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Pitch

Growing forests is the most effective nature based carbon capture and storage solution available and mitigate land use emissions.


Description

Summary

Bratus Natural Capital and its partners developed technology to sustainable forestry development in tropical countries. We are targeting degraded areas which today contribute to climate change, and which could become  carbon sinks and natural storage instead.

We are focusing specially degraded pastures where cattle ranching is done with very low productivity and high contributions to carbon emissions, as well as negative impacts on soil and water quality.

By developing biological diversified forestry, it is possible not only to reverse the carbon balance of those areas, from emissions to capture, but also improve water and soil quality, offering habitats for other plant and animal species and generating positive impact for both local communities and the planet's climate system.

The greatest challenge to develop this initiative at large scale is to drive resources from pension and endowment funds, as well as other long term investments as the return on investment in forestry is a long term maturiry. Financial returns are high, around 20% a year.


What actions do you propose?

  • Establish forestry funds which consider social and environmental standards from scratch;
  • Map degraded areas with potential for forestry activities in tropical countries;
  • Evaluate species which generate better carbon capture, environmental and financial return;
  • Lease or buy land from farmers with lower productivity, at a good opportunity cost;
  • Grow, manage and harvest forests.

     

We are now in the stage of engaging potential customers (fund managers), to evaluate what they expect to get from such funds, so that we may design it on a desirable way.

We have 2 prospect clients which together could plant way more than the estimated size of our pilot, we are following an income generation strategy to prove our feasibility before launching the fund. 

On the pilot prototype phase where are to test multiple species of trees, evaluate results and determine models both in terms of carbon capture as well as for biodiversity, water, soil and financial return.

We are also developing a partnership to offset emissions from a major transportation startup.


Who will take these actions?

We incorporated a company in the US to act as a catalyster of the initiative.

We established partnerships with forest engineer specialists and agriculture companies to develop the prototype.

Key partners to scale up the initiative include:

  • Large agriculture companies, including grain and other agriculture commodities traders and processors as well as beef producers. Being on the top of their supply chains, these companies have the power to foster improvement in their supply chains, including the technology transfer needed so that farmers on the bottom end of the chain adopt forestry as a side activity which mitigates their impact on environment and the climate system.
  • Pension and endowment funds, have the financial resources needed to take the initiative to scale by investing in native forest assets. By establishing high social and environmental standards for their investments they can not only obtain large returns in the long run and contribute to climate change mitigation, but also mitigate risks associated to bad labor and environmental practices and improve their investments resilience.
  • Governments can also foster the development of sustainable forestry practices by regulating timber supply chains. Rulling that all wood come from managed sources, keeping illegal harvested timber out of the market and improving market conditions to the development of sustainable supply chains.
  • Individuals are a key stakeholder as they are the ultimate drivers of behavior change. As consumers, individuals have the power to refuse to buy any timber and timber products which don't have a certificate of origin. As investors and pensioners, individuals can demand that only sustainable forestry projects be funded by long term funds.
  • Universities and other institutions which posses endowment funds also play a key rule, by adopting standard procedures to ensure endowment funds invest in sustainable forestry projects, mitigation risks and contributing to mitigate climate change.


Where will these actions be taken?

The prototype will be developed in Brazil.

We identified sites in the state of São Paulo, in Atlantic Forests areas, where trees grow fast and distances to market are small.

The model could be replicated throughout Brazil, as there are over 100 million hectares of degraded areas in the country which could benefit from forestry initiatives.

Brazil's INDC to COP-21 states it's desire to restore at least 12 million hectares of forests in Atlantic Forests and the Amazon by 2030. 12 million hectares equals to 29 million acres - the size of New Mexico, America’s 5th biggest state. 

Other countries in Latin America, Africa and Asia also have great potential to receive similar projects in future expansion phases.


How much will emissions be reduced or sequestered vs. business as usual levels?

Tropical deforestation is estimated to have contributed with between 1–2 billion tonnes of carbon per year during the decade of the 90s, roughly 15–25% of annual global greenhouse gas emissions.

The main carbon pools in tropical forest ecosystems are the living biomass of trees and understory vegetation and the deadmass of litter, woody debris and soil organic matter.

The level of emissions reduction varies depending on the scale of the adoption, estimations based on the reviewed data indicates  a fund sized at 2,000.000.000 USD, which is considered appropriate by fund managers in terms of scale, would grow at least 200,000 hectares of tropical forestry, reducing emissions from degraded soils and sequestrating between 20,000,000 and 80,000,000 tC over a 30 year period.

This project will contribute to reduce Brazil's greenhouse gas emissions by 43% below 2005 levels in 2030. 


What are other key benefits?

It is important to highlight this is a no regret solution as it does not generate any negative externality to society or the environment.

The adoption of social and labor standards ensures that such an initiative be a driver of sustainable development and green jobs generation in the developing world.

Environment would also be strongly benefited by such approach as the restoration of previously degraded farmland recovers the soil, improves water quality, contributes to the regional climate and regulates the water cycle, specially because of the evaporation-transpiration process conducted by the trees.

As the forests grow the co-benefits generated by the forests increase. A sustainable harvest plan will be developed in a way that no clear cutting will be done, so that the forest cover will always be present, ensuring the long term continuous benefits of forests are enduring.


What are the proposal’s costs?

While there are no negative side effects as this is a nature based, no-regret solution, the project does require investment, but even the investment made will pay off as the forest is managed and grown trees are harvested for sale and new trees are planted on the cleared spaces.

For a scale of 200,000 hectares of restoration we estimate the investment of USD 2,000,000,000. The initiative may be developed at a smaller or bigger scale, and anything above 500 hectares is cost effective in terms of scale, but for the perspective of fund managers, it is important to have a sizable investment.

Not even the argument that forest planting would reduce farmland is possible, as the initiative will be developed in areas of low productivity agriculture and cattle ranching due to degradation of soil after decades of bad management practices. In fact, it will contribute to the restoration of soil and water resources in the surrounding areas and a boost in agriculture productivity.


Time line

Over the next 5 years we plan to develop and monitor the prototype, as we build the conditions to launch at scale.

In the 5-15 years period, the fund will be launched and capitalized by investors from pension and endowment fund which have a long term perspective. Within this period, harvests will already start as we predict they would occur every 7 to 10 years, generating returns to investors.

In the 15-50 years period, the initiative would spread not only within Brazil but it could be replicated to Africa and Southeat Asia, where forest practices today are also contributing to the increase of emissions from illegal deforestation and the following degradation process which occur once forests are cleared.

Over the long run, in the 50-100 years period, the initiative could expand even further, and productivity boosts could improve returns to investors due to the better quality of the soils where sustainable forestry has been developed for half a century. Biodiversity and regional climate.


Related proposals

And others which didn't fit on the field


References

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(There are more references but it would not fit on this field).