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An economic cost-benefit analysis on forest conservation and restoration in Nicaragua

Program Summary

This PROFOR activity aims to provide evidence to the Government of Nicaragua on the economic benefits of forest landscape restoration activities. The knowledge generated from this activity will be disseminated to policy makers who will improve their decision-making on investments going towards rural livelihoods and incomes, reduced GHG emissions, and greater climate risk resilience.


Based on climate change projections, water availability is likely to decline in most of Nicaragua's watersheds. A three-year drought, coupled with massive deforestation in the past few decades, has depleted most of Nicaragua’s water sources which is threatening the country’s future water supply. In fact, the country has lost up to 60 percent of its surface water sources and up to 50 percent of its underground sources, which have either dried up or have been polluted. Such diminished water availability will severely impact human health, agricultural productivity, hydropower generation, and a suite of other economic activities.

The government of Nicaragua recognizes that restoring forest cover is indispensable to safeguarding agricultural production and minimizing the impacts of climate variability on economic and human well-being. Under the National Reforestation Plan, the government is not only addressing the reduction of carbon emissions, but also aiming to increase awareness of the importance of reversing deforestation, increasing forest coverage, and improving the production of environmental services provided by forests.

To assist the government’s efforts, PROFOR will provide analysis on the ecosystem service and economic benefits of forest landscape restoration activities, including disseminating information to decision makers on the trade-offs of different restoration scenarios. The results can guide the Nicaraguan government on implementing potential forest landscape restoration programs by providing potential prices for payment for ecosystem services and identifying the low-cost/high-benefit alternatives in watershed conservation, forest protection, and carbon sequestration. PROFOR will generate various restoration and investment scenarios that could open restoration and reforestation opportunities for farmers, local communities, and the private sector, including agribusiness and ecotourism.  


This PROFOR activity consists of the following tasks:

  • Analysis of the costs of environmental degradation. This task will estimate the costs of environmental degradation resulting from land degradation and deforestation, droughts, soil degradation, fire, flooding, and other natural disasters. In addition, the analysis will estimate the costs to Nicaragua associated with climate change. This task will provide the analytical underpinnings to target interventions for climate change adaptation and mitigation.

  • Benefit analysis of a potential program for watershed conservation and landscape restoration in Nicaragua. This analysis will estimate the benefits of forest and landscape restoration on the value of multiple ecosystem services across the country by estimating the net value of ecosystem service benefits (such as ecotourism, carbon sequestration, water quality, agriculture, soil protection, etc.) under different reforestation scenarios. It will also explore the economic potential of changing land use (such as degraded agricultural land) to restore native forest, or for agroforestry.

  • Recommendations on policies, regulations, incentives and plans to improve forest and land conservation. Different system dynamic modelling tools will be used to analyze various scenarios where investments and policies could improve Nicaragua’s forest landscape restoration.  

By accomplishing these tasks, the program will inform and improve the Nicaraguan Government’s knowledge on how to promote policies and regulations that increase forest conservation, support a nature-based economy, and increase watershed conservation and landscape restoration in the country.   



This activity is on-going. Results will be reported as the implementation of this project progresses over time.



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Last Updated : 07-24-2017

Land Use Planning for Enhanced Resilience of Landscapes in Madagascar and Mozambique

Program Summary

This PROFOR activity aims to support integrated decision-making for landscape management across different sectors and levels of government in Madagascar and Mozambique, through improved spatial data on land degradation and the development of prototype platforms for simulating, evaluating, and re-orienting land use and land use change processes. 


The widespread use of natural resources and exploitation of forests have left vast areas in Mozambique and Madagascar deforested and degraded. Putting further pressure on these areas and aggravating the problem are population growth and climate change. For example, in areas in which land is becoming increasingly degraded, crop yields are likely to stagnate or even decline, leading to additional pressure to expand agricultural production into marginal areas to accommodate population’s demands for food. Climate change is likely to further compound the challenge of managing landscapes and sustaining their ability to deliver development benefits in both countries.

