Agribusiness and Green Economy in Brazilian Amazonia:

Economic Synergies and Socioenvironmental Impacts1

Michael Franz Schmidlehner2

ABSTRACT
This article discusses the recent expansion of two economic modalities, their interactions
and effects on resource governance in Brazilian Amazonia: agribusiness and certain set of
market mechanisms based on environmental compensation and promoted under the label
of “green economy”. First, dynamics of agribusiness and its local impacts will be discussed
and exemplified by soy production in the Brazilian state of Mato Grosso. Although various
studies show that the rapid growth of this industry has led to land concentration,
deforestation, rural exodus, contamination of soil and water, amongst others, government
agencies with strong ties to the industry and local oligarchies keep promoting its further
expansion. Second, the creation of the System of Incentives for Environmental Services in
Acre through the state law 2308 from 2010 (SISA law) shall illustrate the local
implementation of green economy policies in Amazonia. The SISA law enables REDD-type
projects and the creation and commercialization of various types of eco-credits. Despite
harsh criticism from Brazilian civil society groups, SISA is being strongly promoted by the
Acrean state government, big NGOs, and Banks as a pioneer example for the
implementation of Green Economy in tropical rainforest regions. In a third step, some of the
regulations created by Brazilian Law No. 12,651 of 2012 (the so called New Forest Code) will
be explained. Besides loosening environmental standards for big landowners and partially
granting them exemption from fines for deforestation, the New Forest Code marks a
transition from a policy of environmental restoration to a policy of environmental
compensation and thereby creates strong synergies between agribusiness and REDD-type
projects. It is shown that the new standards implemented by regulations like SISA in
combination with the New Forest Code endorse multiple possibilities of new compensation
deals and favor the now merged interests of big landowners, industries and financial capital.
At the same time, these standards tend to further shift control over natural resources away
from smallholders and traditional communities.

KEYWORDS
Amazonia, Resource Governance, Agribusiness, Green Economy, Brazil’s New Forest Code,
environmental services, REDD

1 st
Conference paper presented at the 1 Austrian Conference on International Resource Politics: “Towards
th
International Resource Fairness - Theories, Conflicts and Policies” on December 5 2014 in Vienna.
2
Graduated as “Magister der Philosophie” at University of Vienna (2009), native Austrian with Austrian and
Brazilian citizenship, Michael F. Schmidlehner teaches and conducts research mainly in the fields of Amazonia,
traditional knowledge, biodiversity and climate justice. Contact: michael@amazonlink.org
Introduction
Since the beginning of colonization, Amazonia has been subject to ruthless exploitation of its
resources. The people who actually live in and from the forest were not only excluded from
the benefits of this exploration, but eliminated, enslaved, criminalized and expelled or
disenfranchised and patronized in order to facilitate access to these resources. The millions of
indigenous people, since the beginning of colonization were reduced to a few hundred
thousand, today suffering increasing pressure from mining companies, loggers, governmental
mega projects like highways and hydroelectric power plants. The so-called Rural Caucus
holds a hegemonic position in Brazilian Congress and currently, through a number of
proposed bills and regulations, promotes a policy of restricting and subverting indigenous
rights. The proposal for a constitutional amendment PEC 215/2000 for example would
practically impede demarcation of indigenous land in Brazil. The proposed bill PL-
07735/2014 for implementation of the UN Convention on Biological Diversity is being
discussed without consultation of indigenous people and, if approved, would be a major
setback for their rights regarding access and benefit sharing from genetic resources. Another
group of forest inhabitants, the rubber tappers, during the rubber boom at the turn of the
twentieth century, were held in semi-slavery by the owners of the rubber companies by
forbidding them to plant crops, so that they would depend entirely on the rubber extraction.
After the boom, when Amazonian rubber companies got broke, many of the tappers stayed
and developed a livelihood based on, besides extraction of rubber, fruits, nuts, oils, hunting
and fishing on small scale agriculture. In the second half of the twentieth century these
communities had to defend their living space against the interests of cattle breeders who
expelled and killed many of them. The conversion of rainforest areas into pastureland and
large scale monocultures has continuously advanced since then. Land grabbing, imposition of
forest management plans and criminalization through environmental regulations keep causing
the rural exodus of the forest people.
The Earth Summit in Rio de Janeiro 1992 gave rise to a new set of development politics and a
new discourse, based on the idea of sustainable development. At the turn of the century the
climate crisis appeared to be an eminent threat for humanity and the United Nations
Framework Convention on Climate Change UNFCCC adopted the Kyoto Protocol.
Recognizing that developed countries are responsible for the elevated levels of greenhouse
gases in the atmosphere, the Protocol obliges these countries to significantly reduce
emissions. To assist them in achieving compliance with the Protocol, the Clean Development
Mechanism CDM was adopted, allowing the flexibilization of the system by emissions
trading. So far the Protocol´s goals have been missed by far and while greenhouse gas levels
keep rising due to the unbridled burning of fossil fuels, emissions trading has paradoxically
become the central pillar of international climate policy. The inclusion of forests in the CDM
is being pushed more and more by the private sector and big NGOs, with the tendency to shift
the responsibility for the climate crisis to the forest-rich countries of the south. Projects for
reducing emissions from deforestation and forest degradation REDD, despite evidencing
serious flaws and severe impacts over forest dependent communities, have become big
business and are promoted as if they were beneficial for these communities and solutions for
mitigation of the climate crisis. Extending the logic of forest carbon trading, new markets of
various kinds of ecosystem services and environmental shares are emerging. These new
markets are part of a global economic reordering, promoted amongst others under the label of
Green Economy, and offer strong synergies with traditional markets. In Amazonia – as I
intend to show in this article - the dynamics of these new green markets combined with
agribusiness tend to further concentrate control over resources and to increase the overall
pressure on the rainforest and its inhabitants.

