POSSIBLE SOLUTIONS TO THE PROBLEM OF CATTLE-RELATED DEFORESTATION IN THE AMAZON
Through conversations with our client at WWF, we identified several possible solutions to cattle-based deforestation in Brazil, including increased productivity through genetics and feed efficiency, diversification of farm income, land use planning through agroecological zoning and use of degraded lands for cattle pasture, and financing mechanisms such as REDD and low interest loans. We researched each of these solutions to evaluate their efficacy and to determine which solutions WWF and the GRSB should focus their efforts on.
The following sections provide detailed analysis of six possible solutions to cattle-based deforestation in the Amazon. While we have researched each of these solutions individually, an overarching view of all of these solutions has allowed us to see places where they connect to each other. As a result of this high level view, we have developed four broad recommendations for the GRSB that incorporate learning from all six of the solutions we investigated.
To develop our recommendations, we considered the timeline of these solutions (that is, what is the current status of initiatives addressing the solution) and leverage points in the value chain that the GRSB could impact. In recognition of the limited resources that the GRSB will have available to it, we wanted to think critically about the estimated efficacy of these solutions in reducing deforestation, and the strength of the specific impact the GRSB could have in each area. Therefore, although all of these possible solutions could have positive impacts on deforestation, from our research we decided not to recommend the GRSB and WWF focus on all of these areas at this time. Figure 17 shows a graphical representation of the connections between the six solutions we investigated and the four recommendations we make for the GRSB.
I: Increased productivity through genetics or feed efficiency
Genetic manipulation has been shown to increase reproductive performance that leads to a reduced need for natural resources to build and strengthen the herd. For example, estrous synchronization (ES) and timed artificial insemination (TAI) shorten calving season, increase calf uniformity, enhance pre-weaning growth, and produce heavier calves at weaning. TAI synchronizes ovulation among cattle that are in various stages of the estrous cycle by using hormones to induce ovulation and specified times. Cows undergoing TAI treatment were shown to subsequently wean a calf five percent more often than the control group (at the 95 percent confidence interval). Additionally, weaning weights increased from 175.9 (± 4.3 kg) to 193.4 (± 4.3 kg) at the 99 percent confidence interval. Heavier calves eventually generate higher economic returns; the economic advantage is valued at $49.14 per cow exposed to TAI treatment compared to the control treatment.
ES is a process used to control ovulation in females so that breeding can be completed in a shorter amount of time. Synchronization can shorten breeding time from a 21-day period to as low as a five-day period. Calves derived from ES have also been shown to be ten days older at weaning, also resulting in heavier calves. Estimates of daily growth rate are approximately 0.91kg/day resulting in a total gain of 9.1 kg and an economic return of $16.23.
Feed efficiency is an important factor in directly reducing the number of resources used in cattle operations. Herds that require fewer acres for grazing generally translates to fewer acres of forest needed to be cut down. Feed efficiency is largely determined by genetics in both growing and adult cattle. Estimates show that as much as 80 percent of costs related to cattle ranching are earmarked for cattle feed. Improving the efficiency of feed by one percent has an equivalent economic value of improving weight gain by three percent. Interestingly, improved feed efficiency has been shown to increase the age at which a heifer first calves (although no further effects of reproductive performance have been reported).
As a rule of thumb, cattle require six pounds of feed for every one pound of weight gain. The industry has thus far made little gains in genetic alteration to increase feed efficiency with only a one-pound gain in the last few decades. Unfortunately, efficiency is difficult to measure because social interaction and normal eating habits require test and control groups to intermingle. Systems like GrowSafe utilize RFID technology to measure feed intake. While these systems make data collection easier, they are expensive. GrowSafe uses RFID ear tags and feed trough antennas that record feed disappearance while the animal is present at the trough. This technology provides evidence that genetic selection for lower net feed intake during post-weaning will lead to a decreased feed intake by young and mature cows with no compromise in growth or size.