To tackle these challenges, there is a need to enhance the countries’ ability to quantify the extent of the status and trend of land degradation (including forest loss), and to estimate the future pressures on land and forests. Therefore, PROFOR’s program will support the development of a spatial data visualization tool and a land planning decision tool that will support integrated decision-making for landscape management across various sectors and levels of government. These tools are expected to help the governments of Madagascar and Mozambique to identify an effective mix of interventions to achieve desired development and environmental objectives in terms of food security and landscape as well as forest sustainability in the face of competing development interests.


The activity consists of two components:

Component 1: Land degradation baseline (data and maps)

The purpose of this component is to develop a detailed spatial dataset, updated to reflect the latest available data, that will allow the estimation of the capacity of land to deliver the services being assessed (food provisioning, carbon storage, and erosion control), and to improve understanding of the present situation and implications of land and forest degradation. The activity will develop suitable metrics for assessing the extent of land degradation due to both the change of land cover and the use of inadequate management practices on agricultural land.

Expected outputs:

  • Land degradation baseline (data and maps)

  • Interactive spatial data visualization tool

Component 2: Prototype land planning decision support tool

The purpose of this component is to develop a forward-looking, spatial decision-support tool to assess how selected indicators measuring strategic policy objectives are likely to change over time in response to exogenous drivers, endogenous responses of socio-economic actors, and policy decisions, to improve insight into the future. The tool will consist of a dynamic land use change analysis platform, organized in different modules, intended to capture the interaction between demand for land products (including staple crops and other agriculture products, timber for fuelwood, construction and other uses) and the supply of those products, mediated by local and national markets, and connected through road networks.

Expected outputs:

  • A spatial simulation platform to assess how socio-economic drivers (e.g. population growth, economic development, etc.) and climate change will affect land use change and land degradation in the next one to two decades; and inform public policy and investment decisions on landscape management

A series of training and dissemination activities will be developed to hand over the full set of data sets and tools developed to relevant government officials and other relevant stakeholders in both countries and build their capacity to make the most of these tools.


This activity is on-going. Results will be reported as the implementation of this project progresses over time.


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Last Updated : 07-19-2017

Cutting Deforestation Out of the Cocoa Supply Chain

This story was originally posted by the World Bank.


  • In West Africa, cocoa has been identified as a major driver of deforestation which has led to serious soil degradation, water insecurity and crop failures in the region.
  • To address these issues, governments and the private sector are becoming increasingly active on sustainability in the cocoa industry.
  • A new report describes overarching principles and key strategies that these stakeholders can implement to lay the groundwork for deforestation-free production in the cocoa sector.

A new report presents a first set of principles for achieving sustainable, deforestation-free cocoa production. Eliminating Deforestation from the Cocoa Supply Chain analyzes current sustainability projects and best practices in the cocoa sector and makes the business case for moving toward deforestation-free production models.

While global cocoa production relies almost entirely on 5 – 6 million smallholders, the processing level in the cocoa value chain is highly concentrated among several traders, grinders and chocolate producers. Even though deforestation occurs at the smallholder level, it is the companies, governments, and service providing NGOs that need to work to change policies and practices because the farmers have limited financial means and technical capacity to make the needed changes on their own.

The report, released by the BioCarbon Fund and the Forest Carbon Partnership Facility (FCPF) together with the World Cocoa Foundation and Climate Focus, describes overarching principles and key strategies that these stakeholders can implement to lay the groundwork for deforestation-free production in the cocoa sector:

1.       Protection of natural primary and secondary forest: Companies can commit not to source cocoa associated with the deforestation of natural forest.

2.       Legality: For producers and consumers, it is a priority to eliminate illegality within the cocoa supply chain.

3.       Transparency: Companies, policy makers, and advocacy groups need to know who is driving deforestation and where.

4.       Integration into long-term strategies: For the public sector, this means anchoring policies in long-term development strategies and legal frameworks. For the private sector, efforts that are supported at the CEO level and form an integral part of all operations will have the best success.

5.       Operation at Scale: Larger-scale programs allow the establishment of incentives across a landscape, and economies of scale in information and extension services.

Agricultural expansion is a well-known driver of deforestation, and much has been written about the usual suspects — palm oil, soy, cattle and wood products — which alone are responsible for 40 percent of global deforestation per year. But recently, cocoa – the essential ingredient in the world’s chocolate – is also being scrutinized for its role in unsustainable land use practices.

