Paku Midin: CAN FORESTS BE MORE PROFITABLE THAN BEEF NOW A DAY?

CAN FORESTS BE MORE PROFITABLE THAN BEEF NOW A DAY?

@Jackie San

MARACAÇUMÉ, Brazil – The residents of Maracaçumé, an impoverished town on the edge of the Amazon rainforest, are mystified by the company that recently bought the biggest ranch in the region. How can it possibly make money by planting trees, which executives say they’ll never cut down, on pastureland where cattle have been grazing for decades?

“We are killing pasture that a lot of farmers need,” said Josias Araújo, a former cowboy who now works in reforestation, as he stood on a patch of soil he was helping to fertilize. “It’s all strange.”

The new company, which is also Araújo’s new employer, is a forest restoration business called Re.green. Its aim, along with a handful of other companies, is to create a whole new industry that can make standing trees, which store planet-warming carbon, more lucrative than the world’s biggest driver of deforestation: cattle ranching.

It’s the holy grail of the forest economy. And now it might be within reach.

The stakes are high. About one-fifth of the great rainforest is already gone. And scientists warn that rising global temperatures could push the entire ecosystem, a trove of biodiversity and a crucial regulator of the world’s climate, to collapse in the coming decades unless deforestation is halted and an area the size of Germany is restored.

Re.green plans to restore native trees in deforested areas and sell credits that correspond to the carbon they lock away. Those trees will be protected, not logged. Then, businesses will use those credits to offset their own greenhouse gases in emissions accounting.

The bet hinges on the success of a system that’s being built from scratch and comes with some big challenges. Measuring the carbon held in trees and soil is complex. And many conservationists worry that carbon credits could easily be abused by companies that want to appear environmentally conscious while sticking with fossil fuels.

Still, reforestation projects have created a buzz in the northern Amazon, where companies are rushing to buy up big plots of land with restoration potential.

“You know that people who handle cattle don’t care much about this reforestation stuff,” said Anderson Pina Farias, a rancher whose farm is almost completely deforested. But, he added, “if selling carbon is better than ranching, we can change businesses.”

Challenging an Empire

A backlash from nature seems to be helping the restoration companies win hearts and minds in a region where ranching culture runs deep.

Jose Villeigagnon Rabelo, the mayor of Mãe do Rio, a city in the northeastern part of the Amazon, is worried. A brutal drought fuelled by climate change and deforestation has recently dried out much of the grass that ranchers there use as feed. And after decades of pounding by hooves, millions of acres across the region have become so degraded, they can’t nourish much of anything.

“The cattle are starving,” Mr Rabelo said sitting in his office, with wooden paneling and benches made of angelim-vermelho, a tree that’s become hard to find in the region. “We’ve never had a summer like this.”

The crisis has prompted ranchers to dedicate bigger and bigger parts of their farms to feed ever-shrinking numbers of cattle. Now fewer than half of the ranches registered with the city have any cattle on them.

But around a year ago, a restoration company called Mombak started a 7,500-acre (3,035 hectares) project on one of the region’s biggest ranches. Mr Rabelo said he is hopeful the new industry will offer the community a lifeline.

The idea is simple: A credit for each tonne of carbon dioxide that the trees pull out of the atmosphere can be sold to companies that want to compensate for their own pollution.

Environmental disruptions, combined with growing interest in carbon credits, have created an opening to challenge the beef empire’s hold on vast stretches of the rainforest, experts say. According to a 2023 report by BloombergNEF, carbon markets could be valued at US$1 trillion (S$1.36 trillion) by 2037, double what the global beef market is worth now.

Growing a large, biodiverse forest on degraded land can cost tens of millions of dollars. For years, forestry projects had to rely on multiple revenue streams, including sustainable timber harvesting, to restore soil and grow different types of natives trees.

But companies looking to burnish their climate credentials are increasingly willing to spend more to fund projects they deem to be high-quality. It’s why companies like Mombak and Re.green are now developing a business model that relies almost solely on carbon credits, with little or no logging.

Microsoft has bought a major project from Mombak, and Re.green said it expects to announce buyers soon. The two companies have raised about US$200 million from investors – including large pension funds, the Brazilian Development Bank and global asset managers – to reforest hundreds of thousands of acres by the end of the decade.

“Scaling all of the other carbon-removal sectors, it’s just going to move too slow,” said Brian Marrs, Microsoft’s senior director of energy and carbon. “I don’t think there’s a solution to carbon removal without global forestry included.”

Part of the strategy of companies like Mombak and Re.green is to help farmers improve land and intensify cattle ranching in some degraded areas while restoring forests on others. On average, Amazon ranches support one animal on every 2 acres. That could rise to three animals with little investment, researchers say.

Most projects employ a few dozen local people to plant trees, fertilize the soil and stand lookout for fires. The companies are also funding and training local businesses to provide much-needed native seeds and seedlings.

In some projects, as the forests grow, local communities can also make a living from collecting and processing Brazil nuts, andiroba oil and other forest products they can sell to food, beauty and pharmaceutical companies.

When a standing forest becomes an answer to people’s range of needs, that becomes a powerful reason for communities to protect it, said Luiza Maia de Castro, an economist who is managing community relations for Re.green. Right now, razing trees is a perfectly acceptable livelihood in most of the Amazon.

“To break that cycle,” she said, “you have to change how people make a living.”

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