The Economics of Restoration: Costs, benefits, scale and spatial aspects

Bernardo BN Strassburg Agnieszka E Latawiec

Global Landscape Forum, 2013

Structure

The Pact for the Restoration of the Atlantic Rainforest

Developing a Restoration Economy

Large Scale restoration and the Landscape

Introduction

Structure

The Pact for the Restoration of the Atlantic Rainforest

Developing a Restoration Economy

Large Scale restoration and the Landscape

Introduction

115 million hectares

The Atlantic Rainforest Biome

Less than 14% of original forest remains

Less than 8%, if only fragments > 100 ha.

45% of species under risk of extinction due to Climate Change

70% of Brazilian GDP

2/3 of Brazilian Population

250 mammals (22% endemic)

340 amphibians (26% endemic)

197 reptiles (30% endemic)

1,023 birds (18% endemic)

More than 20,000 vascular plants

World record of tree species per hectare (458, ac. NYBG)

About 7% of global biodiversity

Source: Conservation International

The Atlantic Rainforest Biome

(William F. Laurence, 2009)

The Atlantic Rainforest Biome

Structure

The Pact for the Restoration of the Atlantic Rainforest

Developing a Restoration Economy

Large Scale restoration and the Landscape

Introduction

Our goal, our challenge: Restoration of 15 million

hectares by 2050

Through: • Protection and restoration of ecosystem services • Legal compliance of agribusiness and food production • Job and income generation for local communities

The Atlantic Forest Restoration Pact

To articulate public and private institutions, governments, NGO, researches, corporations, landowners, etc... ...To integrate knowledges, efforts and resources... ...To promote large-scale restoration and conservation of biodiversity... ...At the most critical areas in the Atlantic Forest.

Our strategy

Government: 47

Private Sector: 66

Third Sector: 127

Labs and universities: 17

257 members

Members

Thinking at large-scale, or the challenge to upscaling more and more. An approach based on landscape ecology and environmental services. The concept of forest restoration supply chain. Matching and applying science and economic incentives to legal compliance.

The Pact´s impact

Members

Board of Coordination

Steering Committée

Executive Secretary

Task Forces Technical and scientific issues

Knowledge and information

Communications

Forest restoration economy

Governance

IIS- PACTO – Agenda Economics Working Group

•Phase 0: Define the models and structure the questionnaire

•Phase 1 : Costs and revenues

•Phase 2: Risks, market and business case

1. Financial analysis of the reforestation models

•Phase 1: Prioritization for carbon, water, biodiversity, costs and opportunities, pasture productivity, legal deficit

•Phase 2: Incorporation of the spatial aspects of restoation models (inc. relation com infrastructure and markets)

•Phase 3: Optimized multiobjective spatial prioritizaion 2. Spatial prioritization analysis

•Phase 1: Jobs and income

•Phase 2: Poverty and inequality reduction

3. Socioeconomic impacts of reforestation models

•Development of financial models (in function of the models)

•Survey of the potencial financing sources

4. Development of financial mechanisms

•Ompacts on biodiversity

•Impacts on climate mitigation

•Impacts on water resources

•Impacts on other ecosystem services

5. Estimate of environmental benefits of large-scale reforestation (e.g. Pacto)

•Estimate of the potencial job screation (direct and indirect within the entire chain), income, poverty and inequality reduction following large-scale reforestation

6. Estimate of socio-economic benefits of large-scale reforestation (e.g. Pacto)

• Phase 0: Define the models and structure the questionnaire

• Phase 1 : Costs and revenues

• Phase 2: Risks, market and business case

1. Financial analysis of the reforestation

models

• Phase 1: Prioritization for carbon, water, biodiversity, costs and opportunities, pasture productivity, legal deficit

• Phase 2: Incorporation of the spatial aspects of restoation models (inc. relation com infrastructure and markets)

• Phase 3: Optimized multiobjective spatial prioritizaion

2. Spatial prioritization

analysis

• Phase 1: Jobs and income

• Phase 2: Poverty and inequality reduction

3. Socioeconomic impacts of

reforestation models

IIS - PACTO – Agenda Economics Working Group

• Development of financial models (in function of the models)

• Survey of the potencial financing sources

4. Development of financial mechanisms

• Ompacts on biodiversity

• Impacts on climate mitigation

• Impacts on water resources

• Impacts on other ecosystem services

5. Estimate of environmental benefits

of large-scale reforestation (e.g. Pacto)

• Estimate of the potencial job screation (direct and indirect within the entire chain), income, poverty and inequality reduction following large-scale reforestation

6. Estimate of socio-economic benefits of

large-scale reforestation (e.g. Pacto)