There are several reasons for this. Cocoa grows best in forested – or formerly forested – areas. For many years, expanding production has encroached into and ultimately degraded forests to plant more cocoa trees. In West Africa in particular, cocoa has been identified as a major driver of deforestation which has led to serious soil degradation, water insecurity and crop failures in the region. This cocoa-related deforestation also affects biodiversity hotspots in Sub-Saharan Africa and Southeast Asia.

More than 90 percent of production comes from smallholder farms that depend on cocoa for their livelihoods. These small farmers and their families have to be part of the move to more sustainable methods, but they often face challenges in adopting better production practices: low yields from older trees, pests and diseases that target cocoa plants, difficulty obtaining farming supplies, and limited access to financing for those improvements.

To address these issues, governments and the private sector are becoming increasingly active on sustainability in the cocoa industry. In March, twelve of the world’s leading cocoa and chocolate companies, including Barry Callebaut, Mars, Mondelēz International and Olam, came together for the first time to set up a cooperative initiative to end deforestation and forest degradation in the global cocoa supply chain. Since then, additional companies have joined and more than 30 are committed to the effort.

In recent years, the World Bank Group has also been active in the sustainable cocoa dialogue, especially in Ghana and Côte d’Ivoire where cocoa is a major driver of deforestation. In 2014 –2015, the Bank Group worked with Ghana on a scenario planning exercise to inform a cocoa sector strategy revision. And through the FCPF, the Bank Group continues to help both Ghana and Cote d’Ivoire to develop large-scale emission reductions programs that aim to create incentives for more sustainable cocoa landscapes by paying for emission reductions, once they are verified.  The Bank Group will also soon begin an analysis of the technical, financial and incentive barriers and opportunities to advance climate-smart cocoa at the farmer level, with funding from the Bank-hosted Program on Forests (PROFOR).

Through 2017, the World Cocoa Foundation and the leading cocoa producers will work to develop a global public-private framework of action to address deforestation in the cocoa supply chain. The FCPF will work in parallel to support the effort with analytical work and consultations.  This framework is planned to be presented at the United Nations Climate Change conference in Bonn, Germany in November.

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Last Updated : 07-24-2017

Improving the Forests Database to Support Sustainable Forest Management

At the heart of whether growth in a country is green and sustainable is the issue of accumulation of wealth. It is wealth — broadly defined to include manufactured capital, natural capital (including forests), human and social capital— that underlies the generation of national income. Gross domestic product (GDP) has conventionally been used to assess economic performance, measuring economic growth from one year to the next. But GDP does not take into account depreciation and depletion of wealth, and therefore does not provide an indication of whether growth is sustainable: an economy could appear to be growing in the near term by running down its assets such as its forests. Assessments of economic performance should therefore be based on both measures of annual growth (such as GDP) and measures of the comprehensive wealth of a country, which indicate whether that growth is sustainable in the long term.

For the past 15 years, the World Bank has provided indicators to measure the sustainability of a country’s growth path, such as Adjusted Net Saving (ANS), adjusted Net National Income (aNNI), and comprehensive wealth estimates.  Underpinning these indicators are data on natural resource rents (from forests, minerals, and energy) which provide policy makers with information on potential revenues from natural capital.

The comprehensive wealth accounts, which have been published for 1995, 2000, and 2005, include estimates for forest wealth which is calculated as the sum of the net present value of rents from timber extraction and annual benefits from non-timber resources, including minor forest products, hunting, recreation, and watershed protection. ANS, which is published annually and covers the period 1970-present, is defined as net national saving adjusted for investments in human capital, depletion of natural resources (including forests), and damages to human health caused by pollution, and provides an estimate of the annual change in wealth.

Recent findings suggest that while wealth data and ANS data are used by researchers and policy analysts, the greatest demand is for data on natural resource rents.  However, while minerals and energy rent data have gained a lot of traction, rent data for forests are not used as frequently. Interviews have revealed concerns with the credibility of the underlying data, such as the FAO data on forest area and growing stock. The authors of the indicators have also concluded that a number of methodological changes could improve estimates for forest wealth, potential forest rents, and net forest depletion.  