Recommendation 1: Do not spend resources on feed and genetic efficiency at this time
Improved productivity has long been sought by all types of businesses to reduce waste and increase profits with the beef industry being no exception. Although it is possible that increased productivity through genetics and feed efficiency could reduce the need for land use change, we do not feel there is enough evidence that this solution could provide additional significant impact on deforestation at this time. First, large-scale producers have already adopted most of the efficiency gains possible through current technology. Second, these efficiency measures have proven to be challenging for small ranches to adopt; pursuing genetic and feed efficiency requires significant investment, education, and genetic research. Systems like GrowSafe are expensive and require significant user education. Last, we find that this solution lacks evidence of efficacy specific to the Amazon region; it is difficult to determine the precise impact on rainforest depletion that spreading efficiency to small farmers could achieve, due to differences in soil and vegetation quality and type between Brazil and the areas that have been currently studied. Taking all of this into consideration, and being cognizant of the GRSB’s limited time and resources, we believe efficiency is not the most attractive solution for land use change for the GRSB to focus on at this time.
If the GRSB still wants to prioritize this solution, several implementation measures should be considered. First, since large producers are already employing this technology, efforts should be concentrated on small and medium ranches. These ranches currently lack the knowledge, expertise, and capital for adoption, and all three barriers must be addressed in tandem to produce results. Historically, NGOs have been the primary source for on the ground education and could work in partnership with companies like JBS and Marfrig as well as with universities such as the University of Missouri, which places doctorate students on the ground for research purposes. Capital investment will likely be hard to garner without solid research relating genetics to a reduction in rainforest destruction. Without such evidence, private and public assistance may be scarce. The GRSB could leverage the processor segment of the value chain to provide the resources necessary to help small and medium ranchers adopt efficiency technology, as processors have an incentive to buy uniform and heavy cattle from ranchers.
II: Diversification of farm income
Agricultural diversification has been proposed as a solution to Amazonian deforestation related to cattle ranching. Sociologists have long posited that traditional cultures and economies are better stewards of the native environment, due to centuries of trial and error. European colonists introduced mono cropping in Brazil, and these practices were introduced to the Amazon during the economic development efforts of the 1960-80s. These types of intensive, single product farming systems have been incompatible with conservation, leading to a cycle of continued deforestation, as soils become degraded and unsuitable for crops or pasture and agricultural developers must clear cut new land. Diversification arises in traditional societies as a way for small-scale farmers, with few assets, to spread risk. Much like modern portfolio management theory in the financial industry, farmers are able to hedge against environmental and macroeconomic risks of highly productive and lucrative crops (i.e. cattle or soybeans) by integration of diverse crops into an agricultural portfolio. By preserving ecosystem services and natural habitat, diversification is a more sustainable approach to farming over the long-term.
The prevalence of single crop farms and cattle ranches implies that concentration on high value crops is financially lucrative, but empirical research has begun to show that this is not the case. Perz (2001) studied agricultural diversification in the rural Amazon and found that farmers engaged in diversification have both higher incomes and higher property value. This finding makes a significant contribution to efforts to reduce deforestation in the Amazon, because there is a negative correlation between agricultural diversification and deforestation rates, even when the crop mix requires cleared lands. By allowing for crop rotations and replenishment of soil nutrients, farmers can more intensively cultivate land for longer periods than in a mono-cropping situation where new deforestation is required to replace degraded lands. In the recent period, where land has been widely available and inexpensive, the incentives for monoculture have been high. As the availability of land decreases, however, farmers become more receptive to mixed-use strategies of farm diversification. Intercropping, or raising multiple crops simultaneously on a plot of land, has been proven to be successful both with mixed plant crops and livestock. One of the most successful examples of this globally is the widespread use of coconut – cattle intercropping in the Asian tropics. The U.N. finds that the same principles that allow cattle to successfully graze among coconut trees are applicable to crops grown in Brazil, such as coffee, rubber, palm oil and many fruit trees. The cows graze amid the trees, while providing nutrients back to the soil. Figure 19 shows an example of a mixed crop-livestock system.