The dynamics of agribusiness

Agribusiness, in this article, is understood as a set of business processes and activities related
to large scale agriculture. In Amazonia this corresponds mainly to cattle breeding,
monocultures of soybeans, corn, sugar cane, coffee, cotton, rice and palm oil. The term
agribusiness also denotes the fact that these products are marketed as commodities, i.e., in
contrast to traditional forms of agriculture, in large quantities. The quality of agricultural
commodities is standardized and their prices are regulated by stock exchange.
The agribusiness sector is characterized by its large corporate concentration. Genetic
manipulation and the patenting of life forms contribute to the monopolization of the market
by a few companies, like Monsanto, Cargill and Nestle.
The conversion of more and more areas in Amazonia into pasture or into production areas of
animal feed in the mold of agribusiness is mainly driven by the increase in meat consumption
in industrialized countries from the post war period on to the recent economic opening of
China. The second factor contributing to the increased conversion of areas into monocultures
is the increasing global demand for biofuels driven by the growing energy consumption and at
the same time, the prospect of declining fossil fuel reserves in the world.
Among the various commodities, the soybean market stands out with its huge growth rates in
the last decade. Amazonian soybean production has had particularly high growth rates during
this period in the Brazilian state of Mato Grosso. The dynamics of agribusiness in the
Amazon and its impacts can be shown exemplarily in the case of the production and
marketing of soybean in this state.

Soy in Mato Grosso

Soy is used in increasing scales, both for animal feed and as raw material for biodiesel
production. More than a third of the world´s demand for soy is met in Brazil. 32% of
Brazilian production, and with this, 9% of worldwide soybean production takes place in Mato
Grosso. (Schlesinger 2013)
The main social impacts of the expansion of soy monocultures in Mato Grosso occur in the
context of concentration of land ownership. The increased prices for real estate in the
industry’s areas of interest, combined with the intensive use of pesticides and reduced water
availability makes coexistence of family farming and monoculture impossible and forces
smallholders into selling their properties to soy companies.
While the soy industry eliminates family farming, increased mechanization of production
leads to a reduction of employment in the state. Whilst production increased from 18,278 to
52,464,000 tons between 1958 and 2006, the number of jobs dropped from 1,694,000 to
419,000. (Ibid., p.18).
Among the many environmental conflicts caused by agribusiness in Mato Grosso in
Amazonia, the conflicts along the BR-163 highway stand out. The highway is being built to
facilitate the transportation of soy from Mato Grosso to the river port of Santarém, in the state
of Pará, passing through large areas of Amazon rainforest, opening access to loggers,
ranchers, land speculators and soy producers, and causes the violent expulsion of residents.
The murder of the North American sister Dorothy Stang in 2005 for a short time brought the
attention of the international press to this problem. (NYTimes 2006)
Besides the severe impacts of pesticides on the environment, such as water, soil, biodiversity
and climate, the direct impacts on human health are well known by institutions and
companies, but little known among the affected population: “According to the World Health
Organization (WHO), each year, about three million acute pesticide poisonings are recorded,
with 220 000 deaths. Approximately 70% of cases occur in developing countries, including
Brazil. Even worse, the WHO itself acknowledges that out of every 50 cases of intoxication,
only one is actually reported and recorded. (Schlesinger 2012 p.19) Impacts of this kind are
strongly felt by the indigenous people in the Xingu Park in Mato Grosso, which is surrounded
by soy plantations and receives pollution from the tributaries of the Xingu river, causing death
of fish and the emergence of diseases previously unknown to these communities.
(Socioambiental 2006)