This activity hopes to increase the use of improved World Bank forest data (forest rents, net forest depletion, and forest wealth), so that countries and data users are better equipped with credible and more accurate information on the physical area and value of forest resources. Countries should consider not just the flow of revenues from forest resources, but also the sustainable management of the asset (stock of forest resources).

  • Data on the value of forest wealth, its share in total wealth, and how the value is changing over time can help governments assess the contribution of forests to current development outcomes and whether forests are being managed sustainably.
  • Data on potential forest rents when combined with information on actual rent recovery and use of these revenues will allow governments to assess whether contribution of forest resources to sustainable development is being realized and who is benefitting from the revenue.  Such data and assessments can equip policymakers to better manage forest resources, improve forest governance, increase transparency in the rent captured, and ultimately lead to increased reinvestment of forest rents in other forms of capital to grow the total wealth of the country.
  • These policy changes could, in turn, promote the sustainable management of forest resources for poverty reduction and economic growth.


The activity has been successfully completed.

A report is being finalized and will be released soon. The report reviews the latest literature, explores improved data sources, evaluates key parameters and assumptions in the methodology, and outlines the steps and resources required to improve the data and methods.

An implementation plan for updating the forest database that includes a plan for country surveys if the report finds insufficient global data will be finalized in the coming months.

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Author : PROFOR [1], WAVES [2], RFF [3] [1] [2] [3]
Last Updated : 02-24-2017

Biodiversity Offsets Toolkit and Sourcebook


In many African countries, native forests are under pressure from rapidly-spreading roads, dams and other infrastructure, as well as the allocation of large forest areas to mining, commercial agriculture, and other non-forest uses. Biodiversity offsets are one of the tools available to address such pressures. Offsets can be used to strengthen protected areas of similar or greater conservation value than the area lost to specific projects. The driving impetus for such offset schemes is usually biodiversity protection, although the associated conservation areas provide additional ecosystem services such as soil and water conservation, flood mitigation, and habitat for sustainably exploitable fisheries. In an era of often flat -- and sometimes declining -- governmental support for forest conservation in general and protected areas in particular, biodiversity offsets provide an underutilized opportunity to mobilize substantial new funding from public infrastructure accounts as well as the private sector.

Biodiversity offsets are not a panacea, nor are they always the best tool available for achieving forest conservation. As part of the “mitigation hierarchy” underpinning the World Bank’s Safeguard Policies and the IFC’s Performance Standards, offsets are considered a last resort, after efforts to avoid, minimize, and restore any significant damage to forests or other natural habitats. Nonetheless, given that many infrastructure, extractive, and other large-scale projects have an inherently large footprint, a biodiversity offset scheme may be warranted (and required by some funding entities).

A key challenge is systematizing and scaling-up biodiversity offsets through a national or other aggregated offset approach in order to overcome limitation like: (i) the high transaction costs often borne by each separate project; (ii) sub-optimal selection of conservation offset areas due to uncoordinated, ad-hoc approaches; and (iii) insufficient participation and ownership by governmental authorities in arrangements negotiated primarily between large private firms and conservation NGOs. The cumulative impacts of multiple (including smaller-scale) projects could also be more effectively addressed through an aggregate offset approach.


Under this activity, the team produced a Biodiversity Offsets User Guide containing key information about biodiversity offsets that practitioners should know about, with references provided where readers could obtain further information. Three case studies of reasonably successful biodiversity offsets were added to the User Guide as annexes. The case studies involved two private sector mining projects (in Liberia and Madagascar) and one World Bank-supported hydropower project (in Cameroon). These case studies are intended to show readers how the concepts explained in the User Guide can realistically be applied to achieve positive results on the ground. 

In addition, in response to a strong expression of interest from the Government of Mozambique, this activity also provided legal technical assistance for incorporating biodiversity offsets into the Government’s official Environmental Impact Assessment (EIA) process. Two reports were produced: (i) An analysis of Mozambican environmental legislation with respect to the use of biodiversity offsets; and (ii) a draft revision of the actual EIA regulations.

Finally, two pilot Country Roadmaps were completed to assess the potential for large-scale biodiversity offset systems in Liberia and Mozambique. The Roadmaps are intended as preliminary country examinations of legal and regulatory frameworks, national policies, land use plans, financial structures, and other relevant information.