Recommendation 2: Promote diversification of farm income
As outlined above, there are many benefits of farm diversification. First, small-scale farmers with few assets can spread their risk over several commodities, such as coffee, cattle, and soy. Farmers engaged in diversification have been shown to have higher incomes and higher property values. By allowing for crop rotations and replenishment of soil nutrients, farmers can more intensively cultivate land for longer periods than in mono cropping, thus reducing the need to clear new land to replace degraded lands. Intercropping also adds nutrients to the soil and preserves water. For example, in rotating cattle pastures with crop pastures, cattle manure replenishes soil nutrients for future planting, and the movements of cattle hooves naturally rotate soil and provide aeration and better absorption of water.
In order to implement this strategy to reduce deforestation, education for small-scale ranchers and farmers is key. The existing system of mono cropping is already entrenched, and farmers may not have the resources, knowledge, or interest in adding crops or cattle to their portfolio. Ranchers will need to be educated on what crops can be raised with cattle, how to rotate pastures, etc. Fortunately, this is an area in which the GRSB can play a positive role. NGO members of the GRSB, such as WWF and Rainforest Alliance, already have expertise in creating the type of education networks that could be effective in spreading information about the benefits of diversification and methods of implementing these practices.
As the GRSB considers creating its own certifications, or building off existing standards like the Rainforest Alliance certification for cattle farms, diversification should be included as one of the strategies for ensuring sustainable practices. The Rainforest Alliance certification starts with an initial audit that helps the farmer to identify gaps between current production and the certification standards. The next step is to educate farmers and develop a three-year management plan that aims to increase the sustainability of the farm. So far, the focus has been on educating the farmers rather than certifying them. The education piece here is critical, and the Rainforest Alliance has a proven model. Through workshops, an online training platform, and distribution of posters and pamphlets in local agricultural communities, the Rainforest Alliance introduces farmers to the standards and supports them along the way. In many regions, training is carried out through local partners such as extension agencies, or farmers that have successfully completed this training. Using this type of train-the-trainer model will help farmers learn from each other, and provide credibility to the education. Additionally, lack of investment has been a substantial barrier to the complete role out of the program.
Leveraging the value chain: The strategy of farm diversification most directly impacts the ranching stage of the value chain, as farmers and ranchers learn how to efficiently integrate cattle with other crops and capture the economic benefits of crop and pasture rotation. However, in addition to addressing the ranching stage of the value chain, we believe this strategy could also leverage the processor and sales segments. First, the GRSB could investigate the impact of instituting at the processor level preferential buying policies from diversified farms. This could provide an economic incentive for ranchers to invest time and money into learning how to diversify their operations. Second, the GRSB could build diversification into standards for labeling sustainable beef in retail channels, leveraging growing consumer demand for certified sustainable beef.
Risks and barriers: This strategy is not without some risks. On one hand, while more intensive land use practices is beneficial from a deforestation perspective, it tends to lead to greater reliance on pesticides and herbicides, to keep smaller plots of land productive for longer periods. It is imperative that a diversification solution does not trade one environmental hazard for another. Next, switching agricultural practices is likely to be costly in the short term and may turn out to have minimal benefits for some. If early adopters do not see strong gains, others are unlikely to follow suit. Finally, smallholders may face greater risks than large ranchers and industrial farmers. If they do not have adequate resources, or are uninterested in developing other crops, they could be cut out of the beef value chain. It will be important to ensure that a diversification solution is carried out equitably and addresses the different needs of large and small landholders accordingly.
III: Land-use planning: agroecological zoning
One initiative that could guide further economic development related to cattle ranching while preserving the valuable ecosystems that are at risk is agroecological zoning – sometimes referred to as “go/no go” planning. Presidential decrees put into place agroecological zoning for sugarcane in 2009 (ZAE Cana) and palm in 2010. We will take a closer look at sugarcane zoning in order to gain insights into how to implement zoning for cattle ranching.
The standards relating to expansion of sugarcane production were determined through multi-stakeholder engagement efforts with members of industry, civil society, academia, and government. Discussions led to the identification of areas where sugarcane production should be sanctioned and where it should be prohibited. The zoning laid out a comprehensive map (Figure 20) and the following guidelines around go/no-go areas for sugarcane production:
- Production is prohibited in the Amazon region, the Pantanal wetlands and its hydrographic basin, and the Upper Paraguay River Basin. Installation of new units of ethanol production is not allowed in these ecologically critical areas.
