The destruction of forests is currently one of the biggest environmental challenges in the world, appearing as a highlight in the discussions at COP26. The main proposed solutions focus on supporting sustainable agricultural activities to deal with the problem.
Although this alternative is extremely important and a fundamental part of the solution, it is of little use without policies that also focus on cutting funding — public and private — for activities linked to deforestation.
Deforestation is an expensive activity. The MPF (Federal Public Ministry) points out that, to destroy an area equivalent to a football field, it takes between R$800 and R$2,000.
With the recent increase in deforestation in the Amazon, more than one million hectares of forest are lost annually. Thus, at least R$1 billion is needed to keep pace with forest destruction every year in Brazil.
It is not uncommon for loans granted by banks, especially via rural credit (subsidized credit for agriculture, financed with Brazilian money), benefit land grabbers and deforesters.
Based on data from the Central Bank itself, the Forest & Finance platform shows that, since the Paris Agreement (signed in 2015 and which provides for mitigation actions for the climate emergency), more than US$ 25 billion in rural credit have been allocated. to sectors such as cattle and soybeans in the Amazon. In the Cerrado, it was more than US$ 50 million.
These are commodities closely related to deforestation — up to 90% of the deforested areas in the Amazon are used for cattle raising, with a similar situation in the Cerrado.
The chance that a good part of this money will finance the consolidation of recently deforested areas, benefiting land grabbers and deforesters, is quite high, and it becomes greater with the increase in deforestation.
To get an idea of ​​the volume of this money, the Declaration of Forests, signed at this COP, intends to make US$ 12 billion available in four years for various activities to curb deforestation worldwide.
Bacen (Central Bank of Brazil) has a fundamental role in agricultural financing, by regulating the activities of all banks in the country. Recently, Bacen started a discussion on the restriction of access to rural credit due to sustainability criteria.
Despite having carried out a timid public consultation on the ongoing proposals, almost no contributions from civil society were incorporated. The final result, described in Resolution 140/2021, has few practical effects and large gaps. Ultimately, the new proposal still allows —in the height of the climate emergency— the financing of activities to consolidate properties that used illegal deforestation, in public areas and in protected areas.
This and other measures were presented at COP26, on November 3, by the president of Bacen, as initiatives to make rural credit more sustainable.
The resolution, however, only prohibits financing to rural properties that occupied the approved indigenous lands and titled quilombolas. Almost 35% of indigenous lands are still not homologated, and, in the case of quilombola lands, the situation is even worse, more than 93% are not titled.
The resolution does not mention projects with overlapping public forests that have not yet been earmarked. A study by Ipam (Amazon Environmental Research Institute) demonstrates that public forests are invaded at a frightening speed and concentrate around 30% of deforestation in the Amazon. Also, since 2016, the number of CAR registrations (Rural Environmental Registry) in areas in public forests has increased by more than 230%.
The study also points out that, even though it is not a land title document, the CAR makes it easier to obtain funds from banks and makes illegal occupation and deforestation feasible.
By not adopting measures to restrict the financing of these properties, and only denying the financing of properties with canceled CAR, Bacen fails to protect 61 million hectares in public forests alone, exactly the areas that have been suffering most from the pressure of illegal logging of wood, fires and deforestation from different sources.
The resolution also only prohibits credit for properties with environmental infractions (and/or embargoed areas) carried out by Ibama (Brazilian Institute for the Environment and Renewable Natural Resources), without considering infractions verified by municipalities and states. Nor does it prohibit credit to beneficiaries who do not track their supply chain, thus financing activities without any environmental control.
Bacen’s first attempt to unlink credit from deforestation dates back to 2008 (CMN Resolution No. 3545) and avoided deforestation in 2,700 km² in the Amazon rainforest between 2008 and 2011, showing that Bacen’s actions are crucial to help in the fight.
However, since this resolution was implemented, there has been an intense increase in platforms and data that allow banks to know the history of the property where activities require financing. Thus, it is certainly possible to improve the safeguards aiming at a more concrete result.
To avoid a climate catastrophe, it is urgent to eliminate deforestation, the biggest source of greenhouse gas emissions in Brazil. In addition to the destruction of forests not generating any wealth for the country, it puts us in an international pariah situation, hindering business and trade agreements.
Preventing rural credit, subsidized with public resources, from encouraging deforestation is a crucial action for the climate and for the country’s economic development. Land grabbers and deforesters cannot continue to be sure of impunity and access to credit.
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