Compensating deforestation with forest surplus : key regulatory issues within Brazil's atlantic forest.

Abstract

Brazil has created a market mechanism for compensating past deforestation based on the acquisition of forest surplus from different properties. This mechanism, known in Brazil as the ‘CRA market’, could become the world's largest forest compensation program. The success of this market depends on the specifics of regulations that are yet to come. The objective of this article was to explore three relevant issues to the regulation of a future CRA market within the Atlantic Forest of Minas Gerais state: the balance between supply and demand; incentives for trade in priority areas; and potential policy overlaps between different compensation programs. Based on geospatial evaluations and content analysis of government documents, the study revealed a potential oversupply of CRAs in the Minas Gerais Atlantic Forest, as surplus areas were found to be 2.76 greater than deficit areas. Eventual incentives for trade in priority areas could lessen oversupply, but unfold into sensitive territorial tradeoffs. The potential overlap between the CRA market and the existing compensation program of the Atlantic Forest Act, while still unclear, is unlikely to be a very relevant one. Future avenues of research are suggested