- Producers are prohibited from expanding into areas with native vegetation and are not allowed to remove native vegetation to expand sugarcane cultivation.
- Production is prohibited in areas with more than a 12-degree slope. This rule was approved to incentivize mechanical harvesting over manual cutting and improve labor conditions for field workers.
- Sugarcane production expansion is encouraged in areas where full irrigation is not needed. Weather and soil conditions were considered to identify areas where sugarcane could be grown using the least amount of irrigation.
- Production is encouraged in degraded or underutilized areas and on land already used for pasture. The Brazilian government identified over 34 million hectares, including land already used for livestock, suitable for sugarcane production. The policy suggests that increasing livestock efficiency (measured as head of cattle per hectare) may free some of this land for sugarcane.
The Brazilian government has found that, according to these guidelines, 92.5 percent of Brazil’s territory is unsuitable for sugarcane production. However, the suitable areas identified are considered to be more than sufficient for future cultivation. Currently less than one percent of the country’s land is used for sugarcane, and projections by the Ministry of Agriculture estimate that at most 1.7 percent of total land will be required to meet demand by 2017.
In implementing agroecological zoning, developing strategic oversight systems is critical. The agroecological zoning for sugarcane strategically uses pressure points related to financing and processing to structure enforcement and consequences. Access to capital is tied to compliance with the zoning laws, as national financial institutions are required to evaluate all loans for large farming operations based on observation of agroecological requirements. If activity in conflict with the laws is found, the government can refuse granting or renewing permits to processing facilities. This is a serious threat, as most sugarcane producers have access to only one processing plant in their areas, and sugarcane must be processed within a few hours of harvest. Placing enforcement mechanisms at these two points – banking and processing – puts the burden of oversight into more easily observable parts of the value chain. An important note about ZAE Cana is that these rules do not apply to industrial units already in use, or their planned expansion.
A similar policy could be created, outlining go/no go regions for cattle ranching in Brazil. As in the sugarcane agroecological zoning policy, identifying the strategic points in the beef value chain where compliance can most easily be monitored is critical to making this type of policy workable.
IV: Land-use planning: use of degraded land
Land is considered degraded once nutrients are eroded from the soil and it is unable to support crops. Typically, farmers use clear-cut areas for crops, but the nutrients in forest soils are too nutrient-poor to sustain crops for long. Within two to three years crop yields fall, fields are abandoned, and grass begins grow. For ranchers these grassy fields are an ideal establishment for raising cattle. However, within five to ten years overgrazing and nutrient loss will turn the fields into wasteland.
Research has shown that if cattle grazing on degraded land are well managed, the soil will improve, native grasses will return, and the land will become a carbon sink. Moreover, the land will be able to double or even quadruple livestock capacity over time. The process is quite simple and ideally mimics the grazing behavior of undomesticated cattle. The animals chew what is initially available on the land so as to stimulate plant and root growth. Then the herd moves on in a leisurely way. The deep-rooted plants enrich the soil and the hoof movements rotate the hardened earth so that seeds can grow and water can penetrate. Use of degraded lands translates directly into profitability – feed and labor costs plummet, the land is more resilient, and native grasses limit opportunistic/unpalatable plants from invading.
The Savory Institute is an organization whose mission is to promote “large-scale restoration of the world’s grasslands through holistic management.” According to the approach “Holistic Management teaches people about the relationship between large herds of wild herbivores and the grasslands and then helps people develop strategies for managing herds of domestic livestock to mimic those wild herds to heal the land.”  In Australia the Mosley family provides a good example of how holistic management can be adopted by ranchers around the world. The Mosley’s fenced 18,000 ha into 18 paddocks in which two herds rotate through two paddocks at a time. Each paddock is rested for 120 days with the goal of extending the rest period to 150-180 days in order to allow the pastures more time to recover. The results have been extraordinary: animal production is more predictable due to less of a boom-bust cycle; animal handling is streamlined since the herd is simply split in two; the temperament of the cattle has improved due to less handling and the ability of the herd to graze together instead of individually scouring the land for viable feed; the increased ground cover provides better water infiltration and protection from wind and water erosion; and profitability is up, putting them in the top ten percent of producers in terms of profitability after previously being average to below average.