Deforestation in Mato Grosso

Mato Grosso is divided into three biomes: The wetland called Pantanal covers 6.8% of the
states area, the savannah-like Cerrado 39.6%, and the Amazonian Biome 53.6%. By law, 80%
of the Amazonian biome and 35% of the Cerrado are considered legal reserve, and may not be
deforested. In reality, these limits are rarely respected. Greenpeace (2005) considers this state
a leader in deforestation, being responsible for 48% of forest loss in the Brazilian Amazon.
Despite decree No. 6514 of July 2008 establishing stricter rules against environmental crimes
in Brazil, deforestation continues in fact out of control. According to the Amazon Institute of
People and the Environment IMAZON, in February 2013, 78% of the total deforestation in
Brazilian Amazonia occurred in Mato Grosso (IMAZON 2013). In this month only, 35 square
kilometers were deforested and the numbers the keep rising. In September 2014, 78 square
kilometers of forest were cut down in the state. (IMAZON 2014)
The enormous pressure of the Ruralist Caucus in the Brazilian Congress to legalize the
conversion of forest areas for pasture land or monoculture becomes evident when, for
example, in 2007, a bill requires the redefinition of 54% of Amazon rainforest in Mato
Grosso, declaring it to be Cerrado biome. (Sonoticias 2007)
The soy farmers from Mato Grosso have Mr. Blairo Maggi as a strong partner in Brazilian
politics. Considered the largest single producer of soy in the world and the "King of Soy" in
Brazil, Maggi received in 2005 with the "Golden Chainsaw Reward" from Greenpeace as a
result of deforestation rates in his state. Nevertheless, having two times been elected
governor, Maggi is now senator and chairman of the Committee on the Environment,
Surveillance and Control in the Brazilian Congress.

BNDES and Brazilian “sub-colonialism”

The expansion of agribusiness in Amazonia is heavily funded by the Brazilian National
Development Bank (BNDES). In the first quarter of 2013, BNDES granted about $ 310
million to agriculture in Mato Grosso. (Agrolink 2013).
To lower the costs of soy transportation to China and Europe and increase the product’s
competitiveness in these markets, BNDES co-funds together with the Brazilian government
the so-called “intermodal logistics corridor” formed by the BR-163 highway and waterways
from the port of Santarem. (BNDES, 2012).
However, the bank's performance goes far beyond the borders of Brazil. Having taken the
lead in the South American Infrastructure and Planning Council (COSIPLAN), the successor
organization of the Initiative for the Integration of Regional Infrastructure in South America
(IIRSA), BNDES finances together with the World Bank and the Inter-American
Development Bank (IDB), besides agribusiness, major infrastructure projects such as roads
and hydroelectric plants in the Andean-Amazon countries, thereby promoting the
internationalization of Brazilian companies, that are contracted for these constructions.
In this context, the planned construction of a highway crossing the Secure Indigenous
Territory and National Park Isiboro (TIPNIS) in Bolivia must be mentioned. Comparable to
the dynamics of BR-163 in Brazil, this project would enable the introduction of monocultures
and facilitate the flow of agricultural commodities. The funding of this road by the BNDES,
with $ 332 million and execution of work by a Brazilian construction company has provoked
serious conflicts between the Bolivian government and indigenous and peasant movements
and demonstrates the violence of the new sub-colonialist policies of Brazil as an emerging
"superpower" in Latin America. (IBASE 2011)

A scenario of self-destruction
While the Brazilian model of "agricultural development" is being adopted in large parts of
Amazonia, scientific studies clearly indicate the limitations of this model.
Researchers at the Federal University of Viçosa (Brazil) and Woods Hole Research Center
published in 2013 the results of a study that estimates carbon stocks and profitability of
agriculture in the Brazilian Amazon in 2050 (Oliveira et al . 2013)
Firstly the researchers took into account the effects of global warming on vegetation,
secondly, the physiological effects of carbon dioxide on vegetation and thirdly, the effects of
land use changes on regional climate and developed four computer generated scenarios for the
year 2050. The methodology used in this study differs from previous studies because it takes
into account, in addition to the three individual abovementioned effects, the feedback effects
between them. In all four scenarios, the model shows accelerated reduction of biomass and
reduced agricultural productivity, mainly caused by reduced rainfall. The simulation returns
alarming data on the Amazonian biome: biomass loss can reach up to 65%, and with that, the
carbon currently stored in the Amazon would be reduced by 56% until 2050 (Ibid., p.9.)
But the most surprising results of the study are the outcomes of simulations predicting the
production of grass and soy per hectare. The study shows that the more agriculture expands in
Amazonia, the less productive it becomes. An increase of soy plantations by 10% would
result in an absolute reduction of production by 26%. The study concludes that agricultural
expansion in Amazonia is not only environmentally unsustainable, but above all economically
self-destructive within the next four decades.
Nevertheless, the short-term profits of soy business continue to prevail for its promoters, and
the Institute of Agricultural Economics of Mato Grosso (IMEA 2012) states: "The
availability of large amounts of arable land with high levels of rainfall provide an unbeatable
combination in Brazil. Brazil has the potential to double its acreage [. ...] ". Following the
example of Brazil, the government of Bolivia, influenced by big soy producers in the
department of Santa Cruz originating from Mato Grosso, proposes to increase agricultural
production to 15 million hectares by 2025 and invest $ 500 million annually to support
agribusiness producers. (CLAJADEP 2013)

