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Biodiversity Markets and Bolsa Floresta Program Research Paper


The natural living environment involves a complex interaction of billions of species which have evolved over the years. Although extinction is a nature rule, the loss of a single species can have consequences to the whole biodiversity.

Markets for biodiversity conservation have become a controversial topic due to the unclear and untested rules governing transactions (Bruggeman). Trading policies are put in place to help reduce transaction cost. However, many people have argued that such rules have resulted in markets that favor their interest and lead to degradation of the biological environment.

Historical Background

The complexity of life has led to diverse systems in the human knowledge. As such, biodiversity conservation has emerged from human anxiety triggered by the continued demolish of the biosphere (Bruggeman). Biodiversity conservation dates back to around 250 B.C when empire Ashoka of Maury started veterinary medicine and issued directions to control the slaughter of specific animals and birds. Modern conservation started during the late 18th century in England and Scotland.

Environmentalists and scholars of the time led by Lord Monboddo put forward the significance of nature conservation which was followed by implementation of conservation policies in the British Indian forests. In 1842, Alexander Gibson led the Madras Board of Revenue to adopt forest conservation program. It was not until 1855 when permanent and large scale conservation programs were adopted worldwide by Lord Dalhousie. This was followed by the institution of the Yellowstone National Park in the US which was the first national park ever in1872.

Efforts to conserve specific species arose in mid-20th century when the New York Zoological Society started the Big Cat Conservation Program in South America. By 1970, biodiversity initiatives had developed in the United Kingdom, Sweden and Australia resulting in hundreds of individual species protection programs. The United Kingdom mainly focused on conserving sites with greatnatural, cultural and economic importance, a plan that was boasted in 1972 after being adopted by the General Conference of UNESCO. In 2006, there was a total 644 cultural sites and 162 natural sites.

In 1980, there was notable development and introduction of urban conservation movement in Birmingham, UK. This was significantly supported by research efforts that led to the establishment of the Conservation Biology Society in 1985. By 1990, many countries across the world had adopted the scientific principles of conservation of biodiversity and by the end of the 20th century, the industry had experienced increased professionalism. As from 2000, intensives large scale biodiversity conservation has developed giving little attention to specific species protection.

Background of solutions

All communities depend on biodiversity resources. However, these natural resources lack property rights definition due to the fact that they are public goods that lack apparent values. This factor has massive impacts on the over exploitation of the natural resources which leads to extinction of some species.

The first step in the process of biodiversity conservation is the quantification of its economic values. This is important in the identification and selection of potential consumers of the diversity resources (Conservation International). The second step is the use or creation of markets to boast conservation and sustainability. This step helps in the computation and capturing of economic values that have not been consumed by the markets.

Therefore, it is very important to identify the resources of diversity and classify them according to their marketability in conserving and ensuring sustainable use. To achieve this, it is important to understand diversity in terms of whether it falls under a public good or a private good. A public good is that which does not display rivalry or excludabilit (Lockie and Carpenter). Private goods have rivalry and excludable characteristics in consumption. Rivalry means that if one person consumes the good, he depletes the availability of the good to others, while excludability means that it is possible to control consumption of the good by charging a certain price.

Markets for diversity resources are not fully developed and have not so far incorporated full value of biodiversity. These markets represent a great potential source of income to the local communities and since there is a great rift between income from biodiversity and agriculture, agroforestry can be a remedy method of merging them in a sustainable and productive way. Although forest extraction has been a historical economic activity to most of forest dwellers, there has been considerable change over the years.

To improve this, biodiversity support institutions like conservation centers have been established to facilitate commercial exchange of ideas between biodiversity extractors and agriculturists (Conservation International). A good case is the herbal medicine and cosmetic sectors which have witnessed notable success in the past few years. Their success should be celebration and a caution too. This is because both ventures use plant species that are of great value to human and animal life in addition to providing medicinal and cosmetic ingredients andtheir uncontrolled extraction would result to extinction of such trees.

If employed responsibly, ecotourism can be very critical in biodiversity conservation and ensuring sustainability to the environment and the forests inhabitants. Thus, it has been one of the best market based method for promoting sustainable consumption of biodiversity resources. Though ecotourism depends largely on public resources such as national parks and reserves, it is mostly a private industry venture. Due to this, it can be a reliable source of revenue to both the public and the private sectors. These profits can be used to support conservation of biodiversity.

The lack of excludability calls for considerable policy formulation and implementation (Conservation International).This intervention can focus on enabling the use of markets to enhance conservation of diversity resources which in most cases involves policies structured to produce marketable instruments. There are two common types of economic instruments. One of the instruments create markets that limit the negative factors that affect ecosystems.

Examples of this are: tradable and auction pollution permits and land development rights that are used to regulate economic land developments by compensating owners of biodiversity identified land for its conservation. The other instrument provide incentives to technological innovation that generate both financial and environmental benefits.