V: Financing mechanisms: low interest loans
Low interest loans for farmers are commonplace in many developed and developing countries. However, these loans can decrease deforestation if they are tied to environmental performance. A Brazilian law passed in 2008, Resolution 3545, limits low interest loans for rural farmers to those that can provide proof of compliance with current environmental laws. This type of law will impact agricultural operations that are the most capital constrained, such as cattle ranching. Studies have shown that this law has restricted credit and decreased deforestation in the Legal Amazon region. However, consensus has not been achieved regarding the amount of decreased deforestation that was caused by this law versus by other factors, such as macro economic factors and private initiatives. While the Brazilian government has not been able to monitor the environmental compliance of all cattle farms they may be able to prioritize monitoring the farms that receive low interest loans. Decreasing the number of farms that are monitored would decrease the amount of resources that are needed to ensure compliance.
In addition to tying low interest loans to environmental compliance, policies must also ensure that loan requirements do not promote land clearing. Low interest loans to people in areas threatened by deforestation, such as the Brazilian Amazon, should not be tied to occupation of land if occupied is defined as land that is cleared. If loans are decoupled from occupation, then one of the incentives for people to clear land will be removed.
Recommendation 3: Agroecological zoning for cattle
Creating go/no go zones for cattle ranching can have a huge impact on deforestation. Similarly to how the Brazilian government has sanctioned palm oil and sugarcane cultivation in specified zones, and outlawed it in environmentally sensitive zones, agroecological zones can be created for cattle ranching. Clearly laying out sanctioned land and developing easy to understand standards, similar to the ones laid out in ZAE Cana, makes it easier for ranchers to comply with laws already in place regarding deforestation. For ZAE Cana to be successful, a multi-stakeholder group was convened to determine the standards that would govern zoning. This is where the GRSB can play a valuable role, bringing the appropriate parties to the table to help set standards for ranching lands. The GRSB can also lobby the government to adopt cattle zoning standards that are most effective for reducing deforestation.
We recommend cattle zoning include promotion of the use of degraded lands for cattle grazing. This has already been modeled in sugarcane zoning, where ZAE Cana has encouraged the use of degraded or underutilized areas by identifying these areas as “go” zones. In the same way, standards for cattle zoning should incorporate prioritization of degraded land. Use of degraded land can have huge impacts on land quality and land conversion with minimal investment. Not only can these techniques curb deforestation, they can provide steadier animal production, better cattle temperament, more prosperity of native vegetation species, and increased land protection from water and wind erosion. Use of degraded lands is a largely holistic process and thus has few, if any, environmental risks.
The main challenge to agroecological zoning for cattle ranching is establishing effective incentives, punishments, and systems of oversight. Once again, sugarcane zoning can be used as a model. Under that system, national financial institutions are required to investigate all loans for large operations to ensure they are in compliance with ZAE Cana, providing a financial oversight mechanism. As we have discussed, access to capital is an important component of economic development, especially for small, rural farms, and can be used to regulate land use. We therefore recommend that access to low-interest loans be used as a mechanism for enforcing compliance to cattle zoning law. Resolution 3545, passed in 2008, restricts low interest loans to rural farmers who are able to provide proof of compliance with current environmental laws. Once cattle zoning is passed, Resolution 3545 should include the new environmental regulations related to ranching. The type of monitoring required by this law can be expensive and time-consuming; certainly the government will not be able to monitor the environmental compliance of all cattle farms. However, a policy that focuses on low-interest loans allows the government to prioritize the monitoring of small ranching operations, which are more likely to encroach on protected lands.
Leveraging the value chain: Additional oversight should take strategic advantage of the pressure points in the value chain. In sugarcane production, the most effective point identified is the processing facilities. If sugarcane originating from a no-go zone is found at a processing facility, that unit may not have its operating permit renewed. Similarly, the slaughter/process stage is a good leverage point for oversight in cattle ranching. There are only a handful of companies that are responsible for the vast majority of processing. Since the value of beef increases significantly at the processing stage, these companies have a lot to lose if production has to be temporarily halted. In addition, cattle ranchers depend on these companies to buy cattle for slaughter and process, so the threat of temporarily losing their regional customer if the processing unit is temporarily closed could make ranchers accountable to each other.