Green Economy and the SISA law in Acre

The term Green Economy has become popular in recent years along with the idea that the free
market would not only be compatible with environmental protection and social equity, but
that market strategies could actually solve environmental and social problems. New
technologies for renewable energy, green architecture, transportation, land management,
water and waste as well as new market mechanisms are presented in this discourse as suitable
means to address the social and environmental crisis, while maintaining the paradigm of
perpetual economic growth.
A central element in the logic of green economy is the concept of compensation. Regulations
such as "Cap and Trade" that allow industries to compensate or “offset” surplus emissions by
acquiring carbon credits, instead of containing their emissions of greenhouse gases within
legal limits.
The Brazilian state of Acre occupies a "pioneering" role in the implementation of the green
economy in the Amazon. The state law 2.308 from 2010 implements a System for Incentive
of Environmental Services - SISA. This law defines carbon sequestration, conservation
natural scenic beauty, conservation of social and biological diversity, water conservation,
climate regulation and soil conservation as ecosystem services and products that can be
commercialized by an authorized state agency. The sub-program called ISA-Carbono
specifically facilitates the emission of carbon credits from projects for Reducing Emissions
from Deforestation and Forest Degradation REDD. (Acre 2010) Such carbon credits are
expected to be purchased in the near future by industries in the US state of California. In
2012, the former Californian governor Arnold Schwarzenegger signed a Memorandum of
Mutual Understanding with the Government of Acre the Mexican state of Chiapas and
California has legally adopted Cap and Trade, in order to establish a regulated sub national
carbon market.
The unethical nature of offsetting becomes evident in this example. In California, low-income
urban communities that live near polluting industries continue to suffer serious health
consequences from the industries’ pollution, such as respiratory problems, elevated rates of
cancer and miscarriage. In the project areas, peasant and indigenous communities, in
exchange for small payments are restricted in their traditional subsistence activities such as
planting, hunting, fishing, in order to maintain carbon stocks in their territory. Dercy Teles,
president of the rural workers union in the Acrean district Xapuri fought in the 1980s against
the expulsion of the forest people by cattle breeders together with Chico Mendes, the famous
rubber tapper leader, who was murdered by big landowners in 1988. Today, she states about
payments for environmental services: “And these payments that are held as if it were a
million dollars... But nobody really lives standing in a corner, because life is missing purpose,
isn't it? One feels useless. You cannot live standing still, only eating and looking at the forest,
having to quit all the things that you grew up doing, like fishing, hunting, hiking, making
your crop and so on.” (Dossier Acre 2012) There is strong resistance against SISA from parts
of Brazilian and Acrean civil society. In 2011, a group of 30 organizations published the
“Letter from the State of Acre - In defense of life and the integrity of the peoples and their
territories against REDD and the commodification of nature”, questioning the legitimacy of
the SISA: “In addition to being anti-constitutional, Law Nº 2.308 of 22 October 2010, which
regulates the State System of Incentives for Environmental Services, was created without the
due debate with sectors of society directly impacted by the law,” (Climate-Connections 2011)
In April 2013, the Indigenous Missionary Council (CIMI) from the state of Acre sent an open
letter, signed by numerous organizations and individuals to Californian authorities regarding
the planned inclusion of REDD offsets, primarily from Acre, in California’s carbon trading
scheme: “The government of Acre‟s “green economy” policies have created more problems
for the peoples who depend on forests, and even worse, they have caused divisions within
these communities due to the co-option of some of their leaders by the state government.”
(FERN 2013)
While inside the forests of Acre, oil and gas exploration is set up (Agencia AC 2012a), and
livestock growing and expanding monocultures of genetically modified corn and sugarcane
are encouraged (Agencia AC 2012b), the state government can externally preserve its green
image and attract large funding from international development banks such as the World
Bank, the Interamerican Development Bank IDB , BNDES and more recently the German
Development Bank Kreditanstalt für Wiederaufbau KFW through the so-called Early Movers
Program REM that supports pioneer REDD experiences. With this financial boost, Acre is
projected internationally as a showcase for green economy in the Amazon, aiming at the
application of this development model in other regions of tropical forests. Ignoring the fact
that Chico Mendes was a self declared communist, he is depicted as if he were a patron of
Green Economy. “The German federal government would like in the future to extend the
successful REM program to Ecuador, Colombia and Asian countries. Something that Chico
Mendes would also have approved of.” (KFW 2014)
The idea that environmental compensation would be a demand of the Amazonian rubber
tappers is propagated amongst others by the American NGO Environmental Defense Fund
EDF. EDF advises big companies like Walmart, McDonalds, as well as corporations in the
energy sector and strongly promotes the idea of environmental offsetting. EDF´s director of
tropical rainforest politics, Steve Schwarzman is one of the major articulators of Acre´s
environmental services politics. Amongst others, he uses the abovementioned argument in
advocating for the inclusion of forests in the Clean Development Mechanism of the Kyoto
Protocol (cf. Dossier Acre 2012, p.16-19) “It is in fact in part owing to Chico's legacy that
international climate negotiators in the United Nations climate convention spent much of the
first half of December in Poznan, Poland debating whether and how tropical forest countries
and forest peoples that reduce deforestation could be compensated through a new climate
agreement to go into effect in 2013.”(EDF 2012)

