Market mechanisms to compensate for illegal deforestation in the Brazilian amazon and their connection to land tenure governance [electronic resource]
Keywords: Law JSD.

This thesis consists of three papers addressing the potential of a market mechanism to promote forest conservation in the Brazilian Amazon and the necessary land tenure governance conditions that need to be in place to allow the development of such a mechanism. In particular, the three papers focus on the state of Pará, which currently ranks among the Amazonian states with the highest rates of deforestation and highest numbers of land tenure conflicts. In the first paper, I analyze the potential use of the Environmental Reserve Quotas (CRA) in Pará, a forest trading mechanism whereby landowners who deforested more than what was legally allowed before 2008 could absolve their deforestation "debts" by making payments to landowners who have conserved more forest than legally required. Specifically, this study estimates how decisions on who can participate will likely influence the potential forest surplus and forest debt for the CRA market, and takes into account governance characteristics relevant to the State of Pará, eastern Amazonia. The study evaluates the effects on the CRA market eligibility after simulating a validation of properties in the environmental rural registry (CAR) and assessing different scenarios surrounding land tenure status of properties. Results show how regulatory decisions on CRA market eligibility will determine the extent to which CRA will serve either as a tool to support forest conservation or as a low-cost path to help illegal deforesters to comply with legislation, but with limited additional environmental benefits. The study reviews regulatory options that would reduce the risk of forest oversupply, and thereby increase the additionality of the areas eligible for CRA. Overall, the study demonstrates the importance of including governance as well as biophysical characteristics in assessing the potential of forest trading tools to deliver additional environmental conservation and restoration benefits. Given the relevance of the land tenure status of properties for the CRA mechanism, the second paper analyzes in more depth the causes of the land tenure problem in the Amazon region. This paper uses the case of Pará State in the Brazilian Amazon to understand why land tenure uncertainty remains, even in the formally allocated areas, and to identify what the possible policy options are for preventing the continuation of illegal appropriation and deforestation connected to this problem. This study addresses four main questions: i) what is the size of the area of uncertain land tenure in Pará State?; ii) why has the land tenure uncertainty persisted until now?; iii) what are the specific problems that need to be addressed?; and iv) what is lacking in order to solve these problems without causing additional deforestation in the process? I found that that in six of the nine types of land tenure conflicts identified in this study, the existing regulation and polices are not sufficient for resolving the conflicts. In the other three types of conflicts, the major problem is the lack of consistent implementation of laws and policies throughout the different levels of government and across institutions. Resolving land conflicts and avoiding further land grabbing in the Amazon region will require legal and policy reforms to end postponement of preemption mechanisms for recognizing land rights, to retake governmental control of illegally appropriated lands and to extend the use of mechanisms that temporarily freeze any land rights recognition until the allocation priorities are identified. Finally, the third paper explores the motivations that will lead farmers to opt for the CRA market in order to compensate for illegal deforestation instead of choosing to restore this environmental debt themselves. The study analyzes the first real case of a compensation market in the Amazonia, in the municipality of Paragominas, Pará. Even though the federal government has not regulated the CRA market, the Forest Code also allows this type of transaction through civil law contracts. Paragominas passed a local law in 2014 regulating the legal reserve compensation within the municipal boundaries. This paper explores the main features of the Paragominas compensation market in order to understand why farmers with legal reserve deficits would choose this type of regularization. In particular, the main question explored in this study is: what economic and environmental factors influence the choice of compensation rather than restoration in properties with legal reserve deficit in Paragominas? Results show that an increase in the percentage of illegal deforestation up to 2008 on a property is associated with an increase in the predicted probability of choosing compensation, keeping agriculture as a land use, the property size and the number of land uses in the property unchanged. The study also reveals that farmers with forest deficits may prefer to buy a forest area instead of renting for compensation if they have enough capital to invest.