A significant barrier is, of course, getting the relevant parties to submit to monitoring. Since JBS and Marfrig are both members of the GRSB, this body can certainly play a role in advocating for agroecological zoning policy, if these companies can be brought on board. The advantage of the GRSB is that it includes companies farther down the value chain, like Walmart and McDonald’s. These consumer-facing companies and brands have an incentive to keep a clean name as consumer awareness about where beef originates is heightened. As these companies alter their standards, they can put pressure on producers such as JBS and Marfrig to buy from sustainable ranchers. If these retailers can work with the nonprofit and government bodies on the board to encourage processors to submit to oversight, great strides could be made with agroecological zoning.
Of course, compliance with zoning and use of degraded lands also requires action at the ranching phase of the supply chain. Specifically, this solution targets small and medium size ranches that often bypass government enforcers and instead cut down forests and institute land tenure. At this stage, a barrier to large-scale adoption of agroecological zoning and use of degraded lands is education. If new zoning laws are put into place, ranchers will need to be educated to understand how to stay within compliance with the laws. This is a place where NGOs on the GRSB can play a big role. The Rainforest Alliance has already been working diligently to certify cattle ranches in the amazon through techniques that aim to reduce the carbon footprint of cattle ranches, but engaging ranchers has been the most difficult part of the process. Rainforest Alliance extends invitations to ranchers for workshops but does not place pressure on attendance. However, it only takes a few champions in a region for these types of programs to have success. The education process involves not only certifying the ranch but also the rancher to go out into the community and teach others. This system allows for more rapid success and knowledge transfer.
Risks and barriers: Getting producers to submit to monitoring for compliance mechanisms is a barrier already discussed above. Another major barrier is lack of government enforcement. The Forest Code has been in place for decades, yet many agree enforcement has not been consistent. If agroecological zoning laws are similarly considered toothless, this policy will not have significant impact on land conversion. This is why it is critical that the GRSB help develop an oversight system that is enforceable at the ranching and processing stage of the supply chain.
VI: Financing Mechanisms: REDD
Reducing Emissions from Deforestation and Degradation (REDD) financing has the opportunity to provide a new source of funding for developing countries that are trying to stop deforestation while benefiting many stakeholders. Under a REDD market, credits are established and verified for land that is protected from deforestation. Those credits are then sold on a credit market and bought by companies to meet emissions reduction obligations. Figure 21 gives an overview of how REDD creates a financial incentive for conserving forest, and how funds from REDD credits are reinvested to support alternatives to land clearing. Developing countries have the greatest potential for CO2 mitigation through decreasing deforestation and degradation and the greatest opportunity to sell certified credits. Currently, 36 percent of voluntary credits are made up of Forestry-based credits, for a total value of $331 million.
There are three possibilities for REDD financing: a voluntary fund, a market mechanism, and hybrid mechanism. A voluntary fund could operate on many levels (national or international) and could source capital from both public and private sources. In a market mechanism, REDD credits would be traded with other certified credits by companies seeking to meet emissions reduction targets. In a hybrid system, funding would be generated through an auction or a market in which REDD credits link to, but are not traded alongside, certified credits. Several hybrid systems have been proposed, such as Norway’s Assigned Amount Units (AAUs) auction and the Center for Clean Air Policy’s “Dual Markets” approach.
Most likely, a combination of these mechanisms will be needed for REDD financing in addition to a large role for governments. The voluntary funding could be most useful at the beginning in order to develop a strategy surrounding REDD at the national level and to strengthen institutions that will be needed for the market mechanism. After the initial round of financing, additional funding could be linked to both decreased deforestation results and the application of the national REDD strategy. Once countries have begun to implement REDD strategies and the necessary institutions and infrastructure is in place, the funding system could transition to a market based mechanism where certified emissions reduction credits would be traded alongside other certified credits.