REDD projects in Acre

In June 2012, just a few days before the Rio + 20 conference, the government of Acre
publicly celebrated the formal registration of the first private project for environmental
services, the" Purus Project" in the SISA Sub-program “ISA Carbono”. The project
description by the US-company CARBONCO, LLC begins with a dedication to Chico
Mendes and states that the Purus project would be the fulfillment of Mendes’ dream. (cf.
CCBA 2014, p.1) At the ceremony, the vice governor of Acre spoke of a "landmark in the
state’s history". (Agencia Ac 2012c) The project’s registration would be the first step in
preparing its definitive inclusion as making part of the Carbon ISA program. In order to
strengthen the partnership with this private project, the Acrean Institute for Climate Change,
the states attorney general and the vice governor issued letters of support and approval.
Members of ICM´s technical staff accompanied the project promoters when they visited the
communities in the project area.
The approval of regional authorities is one of the criteria required by international REDD
certifiers and the Purus Project soon received certification of the two most recognized
organizations: Verified Carbon Standard - VCS and the Climate, Community and Biodiversity
Alliance - CCBA. The CCBA even considered the project "gold standard", assuring a good
position in the international markets for credits generated from this project. In April 2013,
first carbon credits generated by the project were selected to offset the emissions associated
with the “CA World 2013”, a conference to be hosted by the IT company CA Technologies in
a Las Vegas casino and resort. (WRM 2013) In June 2013, the International Football
Federation FIFA declared its support for the Purus Project in order to neutralize the emissions
of greenhouse gas in the course of the World cup. According to FIFA, the projects (Purus and
two others) passed through a rigorous screening process and comply with the standards
defined by the International Carbon Reduction and Offsetting Alliance (ICROA). The projects
were selected by an independent panel of environmental NGOs. (FIFA 2014)
Besides the Purus Project, CARBONCO, LLC promotes two more REDD+ projects in Acre,
the "Valparaiso Project" and "Russas Project" named according to the former of rubber
tapping regions, where the project is being executed.
In December 2013, severe accusations regarding violations of local people’s rights caused by
the three projects came forward . The accusations were published after a visit from the Special
Rapporteur of the Human Rights Platform DHESCA (Brazilian Platform for Human, Social,
Cultural, Environmental and Economic Rights). (Reporter Brasil 2013). DHESCA’s mission
was accompanied by researchers and representatives of civil society in Brazil and other
countries, including the author of this article. A first summary of its mission in Acre is to be
published by DHESCA in December 2014. (DHESCA 2014).
The team found that, by restricting resident’s traditional crop cultivation, the projects tend to
compromise their food security and threaten their land rights. One of the interviewed
residents said “We do not feel good. This project came here first like a charm, and after a
year they begun to threaten the people in here. They came with the project in one way and
now want to do the project differently. They want us to stay inside trapped in a corner
helplessly, so that some day we will have no more plots for our plantations. …” (Ibid., p.13)3
The resident’s right to prior, free and informed consultation apparently was not respected. The
communities told the team that they did not understand the purpose of the project and that no
3
All citations from Portuguese or Spanish sources were translated by the author of this article.
meeting of the community with the project promoters had ever taken place. The promoters
had spoken to residents only individually or in small groups, inducing them one by one to
sign a "Statement of Understanding". In this declaration, residents - largely illiterate -
practically acknowledged in writing that their right to remain in the area would be conditioned
to the obedience of the project’s rules. This document was actually considered as “not a
culturally appropriate method for community engagement” by the certifier CCBA and
certainly is not legally valid. (cf. WRM 2013, p.7) Still, it exacerbates a strong psychological
effect over the residents. Though recognizing it as something illegitimate, they still feel that is
makes them vulnerable. One of them said: “They came here with a document and I asked
what it was and if it would harm me and they said no. So I signed a document without
knowing anything. The document constrains and injures all of us in here. After a few days we
found out that the document was tainted, dirty. And this project, the way we will live in here,
the law, this false document they have, here inside we will not be able to do anything and the
guy who does something will be handcuffed in here.” (DHESCA 2014)
In two communities, residents told that the promoters of the project had given a "secret"
incentive for deforestation: "Then he told us that we should cut down a lot this year. One who
planted two acres should plant four, but we must not tell anyone and that next year everything
would be prohibited...". (Reporter Brasil 2013)
The encouragement of deforestation, coming from a promoter of a forest conservation project,
at first glance seems paradoxical, but is easily explainable by the principle of "additionality",
that generally underlies all REDD-type projects: The proof, that emissions were avoided is
only possible by comparing the “positive” scenario of the project with a hypothetical
“negative” scenario that would have taken place in this area without the project. In this
“negative” scenario more emissions would have occurred. By showing the difference between
the two scenarios – the so-called additionality of the project - the promoters of the project
seek to prove that the project has actually avoided emissions. If, for example, in the area of
Russas, deforestation increases in 2013, before the project’s implementation, the negative
scenario projected for 2014 will hypothetically be worse and with that, the projects will show
more additionality.
One of the communities received the DHESCA team in a small wooden construction without
walls. The residents informed that the construction serves as their catholic church. The wood
for making the walls had already been donated by one of the residents, but had been
"confiscated" by one of the authors of the project, because logging was prohibited now in the
area. Later the team was informed that this same wood was used to build the large signs that
stand in the centers of all communities in the CARBONCO project areas. The signs show the
name and logo of each project with a list of prohibitions imposed by the project and, in large
letters, the words: “The community is a partner”4.
The projects Purus, Russas and Valparaiso were closely accompanied by the Acre
Government. Their definitive inclusion into SISA, as foreseen in June 2012 so far has not
happened and, after the revelations of the DHESCA Mission, is not likely to take place in the
near future.

