE%202030%20-%20Proje%C3%A7%C3%B5es.pdf
- (4) Empresa de Pesquisa Energética, 2019, http://epe.gov.br/pt/publicacoes-dados-abertos/publicacoes/Plano-Nacional-de-Energia-PNE-2030
- (5) APEX< 2019, https://portal.apexbrasil.com.br/setores-prioritarios/
- (6) Forest Declaration, 2017, https://forestdeclaration.org/goal/goal-4/
- (7) Globo, 2019, https://g1.globo.com/natureza/desafio-natureza/noticia/2019/02/20/caatinga-tem-182-animais-ameacados-no-pais-quase-10-dos-monitorados-estao-sob-risco-de-extincao.ghtml
- (8) UNFCCC, 2015, https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Brazil%20First/BRAZIL%20iNDC%20english%20FINAL.pdf
- (9) Presente Rural, 2019, https://opresenterural.com.br/plano-de-producao-florestal-e-aprovado-preve-aumento-de-20-em-area-ate-2030/
- (10) BNDES, 2019, http://www.bndes.gov.br/SiteBNDES/bndes/bndes_pt/Galerias/Convivencia/Restauracao_Ecologica/linhas_financiamento.html
- (11) BNDES, 2018, https://web.bndes.gov.br/bib/jspui/bitstream/1408/16040/3/PRLiv214078_Visao_2035_compl_P.pdf
- (12) Serviço Florestal Brasileiro, 2019, http://www.florestal.gov.br/concessoes-florestais
- (13) Diálogos Sustentáveis, 2017, https://www.funbio.org.br/wp-content/uploads/2017/08/Concess%C3%B5es-Florestais.pdf
- (14) Forest Declaration, 2017, https://forestdeclaration.org/goal/goal-4/
- (15) Serviço Florestal Brasileiro, 2018, http://www.florestal.gov.br/documentos/informacoes-florestais/premio-sfb/iv-premio/monografias-iv-premio/profissional/2598-iv-premiosfb-3-lugar-categoria-profissional-maisa-isabela-rodrigues/file
- (16) Estado do Rio de Janeiro, 2013, http://www.icmbio.gov.br/portal/images/Relat%C3%B3rio_EVE.pdf
- (17) Universidade de Brasília, 2015, http://bdm.unb.br/bitstream/10483/13731/1/2015_RayaneGadelhaMariz.pdf
- (18) Governo do Brasil, 2016, http://www.brasil.gov.br/economia-e-emprego/2016/04/bndes-apoia-com-r-43-milhoes-projeto-na-mata-atlantica
- (19) Mongabay, 2020. https://rainforests.mongabay.com/mata-atlantica/
- (20) SDG Tracker, 2021. https://sdg-tracker.org/
- (21) Global Gender and Climate Alliance & UNDP, 2016. https://www.undp.org/content/dam/undp/library/gender/Gender%20and%20Environment/UNDP%20Gender%20and%20Sustainable%20Energy%20Policy%20Brief%204-WEB.pdf