The article was originally published on Huffington Post Brasil
We live in a time when the record for the highest temperature has been broken almost continually since 2001. The hottest year of all was 2016: it was 0.99 °C above the average for the 20th century, as announced in January by NOAA, the U.S. entity that manages meteorology, oceans, atmosphere and climate. Given this scenario, many paths are being traced to comply with the Climate Agreement, signed in Paris in 2015, and to contain the planet's rise in temperature to less than 1.5°C by 2100.
It seems that reducing deforestation and greater reforestation - in other words, maintaining standing forests and increasing their areas - is currently the most cost-effective way to mitigate global warming, according to a 2007 McKinsey study de 2007. That is, planting trees brings enormous benefits to the climate and the planet. What’s more, depending on the model of planting, this is a great deal from a financial point of view.
Therefore, this is the time for forest restoration and recovery to take off, gain scale and become a part of any investment portfolio. Attracting public and private capital to new business models in this area will also be instrumental in meeting one of Brazil's NDC targets (the country's commitments to the Paris Agreement) to restore and reforest 12 million hectares by 2030.
Investing in trees, while considering financial profitability, is nothing new in Brazil. It has already happened with the so-called planted forests (pine and eucalyptus). In the case of eucalyptus, productivity has tripled over a period of 40 years. Much of the success here can be attributed to the tropicalization of forestry, that is, thanks to our own way of cultivating these trees. This was only possible due to resources invested in research and development (R&D).
The same can be done with tree species native to the country. The development and application of technologies will create the basis for a new tropical forest economy, which in turn will pave the way for large-scale reforestation. Among the many possible planting models, there are those with economic purposes, which will allow reforestation with native species, but at the same time make commercial use of them.
So, then, what’s the roadblock to investing more in forests? One of the main barriers found during international discussions - as well as in a series of workshops in Brazil led by theVERENA Project (Economic Valuation of Reforestation with Native Species) -, is the lack of R&D incentives for native species. VERENA has identified the need to implement a pre-competitive program in this sense - a program that answers the basic questions of who wants to invest.
For example: why are native species not yet used on a commercial scale? Which species have already been domesticated (already within the production system, with some degree of improvement)? How to stimulate/adopt plantations with biodiverse models (several species cultivated within the same system)? Where and in what state of conservation are these species’ research banks and genetic materials(germplasm)? Why has eucalyptus become a success story? From there, we can identify which native species can have increased productivity, which will yield financial returns more quickly, which ones will be more valuable in the market, and so forth. This will bring forests into the future perspectives of investors.
R&D programs do take decades to show major results, requiring great investment over a long period of time. But there is good news, once again coming from the Paris Accord. Article 10 of this climate treaty establishes a long-term vision of the importance of developing and transferring technologies to reduce greenhouse gas emissions. This means that developing countries can raise funds through bilateral and multilateral funds, in order to finance technologies such as tree species development.
Certainly, implementation of a pre-competitive and robust program will, in the short term, improve the business environment for reforestation with native trees (less risk to the investor, with prospects for increased productivity and, subsequently, higher economic returns). In short, the accelerator for the implementation of what was agreed upon in Paris will involve the development of native species. So then, why not invest in this area?
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