The research team found that multiple detailed publications already exist about the details and controversies of biodiversity offsets, but that a concise reference with practical advice on how actually to do them was still lacking. This is the void that the Biodiversity Offsets User Guide seeks to fill.

The Liberia Biodiversity Offsets Roadmap emphasizes industrial-scale mining. Since adequate funding for Liberia’s protected areas remains a challenge, biodiversity offsets offer the potential for improved financial sustainability. The Liberia Roadmap outlines a series of steps for scaling-up biodiversity offsets in Liberia; among the most important is the establishment of a national Conservation Trust Fund to enable the reliable and transparent transfer of funds from extractive firms to priority Protected Areas. The new Liberia Forest Sector (REDD+) Project, approved in April 2016 with support from the World Bank and Government of Norway, provides a vehicle for moving forward the Roadmap’s key recommendations.

In Mozambique, existing Conservation Areas (CAs) cover about 26% of the country’s land area, and encompass most types of terrestrial and aquatic ecosystems. However, most are seriously underfunded. The Mozambique Biodiversity Offsets Roadmap (also available in Portuguese) proposes using Mozambique’s BioFund to transfer biodiversity offsets funding from infrastructure and extractive industry projects to selected CAs that are ecologically similar to the project-affected areas. Implementation has begun of the Roadmap’s recommendations, through the Government’s recently revised Environmental Impact Assessment Regulations.

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Author : World Bank Africa Region
Last Updated : 02-28-2017

The Forest Dialogue -- dialogues on REDD+ Benefit Sharing

Deforestation and forest degradation account for nearly 20% of global greenhouse gas emissions, more than the entire transportation sector and second only to the energy sector. While considered a problem, preventing deforestation can serve as 20% of the solution to climate change.

Reducing emissions from deforestation and forest degradation and the enhancement of carbon stocks (REDD+) is an effort to create a financial value for the carbon stored in forests, thereby offering incentives for developing countries to reduce emissions from forested lands and invest in low-carbon paths to sustainable development. REDD+ goes beyond deforestation and forest degradation and includes the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks.
For REDD+ to be effective, a benefit-distribution system is needed to persuade stakeholders, in particular the forest-dependent poor, to participate. However, a range of critical questions remain about the nature of such a system.

The Forest Dialogue (TFD) REDD+ Initiative seeks to build a community of practice among locally rooted, well-connected REDD practitioners to share experiences and develop practical tools that support effective, efficient, and equitable benefit-sharing mechanisms for REDD+. Through the initiative, TFD aims to promote appropriate economic, policy, and institutional arrangements at the local, national, and international levels and to facilitate equitable and efficient delivery of REDD+ benefits.

TFD and the International Union for Conservation of Nature (IUCN) conducted a series of dialogues among leaders in 2013—in Ghana, Vietnam, and at the World Bank headquarters in Washington, D.C.—to investigate how to create benefit-sharing mechanisms for REDD+. The first dialogue, in Washington, was a scoping exercise that aimed to understand the state of REDD+ benefit sharing in several key countries and to identify the challenges of designing and implementing those mechanisms more broadly. The dialogues will continue in 2014, with the first scheduled to take place in Peru.

PROFOR will support this initiative in several ways. It will host the scoping dialogue associated with this dialogue stream. PROFOR also will use the work it has done on benefit sharing to inform the broader dialogue stream, and will link the stakeholders that it has engaged with to the dialogue stream. PROFOR’s other objective is to actively engage from the technical side in the dialogue stream, given the relevance of this topic for REDD+ and more generally. PROFOR also will assist with dissemination and generation of materials and products from this dialogue stream, on a needs-justified basis.

This activity is ongoing. Findings will be shared on this page when they become available. 

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Author : The Forests Dialogue [1], International Union for Conservation of Nature [2] [1] [2]
Last Updated : 05-23-2017

Economic Growth and Drivers of Deforestation in the Congo Basin

Though the deforestation rates in the Congo Basin countries have historically been low, the trend is likely to change dramatically due to the combination of many different factors: population increases (and associated expansion of subsistence agriculture and fuelwood collection); local and regional development; and the rise in global demand for commodities.

