IDB Paper Examines Impact of Deforestation Ban in Latin America

28 January 2011: The Inter-American Development Bank (IDB) presented a discussion paper on the implications of a hypothetical complete ban on land clearing for agriculture in tropical areas of Latin America and the Caribbean, which underscores that the carbon market will not be sufficient to compensate the rural poor for lost income.

According to the paper "Agriculture Greenhouse Emissions in Latin America and the Caribbean - Current Situation, Future Trends and One Policy Experiment," the value of greenhouse gas (GHG) emissions in the marketplace, compensating farmers for refraining from land clearing may only offset over half of the total agricultural losses associated with the ban, when taking into consideration the average 2009 price of roughly $4.30/t CO2 eq. At present, deforestation and forest degradation are the main source of GHG emissions in the region and scientific studies suggest policies to halt destruction of forest cover will be key to stabilize worldwide emissions. The study is part of ongoing efforts by the IDB to improve information on and understanding of the potential costs and benefits of policies seeking to mitigate and adapt to climate change.

Eirivelthon Lima, a Natural Resources Economist at the IDB, one of the coordinators of the study explains that “Our study supports other empirical studies indicating that the potential income that the rural poor could receive from protecting the forest is much smaller than the income they would typically get by clearing land to grow crops.'' She adds that “a complete ban on land clearing in the tropics of Latin America and the Caribbean would therefore require compensatory policies to make the ban feasible and to prevent local poverty from increasing.” [The Discussion Paper]