Community involvement is a key market promoter especially if members of the community have experience in ventures that establish and develop biodiversity businesses and investments (Conservation International). Most of the inhabitants of the areas rich in biodiversity are either farmers of hunters. In order to achieve massive success in biodiversity conservation on these areas, the methods used should combine agriculture and other relevant uses of the diversity. In the past decades, small farmers in these areas have employed sustainable agricultural practices. In order to promote expansion of markets for the biodiversity resources, premiums and compensation can be paid for produce from these communities.

Real Implemented Cases

Bolsa Floresta Program

The Bolsa Floresta Program is a public state institution established in 2007 and managed by the Amazonas state government. Its institution was an historical step in Brazil towards promotion of sustainable environmental conservation that not only has impact on the national level but also on the universal conservation structure. The establishment of the program was provided by section 3.035 of the intermediary law on climate change, conservation of environment and Development of the Amazonas into a sustainable ecosystem.

There was also a complementary Law 53 to control the State Schemes of Conservation Unities (CUs) which was also introduced in 2007. Both laws promoted a strong innovation drive and became the backbone of the environmental regulation. This facilitated structuring of the environmental forest based economy and provided social justice in areas of environment conservation (Amazonas Sustainable Foundation).

Bolsa Floresta Program was then initiated and implemented by the State Secretary of environment and sustainable development in September 2007 although FAS took over its governing in March 2008.

The Bolsa Floresta Program operates through four components which are: family, income, social and association. The participation of the families under the Conservation Unities (CUs) guarantee them direct benefits, community level social gains, association support and reliable source of income. The program further offers opportunity for voluntary participation in workshops, climate change training as well as admission of children of the participants in schools.

Guyana Conservation

Guyana conservation is the first Guiana Community Owned Conservation Area (COCA) and also the largest protected area in the nation. The conservation program is managed by the Wai Wai indigenous community and covers over one million hectares of natural forest. It was established in Konashen district 2004 after the Wai Wai people received title for their land and with the help of the Guiana government and the Conservation International, they selected forest area for conservation.

The establishment of the area as a conservation reserve came about as a result of the locals wanting to reduce encroachment of their ancestral home by miners and loggers. Following the gazette of the forest, locals have disregarded wildlife trading which was once a survival economic activity and embarked on a journey to conserve their biodiversity in a sustainable way that ensures economic and environmental development.

The conservation of this region has ensured protection of habitat of unique species such as the jaguar, river otter, harpy eagle, blue poison frog and the emerald boa.

Advice from Conservation International has further helped the Wai Wais in making informed development decisions of the area and attainment of long term conservation goal. Moreover, six members of the community have undergone training and graduated as rangers in order to lead operating and managing plans of the conservation.

This has further encouraged the government to start working on a national environmental system to manage and finance the protected areas in order to achieve a long term sustainable conservation program.

Malau Biobank

Biobank is a venture of two entities: Eco Products Fund LP and the Malaysian government. Through this initiative, Eco Products Fund has set aside about US$ 11 million after receiving conservation rights from the Malaysian government to help in reforestation of the Malau Forest Reserve for the next five years.

The role of the Malau Biobank is to sell certificates for biodiversity conservation that represent 100 square meters reforestation and conservation land. To support the program, TZ1 Limited, which is a voluntary carbon market registrar, has been named the global registry for biodiversity certificates sold by Biobank. Buying of these certificates is a method supporting conservation of the Malau rainforest.

Firms buying the biodiversity certificates make significant and reliable contribution to conservation of the Malau forest and enhance their brands in the process. Several firms operating in Malaysia bought biodiversity conservation certificates while other international corporations showedinitial interest in the program and later bought the certificates. The biodiversity certificates cost US$ 10 per piece and the anticipated total cost for the whole project was US$ 10 million. After selling out the biodiversity conservation certificates, Biobank generated great returns both to the investors and the local government of Sabah.

Bolsa Floresta Program

The Bolsa Floresta program was established by Amazonas state government in 2007 to contribute in mitigation of climate. This was the first law made in Brazil concerning environment conservation and development. This program was also the first internationally certified Brazilian initiative that facilitated compensation of traditional communities for the protection of the environmental services which is provided to the tropical forests (Lucas).

The main objective of the program is to provide payment for the environmental products processed by the traditional inhabitants that favor the sustainable extraction and consumption of natural resources, conservation, protection of the environment and the voluntary calling for regulating deforestation.

Payment System

According to Lucas 2013, the Bolsa Floresta was established with participative approach giving significant attention to the local communities and the State government in Amazonas. A special agreement contract was then made with each of the families dwelling in the affected region: this was after an educative awareness on the zero deforestation objective of the program. That contract was valid only to those people who had lived in the area for more than two years. The contract obliges the community to avoid deforestation in the regions referred to as the primary forest.