The countries of the Congo Basin face the dual challenge of developing local economies and reducing poverty, while limiting the negative impact of growth on the region's natural capital.

PROFOR supported an in-depth, multi-sectoral analysis of the major drivers of deforestation and forest degradation for the next decades in all six of the Congo Basin countries (Cameroon, Central African Republic, Gabon, Democratic Republic of Congo, Equatorial Guinea and Republic of Congo). The overall study was led by the World Bank Africa Region. A team from the International Institute for Applies Systems Analysis (IASA) led a modeling exercise, based on the GLOBIOM model but tailored to the Congo region, to investigate drivers of deforestation by 2030 and assess the impacts of various "policy shocks" (such as: increased international demand for biofuel; improved transportation infrastructure; improved agricultural technologies; etc). The approach also relied heavily on the inputs from multi-stakeholder regional workshops and in-depth sectoral reports (available on this page).


  • ƒDeforestation rates are likely to increase in the future to sustain development and poverty reduction.
  • ƒƒIncreasing agricultural productivity is not sufficient to limit pressure on forests.
  • ƒƒWood extraction for domestic fuelwood or charcoal production will continue to grow for the next few decades and could create a massive threat to forests in densely populated areas.
  • ƒƒThe development of much-needed transportation infrastructure could lead to major deforestation, mainly by changing economic dynamics in newly accessible rural areas.
  • ƒƒThe pressure from formal logging is limited, but informal chainsaw logging is expected to progressively degrade forests.
  • ƒƒMining—a largely untapped source of income and growth—could also lead to significant impacts when the sector develops.


The study highlights options to limit deforestation while pursuing inclusive, green growth. Emerging environmental finance mechanisms, such as reducing emissions from deforestation and forest degradation (REDD+), may provide additional resources to help countries protect their forests. But there are already a number of “no-regrets” actions that countries can take to grow along a sustainable development path:

  • Participatory land use planning could help clarify tradeoffs among different sectors, encourage the development of growth poles and corridors, and direct destructive activities away from forests of great ecological value.
  • ƒƒUnlocking the potential of the Congo Basin for agriculture will not necessarily take a toll on forests: the Congo Basin could almost double its cultivated area without converting any forested areas. Policy makers should seek to target agricultural activities primarily towards degraded and nonforested land.
  • ƒƒIn the energy sector, putting the woodfuel supply chain on a more sustainable and formal basis should stand as a priority. More attention should be paid to responding to growing urban needs for both food and energy through intensified multi-use systems (agroforestry).
  • ƒƒBetter planning at the regional and national levels could help contain the adverse effects of transportation development, through a multi-modal and more spatially efficient network.
  • ƒƒExpanding sustainable forest management principles to the booming and unregulated informal logging sector would help preserve forest biomass and carbon stocks.
  • ƒƒSetting “high standard” goals for environmental management of the mining sector could help mitigate adverse effects as the sector develops in the Congo Basin.

See also: Main recommendations by sector (English) - Recommandations principales par secteur (français)

The results from the modeling exercise were shared over the years: at the UNFCCC Conference of Parties 15 in Copehagen, at the World Bank in January 2010 and February 2013( "SDN week" ) and at multiple regional conferences and workshops (Kinshasa, Douala, Brazzaville 2009-2012; final regional conference in Kinshasa, May 2013 - see conference presentations here).

The findings have helped Congo Basin countries better understand the diversity of factors of deforestation --beyond logging -- and the impact of indirect external factors such as global commodity demand.

The knowledge generated from this activity is critically important as Congo Basin countries prepare their REDD+ and broader development strategies. If countries are able to minimize forest loss as their economies develop, they could "leapfrog" the steep drop in forest cover that has historically accompanied development in many countries, and make an important global contribution to climate change mitigation.