The New Forest Code

The so-called Forest Code is a set of laws that regulate since 1965 the preservation of natural
environments in Brazil. After the changes of Law No. 12,651 in May 2012, the set is called
the New Forest Code.
In terms of environmental protection, the New Code entails heavy setbacks, especially the
reduction of minimum conservation areas in Permanent Preservation Areas APPs, riverbank
forests and wetlands, and especially the generous amnesties for deforestation crimes. Rural
property owners are now freed from fines related to deforestation that took place before the
enactment of the Environmental Crimes Act in July 2008, quoted earlier in this article. The
approval of this controversial law - currently the target of three proceedings claiming its
unconstitutionality filed by the Attorney General's Office PGR - became possible through the
intense pressure of the Ruralist Caucus, which, led by the president of the National
Confederation of Agriculture CNA Senator Katia Abreu, has a hegemonic position in
Brazilian Congress and the Federal Government. In 2012 the ruralists achieved at last what
they already had tried through the abovementioned bill of 2007, by way of a series of changes
in the New Forest Code: reduction of the legal reserve and permanent preservation areas and
thus, the expansion areas for agriculture. There is little doubt that the increase of deforestation
in Amazonia by 28% in the year 2013 is caused to a large extent by the alterations in the
Forest Code. (cf. IMAZON 2014)
While the more obvious environmental issues raised by the new Forest Code have gained
some media attention, another aspect of this law, due to its complexity, has remained largely
unnoticed by the public. Adopting the neoliberal logic of Green Economy, the new code
marks the shift from an exclusive restoration-oriented policy to a policy with extensive
possibilities for compensation of deforestation. Actually, the New Forest Code implements a
complex institutional and financial architecture for environmental compensation. The law
4
The portugese words on the sign are: "A comunidade é parceiro”
now facilitates a marketing mechanism, aiming at "self-regulation" of agribusiness and
virtually transforming the environmental debt of big landowners into business opportunities.
The step-by-step in the construction of this mechanism consists in (1) a mandatory electronic
registration of rural properties called Rural Environmental Registry5 (Brasil 2012, Chapter
VI). To force this registration, the law states that from 2017 on, financial institutions will only
grant loans to agricultural landowners who are enrolled in the CAR. (2) The second step is the
implementation of programs of environmental regulation6 (Ibid., Chapter XIII) in all Brazilian
states. These programs define the powers of the state institutions and the specific conditions
for restoration or compensation of deforested areas. (3) Once registered, owners can register
"surplus protected areas " of their own and request, based on these areas, the issuance of
“Environmental Reserve Shares” called CRA7. (Ibid., Art 44), by the competent state agency.
The new code defines a CRA as corresponding to "one hectare of native vegetation, existing
or in the process of recovery." (Ibid., Art 46)
The CRA is the centerpiece of the compensation system. It can be used to comply with the
obligation of legal reserve in one property through shares from another property. A
proprietary who has cleared more than is allowed, for example, a the proprietary of a soy
plantation in the Amazonian biome in Mato Grosso , can compensate his debt with CAR-
shares from another area within the same biome, be it in Mato Grosso or, for example, in
Acre. The law also provides that the agency that issued the shares must register them within
30 days, in a national stock markets of goods , authorized by the Central Bank of Brazil."
(Ibid., Art 47) This way, the shares will have their value set by the stock market and can
attract speculative capital.
