cover image: Carbon and the Fate of the Amazon


Carbon and the Fate of the Amazon

21 Sep 2023

In recent years, deforestation in the Amazon has raised concerns among researchers and policymakers in Brazil and around the world. By 2022, the Brazilian Amazon had lost around 21% of its original forest. Portions of the remaining forest have also been degraded by illegal logging and forest fires. All these factors are driving the forest dangerously close to a tipping point. If the Amazon reaches this critical point, the consequences to climate stability and biodiversity protection would be catastrophic. In response to this threat, governments and large corporations around the world are willing to purchase forest carbon credits, especially via capture (forest restoration), to neutralize their emissions. Despite growing interest in carbon credits, the actual pricing of this mechanism is yet to be fully understood. In the Brazilian Amazon, where cattle ranching is a leading driver of deforestation, understanding this dynamic is paramount. What carbon price would make the government and rural producers switch from cattle ranching to large-scale forest restoration in the Amazon? Answering this question requires an integrated approach that considers the incentives for deforestation, agricultural suitability, and the capacity for forest regeneration in each portion of the Amazon. Quantitative references must also be established to guide the design of carbon mechanisms and public policies. This publication shows that carbon prices exceeding US$ 20 per ton of CO2 captured by the natural regeneration of deforested areas in the Amazon would be truly transformative for the region’s landscape. Offsets for captured carbon would ensure forest integrity, inducing extensive forest restoration and the capture of 16 Gt CO2 over the next 30 years. Under this scenario, the Amazon would no longer be a net carbon emitter and, as a region, would have an enormous capacity to capture CO2 on a large scale. With this amount, it would be more economically advantageous to turn most of the areas currently devoted to cattle ranching into areas destined for forest restoration via natural regeneration. The revenue from carbon (US$ 320 billion over 30 years) would compensate for the loss of revenue in cattle activities. This analysis considers not only the uncertainty about fluctuations in cattle prices, but also the uncertainty inherent to the measurements used to calibrate the modelling parameters. This study presents an exercise of economic rationality, in which the carbon cycle, agricultural dynamics, conservation of standing forests, and forest restoration are all addressed together. The analysis also includes maps of priorities for forest conservation and the evolution of cattle activities over time.
climate carbon pricing amazon


Juliano Assunção, José Alexandre Scheinkman

Published in
United States of America


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