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Author : World Bank Africa Region, COMIFAC, International Institute for Applied Systems Analysis, PROFOR, Norwegian Trust Fund for Private Sector and Infrastructure, UK Government, Trust Fund for Environmentally and Socially Sustainable Development, Forest Carbon Partnership Facility. Author: Carole Megevand, with Aline Mosnier, Joël Hourticq, Klas Sanders, Nina Doetinchem, and Charlotte Streck.
Last Updated : 02-24-2017

Brazil: Scaling up Renewable Charcoal Production

Charcoal is one of the main sources of energy used in the production of pig iron for steel in Brazil. The vast majority of the current charcoal production is from unsustainable and often illegal harvest of native forests, leading to severe environmental degradation and deforestation. However, there have been successful business cases of forest plantation for charcoal production in Brazil, including one Clean Development Mechanism (CDM) project financed by the Prototype Carbon Fund in Minas Gerais. Expanding the area of forest plantations for charcoal on idle or degraded pasture land would reduce the pressure on native forests in Brazil.

However, barriers have prevented wide adoption of forest plantations for charcoal. Some of the barriers include:

  • lack of credit to finance the initial production costs (first income revenue usually is generated after 7 years of plantation),
  • difficult access to credit (forest plantations are often not accepted as collateral for loans),
  • higher transaction costs relative to deforestation and coal production (planted forest activity has a cycle of 14-21 years of production, is labor intensive, and results in high costs of land management and environmental licensing),
  • inefficient technologies for carbonization process (contributing to the emission of greenhouse gases (GHG), including methane),
  • unclear agricultural and environmental regulatory framework to forest production,
  • weak institutional arrangements, etc. 

With 62 pig iron mills, the state of Minais Gerais is Brazil's largest producer of steel and iron, responsible for 60% of the national production.  Minas Gerais approved a law which virtually bans the use of charcoal from deforestation by 2018. In order to supply the industry with charcoal from plantations Minais Gerais would need about 1.5 million ha under new plantations.

PROFOR and the BioCarbon Fund co-financed a study designed to identify institutional and financial arrangements required to mainstream forest plantation business models and promote the potential development of CDM projects aimed at reducing GHG emissions in the forestry and iron supply chains in the state of Minas Gerais.

The displacement of non-renewable charcoal by renewable charcoal by 2017 and the use of charcoal to produce up to 46% of the pig iron and steel by 2030, would potentially mitigate 62 Mt of CO2 between 2010 and 2030. This would represent 31% of all emissions reductions expected from the steel industry and contribute to Brazil's overall effort to reduce its GHG emissions by 39% by 2020.

The study's methodology and preliminary results were presented during a workshop "Identifying Financial and Institutional Arrangements for Scaling Up Renewable Charcoal Production" in Belo Horinzonte, Minas Gerais, in December 5, 2011. (A presentation from that workshop is available in Portuguese on this page). At completion, final reports with the technical work, datasets, and related links were shared with key counterparts within the government, private sector, and financial institutions.

The analytical work supported by this project was a key building block in the World Bank’s strategy for supporting Brazil’s move toward a low carbon economy as stated in the Brazil Country Partnership Strategy for 2012-2015, under Objective 4: Improving sustainable natural resource management and climate resilience. ("Helping the Federal government and the private sector to implement Brazil’s National Climate Change Plan, including through developing programs and financial mechanisms to promote sustainable land use, decrease deforestation, and increase energy efficiency and renewable energy.")

The Minas Gerais Development Policy Loan III ( P121590), to which this study contributed, is one of the deliverables of the new country strategy. The State has adopted measures to encourage forest plantation within its territory to supply raw input to industries within its territory.

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Author : World Bank in Brazil [1], BioCarbon Fund [2] [1] [2]
Last Updated : 02-24-2017



World Bank feature story on the report


Seven Principles for Ensuring Responsible Agro-investments

New York Times story: African Farmers Displaced as Investors Move In (12/21/2010)




The report was prepared by a team led by Klaus Deininger, World Bank. Support was provided by PROFOR , the Swiss Agency for Cooperation and Development (SDC), the Trust Fund for Environmentally and Socially Sustainable Development (TF-ESSD), the Hewlett Foundation, the Bank Netherlands Partnership Program (BNPP) and the French Ministry of Foreign and European Affairs.

Large-scale Acquisition of Land Rights for Agricultural or Natural Resource-based Use


Large-scale land acquisition and investments in agriculture attracted considerable interest in the wake of the 2007-08 commodity boom and the subsequent financial crisis. Some countries were concerned about their inability to provide food security from domestic resources. Other investors sought land as a hedge against inflation or for speculative gain. Agro-industrial investors had an incentive to increase the scale of their operations.

