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Restoring Degraded Land in Latin America Can Bring Billions in Economic Benefits

Imagine a landscape, baked by a hot tropical sun, where almost nothing grows. The dirt is compacted and bone dry, the grasses are sparse and weedy, and it is quiet — there’s no sound of the livestock that used to roam here or the wildlife before that. After years of unchecked deforestation and heavy grazing, this badly degraded land provides few environmental benefits, and no longer makes money for the communities that once depended on it.     

New research shows that bringing life back to these damaged landscapes through landscape restoration can generate billions of dollars of profit for farmers, investors and society. A new WRI report, The Economic Case For Landscape Restoration In Latin America, finds that restoring 20 million hectares (49 million acres) of degraded lands in Latin America and the Caribbean by adding trees and improving farming practices would yield $23 billion in net benefits over 50 years, a value equivalent to about 10 percent of annual food exports from the region. That’s an average of $1,140 per hectare!

Thinking of Lost Productivity as an Opportunity

With close to 650 million hectares (1.6 billion acres) of deforested and degraded lands in Latin American and the Caribbean, an area double the size of Argentina, the region is primed to tap into restoration’s economic promise at a massive scale. Eleven Latin American countries as well as several Brazilian states and private projects have already pledged roughly 27 million hectares (67 million acres) for restoration through partnerships like Initiative 20x20 and the Bonn Challenge. Investors have earmarked more than a billion dollars in financing to kick-start restoration projects. The private sector, from farmers to investors, expects to see financial returns from increased agricultural productivity, forestry products, ecotourism and carbon sequestration.

Landowners and investors however, need more than economic models to justify placing huge financial bets— they want examples of where restoration has been successful and where it has turned a profit. Here, we can look to three cases from Latin America that demonstrate restoration is good business.

Sustainable Cattle Ranching in Brazil

Cattle ranching drives an estimated 65-70 percent of Brazil’s deforestation. But how do you restore and sustainably manage all of that deforested land that is now being intensively used by ranchers and farmers? The Novo Campo program in Brazil’s Mato Grosso state shows how restoration can boost economic performance through better ranching practices and “silvopasture,” which re-introduces trees to pasture lands. Ranchers with Novo Campo have helped vegetation naturally regenerate on deforested areas, which increased soil and water quality and the availability of feed and shelter for their livestock. With these methods, the ranchers were able to fit more cows on less land and produce more beef from the healthier cattle. In Novo Campo’s pilot program, gross profit margins increased by up to $217 per hectare. Our analysis shows that this is not unusual: on average, farmers who restore their land can earn an extra $274 per hectare in net economic value from additional agricultural productivity alone.

<p>Silvopasture system in Costa Rica | Photo by Luciana Gallardo Lomeli / WRI</p>

Silvopasture system in Costa Rica | Photo by Luciana Gallardo Lomeli / WRI

Growing Money on Trees in Nicaragua

Agroforestry is another approach that allows farmers to tap into the benefits of restoration, this time by integrating trees into crop systems where they can provide shade and enrich the soil. In Nicaragua, investors and farmers started a project called Nicafrance to restore high-value forests around coffee plantations. The forests not only shade the coffee¾they also act as an economic buffer, as when coffee prices are low, harvest from the trees can make up for the decrease in income. Trees also provide a stronghold for wildlife like howler, spider and capuchin monkeys, providing an opportunity for additional income from ecotourism. Our analysis suggests that restored land can generate on average an additional $415 per hectare in net economic value from wood and non-wood forest products. Ecotourism can be worth an additional $161 per hectare in net economic value on average.

<p>Forestry operation in Costa Rica | Photo by Luciana Gallardo Lomeli / WRI</p>

Forestry operation in Costa Rica | Photo by Luciana Gallardo Lomeli / WRI

Carbon and Cocoa

In the Peruvian Amazon, investors from the impact investment firm Althelia are working with cacao farmers to reduce deforestation and improve agricultural yields through the Tambopata-Bahuaja REDD+ and Agroforestry Project. The project operates across two national parks under heavy threat from deforestation, as well as the sanctioned park “buffer zones” where some agriculture is allowed. By working with 1,100 farmer households, the initiative is planting 4,000 cocoa trees in an agroforestry system, creating income for local people while reducing pressure on the ultra-biodiverse natural rainforest. By removing deforestation pressures, the project avoids almost 4 million tons of carbon emissions over seven years, generating credits which can be sold through carbon markets. Our analysis indicates that carbon stocks on restored landscapes can be valued at an average of $270 per hectare in net economic value, assuming a conservative $5 per ton price for carbon.

<p>A farmer harvesting cacao in the Tambopata-Bahuaja REDD+ and Agroforestry Project. Photo: Althelia</p>

A farmer harvesting cacao in the Tambopata-Bahuaja REDD+ and Agroforestry Project. Photo: Althelia

These three projects are only a few examples of how restoration can yield increased financial returns. There are also a host of other benefits that are not as easily monetized, but have incredible value for landowners, investors and policymakers, including improved soil and water quality, sustained biodiversity and an enriched landscape that can absorb greenhouse gas emissions.

Imagine that dry, degraded landscape once more. Now imagine it covered by a green mosaic of regenerated trees and shrubs hosting a noisy cloud of birds, planted pines ready for harvest, robust fields of soy or maize and pastures full of healthy livestock. We know that establishing these landscapes across Latin America and the Caribbean is possible. And from our new research, we know it is highly profitable, too.

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