Managerial structure

The Bosla Floresta program is managed by a committee that was put in place to ensure smooth running of the program. The committee has the mandate to conduct studies and identify the valid beneficiaries in the area of interest, promote interaction among the different participants of the program as well as valuation of implementation of the program. The program has four main components;

  1. Forest Allowance Family (BFF) – This is the monthly payment of approximately US$ 28.6 (R$ 50) that is paid to the mothers of the families living in the affected Amazonas and only those willing to participate in conserving, preserving and developing of the environment.
  2. Forest Allowance Association (BFA) – This is the direct payment to the association of Amazonas dwellers, Lucas 2013. It is equivalent to 10% of the amount paid to the BF family in each month. The objective behind this payment is to strengthen the organization and enhance social control of the program.
  3. BF Income – It is the annual average payment of approximately US$ 2285.7 (R$ 4000) to each CUs which to approximately US$ 200 (R$ 350) annually per family. This payment meant to support and develop sustainable extraction of forest resources such as oils, fruits, honey and fish.
  4. BF Social – This consists of an annual average payment of approximately US$ 2285.7 (R$ 4000) to every CUs which translates to approximately US$ 200 (R$ 350) per family. This is paid to fund the local social improvements in health centers, schools, transport and other social amenities that promote social unity.

Geographical extent

The Bosla Floresta Program predominantly covers roughly 45% percentage of the Amazonas rainforests regions inhibited by indigenous communities in Brazil.

A research conducted by Sustainable Amazonas Foundation showed that there were 6326 families with a total of 28634 persons in October 2009 who were registered and participated in the Bolsa Floresta project occupying 14 conservation regions that cover at least 10 million acres (Lucas).

The BolsaFlorestaProgram is partly financed by the Amazon Fund which is BNDES, a Brazilian Development bank and the FAS. The objective is to channel more than half (60%) of investment towards sustainable and reliable income generating ventures, 10% to welfare of the associations and the remaining 30% of funds to social amenities programs such as education and medical institutions. As at 2013, Juma REDD was the only program implemented by REDD although it is believed that there are more on the way.

Cost Frame

The Bolsa Floresta Program annual report for the year 2012 indicated the costs and investments undertaken for one year that ended in June 2013. The four components costs for the year are as follows:

Table 1:

Family Income Social Association Total BF
Total US$ 1974829.00 969142.80 1103656.00 368156.00 4415783.40
Total US$/Family 312.20 153.20 174.50 58.20 698.20
Total US$ per ha 0.20 0.10 0.10 0.04 0.40

The annual payment for a BF family is US$ 312.20 to every family with consideration to direct economic benefit of the program. Indirect benefits consist of the other components which are: income, social and association. The cost for each family is US$ 698.20 per annum. The average for every hectare (The total number is 10 million hectares) is US$ 0.40 per annum.

Final Results of BolsaFloresta Program

Satellite images from of the Amazonas region where the program has been implemented indicate an increase in deforestation. However, the Amazon region has witnessed a reduced increase in the rate of deforestation since the year 2007, thanks to the program (Gripne).This achievement can be attributed to the improvement of technology in monitoring systems, increase of conservation scope and implementation of rewarding and compensating programs.

Annual benefits

Table 2:

Direct Benefit Indirect Benefit Total
US$ per Family 312.20 385.90 698.20
US$ per hectare* 0.20 0.20 0.40
US$ per hectare** 9.90 12.30 22.30
  • *Cost dividend by the whole conservation area
  • **Cost per family dividend by 31.80 ha per family.

The average income of the affected population exceeds the minimum wage which is approximately US$ 292 per month by an insignificant percentage. However, the monthly income received by each family from the BolsaFloresta program increases the total income earned by each family. The main debate has been on what should be the optimum payment that ensures maximization of the welfare of the traditional community. (Lucas). Another issue that has been brought forward is the frequency and to whom the compensation have been paid to. This is to ensure the maintenance of thriving community morale and sustainability.

Effectiveness of the Program

The Bosla Floresta Program has experienced widespread success since its implementation in 2007. This success can majorly be attributed to the involvement of the local communities that live in the CUs. This has been further boasted by reliable compensation mechanism that consists of several classifications of payments as explained earlier in this paper.

Another factor that has contributed to the effectiveness of the program is the widespread awareness created by UNESCO the Amazonas state. The awareness identified Amazon rain forests as a key region whose conservation and protection will have a positive impact on global climate change. As such, the installation of the program came at a time when this knowledge was widely available to the affected communities. This resulted to adequate support and corporation from the traditional inhabitants.

Works Cited

Amazonas Sustainable Foundation. “Making Forests worth More Standing than Cut.” Bolsa Floresta Program, 2017. Web.

Bruggeman, Douglas. “PloS ONE, vol. 10, no. 12, 2015. Web.

Gripne, Stephanie “Markets for Diversity.” Conservation. Web.

“Konashen: A Community Owned Conservation Area.” Conservation International, 2016. Web.

Lockie, Steward and David Carpenter, editors. Agriculture, Biodiversity and Markets. Routledge, 2009.

Lucas, Nathalia. “Department of Economics, vol. 1, no. 804, 2013. Web.

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