Several concerns and barriers currently exist with regard to the implementation of REDD financing mechanisms. One concern is that the large number of potential forestry-based credits could flood current credit markets, causing the price to crash. Another possible barrier is that the voluntary market for emissions reductions credits currently provides a small amount of funding for REDD financing and this would likely need to be ramped up considerably. In addition, there is concern about the poor that live in the areas that would be most impacted by REDD financing, including issues surrounding land tenure and the right to use the land. Furthermore, there is criticism that this type of funding would benefit developing countries that currently have high deforestation rates and penalizing those with low deforestation rates.
Recommendation 4: Pilot REDD
We recommend the GRSB partner with other stakeholders to pilot a REDD program in Brazil. Brazil could be an important market for Forestry-based credits due to the immense size of the Amazon as well as the history of deforestation and associated CO2 emissions. While deforestation in the Amazon has decreased significantly since 2004 (see Figure 22), approximately 2500 square miles of forest were lost in 2011 alone.
One of the major benefits of REDD financing is its ability to move funding from CO2 emitting developed countries to cash strapped developing countries. This is especially relevant in the Amazon due to the large amount of land that is impossible for the Brazilian government to police with current environmental funding. The onerousness of ensuring that deforestation isn’t occurring could be moved from governments to private credit certification organizations. It also offers the opportunity for companies in developed countries to offset their emissions by purchasing forestry-based credits that prevent deforestation or make reforestation possible.
There are three recommended phases for implementing REDD. In phase I, a national strategy is built to tackle the drivers of deforestation. This stage involves analyzing forest governance gaps and developing strategies to address those gaps, establishing national forest reference levels and systems for monitoring changes in forest area, and initiating pilot activities. Phase II focuses on building the frameworks necessary for implementing REDD on a national level. This involves training the appropriate groups in regulatory frameworks and enforcement practices, creating a system for the distribution of benefits, and developing the portfolio of funding options. In Phase III, REDD is formally implemented. At this point, payments based on performance are disbursed using carbon markets or fund-based mechanisms. In addition, third party verification of emissions reductions takes place.
REDD is still in the initial stages of development around the world. Figure 23 shows examples of some of the REDD markets currently underway; as evidence in this map, many REDD systems are still in the design phase. For this reason, we recommend the GRSB work with other stakeholders to conduct the initial research that will be necessary to determine if REDD is appropriate for Brazil, and to run a pilot test of the market. The GRSB can also play a role in developing a funding pool for the pilot phase of REDD. Two GRSB members, JBS and Marfrig, are Brazilian-owned companies; we hope that these companies, along with some of the large consumer-facing companies in the beef value chain, would be invested in providing some of the funding needed for a pilot market. Putting money towards a pilot would demonstrate a commitment to working towards a more sustainable beef value chain. Another source of funding could be the $1billion Norway committed to financial assistance of Brazil’s efforts to reach its climate goals. Finally, the NGO members of the GRSB could be involved in the education campaign that would be necessary should REDD be adopted in Brazil.
Several stakeholders will be needed in order to allow forestry-based credits to make a significant impact on deforestation. Developed country governments and trading scheme architects will be needed in order for forestry-based credits to be allowed in the next round of trading schemes. NGOs will be needed in order to educate developing world ranchers, especially the smallest and poorest, about the benefits of credits. Developing country governments will be needed to ensure that the proper institutions and infrastructure is in place to allow credit markets to operate efficiently in their countries. Finally, private companies or NGOs will be required in order to certify that forestry-based credits are actually decreasing deforestation.
Leveraging the value chain: Forestry-based credits would be implemented in the ranching stage of the beef value chain. This strategy is designed to give ranchers an economic incentive for preserving forest, and should provide a second form of income for cattle ranchers.
Risks and barriers: The largest barrier to REDD financing is the uncertainty of future carbon markets. If companies are not certain that they will have to reduce or offset their carbon emissions, then they will be reluctant to spend resources on forestry-based credits. Additionally, forestry-based credits are currently only allowed in voluntary trading schemes. This limits the market for credits and the funding that is available to flow into developing countries. Furthermore, if forestry-based credits are introduced into current emissions trading schemes the large number of potential credits could flood current markets, causing the price to crash.
One of the environmental risks is that forestry-based credits benefit countries with high rates of deforestation more than those that have policies in place to keep deforestation low. This may encourage deforestation in developing countries in order to increase opportunities for forestry-based credits.