IIS - PACTO – Agenda Economics Working Group

Structure

The Pact for the Restoration of the Atlantic Rainforest

Developing a Restoration Economy

Large Scale restoration and the Landscape

Introduction

Paradigm shift - Current Prevalent Paradigm

Paradigm shift - Current Prevalent Paradigm

Paradigm shift

Current Prevalent Paradigm

Restoration involves very high costs per hectare…

… with no financial return for the land owner…

… only has environmental benefits…

… and these environmental benefits are poorly perceived…

… and not internalised

New Paradigm

R&D and extension help to reduce costs…

… and, in some cases, increase revenues…

Restoration is an industry that create jobs, contributes to the general economy…

… and the resulting Natural Capital provides goods and services to humanity, including spiritual services and existence value of biodiversity

… and should be at least partially internalised

One word of caution

• Natural Capital, Ecosystems Services and similar approaches have a tremendous potential to help society realize the value Nature provides for humans;

• Included in these are spiritual and existence values (recognizing that biodiversity have value for us even if there are not direct or indirect benefits);

• These might be enough to justify “Ecocentric” restoration for wild habitat;

• But these approaches do not include a potential intrinsic value of nature, an ethical perception that other living beings have value in themselves;

Challenges

• Of production, of the market, legal aspects Risks

• Farmer and the society do not recognize the value of forests Incomplete information

• Even if the the will exists, there is a lack of extension for forest restoration Extension

• Very long time horizon (esp. for small-holder farmer) Time

• Current cost per hectare is very hingh, perception of opportunity costs, costs of transition Costs

• Uncertainty com future prices Returns

• Externatilites are still not internalized, high costs of the transition in incipient markets Incomplete market

Some possible solutions

• R&D, consolidation of the market, simple and clear legal frame Risks

• Roboust research and research-based dissemination Incomplete information

• Better extension from public sector, incentives for private extension Extension

• Non-timber products, consorcium with the species of fast growth, PES Time

• R&D, dissemination, experience, scale Costs

• Consolidation of the markets, warranty for the demand/prices, consorcium with the leading species Returns

• Internalization of the benefits, PES Incomplete market

Tropical forest restoration: show us the money P.H.S. Brancalion, R.A.G. Viani, B.B.N. Strassburg & R.R. Rodrigues

Developing commercially viable systems

Level the playing field

Perceived Value

Not Perceived Value

Low-productive Cattle Ranching

Restored Ecosystem

Subsidies

To further level the playing field

Perceived Value

Not Perceived Value

Low-productive Cattle Ranching

Restored Ecosystem

Subsidies

Partial PES

The current playing field

Structure

The Pact for the Restoration of the Atlantic Rainforest

Developing a Restoration Economy

Large Scale restoration and the Landscape

Introduction

The Economies of Scale and Spatial Prioritization of Restoration

Ecological value

connectivity

potential habitat

water

carbon

border effects

conflict with other land-uses

Economic and Social values

Economies of scale due to reduced costs

higher resiliency

lower border effects

reduced conflicts and opportunity costs

increased value of services

Addressing fragmentation

New study showing effects of isolation on mammal communities

Although the study is based on islands the authors hihglight “ a dire need to maintain large intact forest blocks to sustain tropical biodiversity"

Competition for land

• Lambin and Meyfroidt, 2011 Global land use change, economic globalization, and the looming land scarcity, PNAS; Smith et al., 2010 Competition for Land, PTRS

• In Brazil – competition with agriculture (in all biomes) • Atlantic Rainforest – extensive pasturelands, no ongoing deforestation (around

90% already gone) • Espirito Santo State – plans to both increase agricultural productivity and

forest cover • Difficult without produtivity increase (except in abandoned areas)

Competition for land, leakage

Pasturelands

Forests Elsewhere

The “Land Neutral Ecological Restoration” Mechanism B

efo

re

Aft

er

Multiple Uses (Crop-Livestock)

In-Farm Mitigation Consortium Compensation Single Use +

Intensification

Reducing competition for land and sparing land for reforestation

Latawiec AE, Strassburg BBN, Brancallion P, Rodrigues R., in prep

• Current productivity : 118 million Animal Units;

• Potential sustainable carrying capacity: 367 mi Animal Units;

Current productivity only 32-34% of potential

Current Productivity Potential Productivity

Restored Areas

All 2040 production targets + 36 million hectares restored

Avoiding the “Conflict for land”

Strassburg, Latawiec et al. (submitted)

• The Atlantic Rainforest has lost 88% of its area, and is under risk from climate change;

• A movement with significant representation from Brazilian society is pushing for large scale restoration;

• A paradigm shift is need in terms of financing landscape restoration;

• Restoration systems delivering goods and services can be financially attractive;

• Special attention to landscape benefits and risks are needed when designing large scale restoration;

Take home messages

Thank you b.strassburg@iis-rio.org