With the creation of the CRA, the authors of the New Forest Code established, by copying the
logic of the market for carbon credits, another "green currency". A study by Biofílica, a
company specialized in prospecting eco-credits, estimates the size of the CRA-market in the
Brazilian Amazon to be around 5 billion dollars. (ICV 2013, p.6) But the great potential of
this new national market lies in the fact that the CRA is defined differently from carbon, as an
"area of native vegetation." Therefore, the market for CRAs can operate parallel to the carbon
market, allowing multiple compensation possibilities from a single forest. Nothing prevents
that a "surplus protected area", for example in Acre, that compensates, through the

5
In portugese: Cadastro Ambiental Rural – CAR
6
In portugese: Programa de Registro Ambiental – PRA
7
In portugese: Cota Rural Ambiental – CRA
registration of CRAs deforestation in a rural property in Mato Grosso, may at the same time
generate carbon credits through a REDD project and additionally offset emissions of a
Californian industry.
The brochure "Preparing for Implementation of the CRA in Mato Grosso," explains these
synergies and opportunities that can be expected from the planned "multiple use" of CRAs by
the state’s big landowners: “In addition, the CRA is proof of the existence of a conserved
forest area and can be used for other purposes and in other markets beyond compensation of
a deficit of legal reserve, for example, it can help facilitate mechanisms for Reducing
Emissions from Deforestation and Forest Degradation (REDD), the establishment of a credit
convertible into tons of carbon, or may serve for measures of environmental responsibility of
companies as a "forest-cupon" etc. It also could be used as payment for environmental
compensation of hydropower projects, the conversion of fines for environmental impacts such
as an oil spill, among others. (Without prejudice to the responsibility for the remediation of
the damage)”. (ICV 2013, p.9)
The landowners, once having adopted the trading system of the CRAs, are expected to also
adhere to carbon trading and commercialization of environmental services.
The commercialization of both CRAs and carbon credits is expected to be facilitated mainly
by the “Bolsa Verde” stock exchange in Rio de Janeiro (BVRio). So far, no sufficient CRAs
have yet been emitted to allow a spot market. Nevertheless BVRio already offers in its
BVTrade-platform a future market of these shares, the “Contracts for Development and Sales
of Environmental Reserve Shares for Future Delivery" CRAFs. By setting up these “Future-
CRAs”, the BVRio is likely to secure its position as the main platform of the CRA market and
the market of environmental services and carbon, that is expected to emerge from Brazilian
agribusiness as a consequence from the New Forest Code . (BVRio 2013)
Ruralist leader Katia Abreu refers to this growing supply of carbon credits when she says that
her organization seeks "funds and corporations that want to offset their emissions through the
reduced emissions from Brazilian farmers" (Cardoso 2013)
In addition to directly encouraging the increase of agricultural areas through amnesties and
compensation possibilities, the New Forest Code also indirectly boosts land concentration.
Extensive unproductive areas that before the code could have been expropriated for agrarian
reform purposes are now armored against expropriation because of their alleged
environmental function. The possibility of getting CRAs emitted, furthermore is another
incentive to the already notorious practice of land grabbing in Amazonia. (cf. Ibid.)
Together with BVRio, the Acre state government and BNDES shows interest in controlling
the new green market that arises from Brazilian agribusiness after the New Forest Code. In
March 2013, Governor Tião Viana, Secretary of Environment of Rio de Janeiro, Carlos Minc
and the president of BNDES, Luciano Coutinho signed a technical cooperation agreement
with the aim of charting system and methodology of the Brazilian carbon market. (Agencia
AC 2013)