In addition to environmental risks, critics also have socioeconomic concerns. One of the main concerns is for the poor citizens living on land that would be eligible for forestry-based credits. It is possible that credits could impact land tenure as well as the right to use land.
A possible economic risk that could be created by forestry-based credits is the dependence on foreign funding that occurs through markets. The history of emissions trading schemes and reduction credits has included significant drops in credit prices. If the developing world becomes dependent on credit markets and a price crash occurs, economic consequences could be severe and deforestation could jump.
NEXT STEPS FOR THE GLOBAL ROUNDTABLE FOR SUSTAINABLE BEEF
We have investigated six possible solutions to cattle-based deforestation in the Amazon. From research into these solutions, we have developed four recommendations for the GRSB, including three courses of action we propose the GRSB take, and one solution we recommend the GRSB not put resources towards at this time. Our research also allowed us to qualitatively estimate the political viability and the effectiveness at reducing deforestation for each of these recommendations. Figure 24 shows how each recommendation maps
out by those measures. Based on this analysis, we recommend a timeline for the GRSB to pursue these recommendations. Figure 25 shows this timeline, along with a recap of the specific roles we believe the GRSB is suited to take in each of these areas, and the additional stakeholders that must be engaged for these efforts to be successful.
Because farm diversification methods have already been researched and proven, we believe diversification can be implemented in the short term. The main barrier remaining at this time is education, and this is an area where the GRSB can play a role. The GRSB can also be involved in building diversification into the standards for sustainable beef that are being developed, and can investigate the possibility of building diversification into preferential buying practices.
Agroecological zoning will require significant involvement from the Brazilian government, so we recommend this for implementation in the medium term. The GRSB can take action by lobbying the government to pursue the same sort of zoning laws for cattle that have already been put into place for sugarcane and palm oil, and by being a part of the multi-stakeholder group that will be necessary to develop zoning standards. A cattle zoning law will absolutely require monitoring and enforcement to be effective, so the GRSB members can pave the way for cattle agroecological zoning by agreeing to submit to monitoring and enforcement measures. NGOs on the GRSB can take part in the education campaign that will be necessary once zoning law goes into effect.
The most effective methods of implementing a REDD credit market are still being researched by conservation groups around the world. For that reason, we recommend the GRSB make REDD a long-term priority. The role of the Roundtable will be to engage with other stakeholders in the cattle value chain to pursue phase I of REDD implementation, and to investigate funding options for the pilot phase.
Although the GRSB includes members from all parts of the beef value chain, this body will certainly not be able to work in isolation. Each of our recommendations will require engaging with outside stakeholders. In particular, Brazilian cattle ranchers are not directly represented on the Roundtable, but are a critical stakeholder for the success of any of these solutions. Government bodies will need to be involved in creating laws or policies that will support agroecological zoning and a REDD market. In order to address one of the main concerns of REDD – that the economic benefits of the credit market truly reach the rural populations responsible for conserving forest land instead of developing it – rural populations will need to be engaged in implementing REDD. Last, financial institutions will be necessary to support the REDD credit market.
REVISITING OUR RESEARCH QUESTION
Our project aimed to pinpoint the leverage points in the value chain for reducing cattle-based deforestation. Not surprisingly, we found that the middle segments of the value chain, from ranchers to sales companies, are the most critical. Figure 26 shows which segments of the value chain the recommendations we have outlined most aim to affect. Importantly, our research sheds light on the fact that, while ranchers are the ultimate target of the solutions to cattle-based deforestation in the Amazon, this is a very fragmented group, which can make it difficult to implement practices that would decrease the impact of the beef value chain on deforestation. We find that, to be successful in implementing our recommendations, the GRSB will need to use the power and influence of the slaughter/process/sales segments of the chain to implement change. These are the segments of the value chain with the most resources and power, and these are the segments of the chain that are the target of consumer demands for sustainable beef. By getting the slaughter/process/sales segments of the chain on board with solutions to cattle-based deforestation, the GRSB should be able to push the Brazilian government to implement the recommendations we have outlined, and the GRSB should make use of its NGO members to make sure ranchers have a voice at the table.
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