This global 'land rush' is unlikely to slow given volatile global commodity prices, demand for biofuels, rising incomes, urbanization and population increases. However, opinions about the social and environmental implications of this phenomenon are divided in the absence of solid empirical data. Some have saluted the rediscovery of agriculture by different investors as an opportunity for yield increases and rural development. Others focused on highly publicized cases where land acquisition by outsiders for speculative purposes at very low prices were detrimental to local welfare, trampled basic rights and resulted in irreversible environmental damage including water pollution and deforestation. 

To provide guidance to countries trying to deal with this issue and contribute to a more informed debate, the World Bank conducted an in-depth study on patterns of large-scale land acquisition around the world. PROFOR provided catalytic funding for the inventory and legal analysis components of this research. 

Released in draft form in September 2010 and in hard copy in January 2011, the study Rising Global Interest in Farmland --Can it yield sustainable and equitable benefits? compiles country inventories of large land transfers during 2004-09 in 14 countries, identifies global drivers of land supply and demand and highlights how country policies affect land use, household welfare and distributional outcomes at the local level. It establishes a typology, classifying countries by the size of suitable available land and yield gaps and proposes paths for responsible agricultural investments that would contribute to positive social, economic and environmental outcomes.


What emerged is a mixed picture.

  • The projected increase in the demand for agricultural commodities over the next decade could be met by increasing productivity without expanding into forested areas. In particular, crop yields in the Sub-Saharan African countries which are of most interest to investors seldom exceed 30 percent of potential yields on currently cultivated areas.
  • Some countries work with smallholders and use competitive bidding to foster investment deals that benefit locals. But many countries are ill-equipped to deal with large-scale land acquisition. For example, in many countries, lack of information and transparency make it difficult to exercise due diligence and responsibly manage a valuable asset. This information gap makes it easy to neglect local people’s rights and environmental impacts, opens the door to bad governance and corruption and jeopardizes investors’ tenure security. Furthermore, land transfers appeared mainly ad hoc based on investor demands rather than country development strategies.
  • There is a large discrepancy between investments deals reported in the media and those actually finalized, and between deals signed and actual land area under cultivation. While some countries have transferred large areas to investors, the extent to which such land is actually used productively remains limited. For example, in South East Asia, in response to policies that aimed to foster development of the palm oil industry by giving away land (and the trees on it) for free, large areas with high biodiversity value have been deforested without ever having been planted to oil palm. In Mozambique, 2004-2009, 2.7 million has of land were acquired by investors, but a 2009 land audit found that some 50 percent of this land was unused or not fully used. Many projects in the biofuel sector experienced problems or were cancelled due to lower oil prices. Beyond economic and technical challenges, tensions with local communities have often stymied implementation.
  • Case studies based on field visits show that investments can bring significant benefits under certain conditions but that the benefits are often outweighed by negative impacts borne disproportionately by vulnerable groups. Even projects that are not fully implemented can seriously undermine local livelihoods. Project proposals that were not implemented have often affected patterns of resource access and shifted the local balance of power. Expressions or expectations of outside interest in agricultural land can set in motion “land grabbing” by local elites that can have undesirable social impacts or deprive vulnerable people of their livelihoods.


  • Building upon this study’s initial results and consultations with governments and private sector investors, the Bank drafted seven principles for ensuring responsible agro-investments: Respecting land and resource rights; Ensuring food security; Ensuring transparency, good governance, and a proper enabling environment; Consultation and participation; Responsible agro-investing, Social sustainability; Environmental sustainability.
  • A number of developing countries have approached the World Bank for technical assistance to improve the capacity of their legal and institutional environments to screen, monitor and enforce responsible agro-investments.

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Author : The report was prepared by a team led by Klaus Deininger, World Bank. Support was provided by PROFOR , the Swiss Agency for Cooperation and Development (SDC), the Trust Fund for Environmentally and Socially Sustainable Development (TF-ESSD), the Hewlett Foundation, the Bank Netherlands Partnership Program (BNPP) and the French Ministry of Foreign and European Affairs.
Last Updated : 02-24-2017