Conclusions
As agribusiness keeps expanding and environmental services and REDD type projects
advance over Amazonian forest areas, indigenous peoples and peasants living in these areas
are either expelled or become hostages of a perverse logic that prohibits the self-determined
use of their land and makes them dependent on externally controlled volatile markets. The
rapid expansion of agribusiness in the last decades and the more recent introduction of the so-
called Green Economy show up as parts of an ongoing process of domination, exploitation of
natural resources and dispossession of traditional communities that mark the history of the
Andes-Amazon region since the beginning of colonization.
While reproducing the old paradigm of domination, these two economic modalities present,
especially in combination, some new features. In Brazil, the New Forest Code, in
combination with sub-national regulations for environmental compensation like the SISA in
Acre, inaugurates a new alliance between local agro-oligarchies with international speculative
capital. As consequence of the merging of two regimes of capital accumulation – agribusiness
and environmental compensation market – violence against nature and rural communities
tends to increase and the control over natural resources becomes further concentrated in the
hands of a small group of landowners, businessmen and speculators,
The interests of these groups control the Brazilian government and are camouflaged with a
flawed environmentalist discourse, offering the ill-fated ideas of commercialization of nature
and self regulation of an environmental services market as if it were solutions for the multiple
crises that our planet is facing.
Brazil imposes aggressively its development model in other Latin American countries through
its hegemonic position in the continent and the financial power of its development bank
BNDS. Mega projects like highways and dams are implemented with Brazilian money in
neighboring countries. The policy of expansion of soy in the Amazon biome, which can be
shown to be a self destructive process in Mato Grosso, is imposed in Bolivia.
Northern stakeholders – interested in environmental offsetting – seek to promote the example
of Acre as a showcase for Green Economy in tropical forests. Influential NGOs like EDF
propagate the idea that the Acrean government´s forest policies are aligned with the ideas of
Chico Mendes and the German Government supports the implementation of REDD and
Environmental Services through programs like Early Movers.
The picture drawn by this group of stakeholders stands in harsh contrast with the reality of
first REDD experiences in Acre. The example of the hidden incentive for deforestation by the
promoter of a REDD project in Acre in order to increase the project´s additionality confirms
that the deceptive and fraudulent practices that frequently occur in REDD type projects are
not simply errors or failures in implementation, but systematic consequences of the
fundamental logic of this type of project, which is on one hand based largely on malleable
hypotheses and conjectures and on the other hand directly tied to profit intentions and hard
market realities. The tendency to give preferentiality to individual profit over sustainability
and fairness is intrinsic to projects that aim at commercialization of environmental services
like forest carbon.
The prohibition of autonomous food production by planting crops, as imposed in the times of
the rubber boom in order to maximize latex production, reappears as an essential element of
REDD type projects, this time in order to maximize carbon stocks. This is one of the details
indicating that the same power structures by which the people of the forest have been
oppressed since centuries are still being reproduced. The transformation of former rubber
extracting areas into carbon sinks corresponds to what Elder Paula Andrade of the Federal
University of Acre describes as ”redefinition of the place in Amazonia in the context of a
continuous process of capital accumulation”. (Paula 2013, p.322)
What is new in this continuous exploration process is a set of discourse practices that come
along with it and systematically obscure its unsustainable and unfair nature. The phrase “The
community is a partner” written on the signs in the project area in Acre exemplifies the kind
of euphemism and the symbolic violence that are characteristic for this new discourse. The
equally euphemistic denomination “Green Economy” tries to suggest that free market would
not only be compatible with sustainability, but capable of solving the planetary crisis.
Discursive constructions like this one prepare an ideological basis, making certain politics and
legal regulations acceptable for the common sense. The Acrean SISA law that redefines
natural processes as merchandise and the New Brazilian Forest Code that introduces the shift
from environmental restoration to compensation-policies are examples of such regulations.
But what is most insidious about this discourse, is that by propagating the feasibility of false
solutions, it aggravates global society´s situation of political paralysis and alienation in
relation to the crisis, blocking the insight that a paradigmatic change would be necessary to
overcome it.

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