New analysis shows that restoration of degraded and deforested land represents a major investment opportunity for governments, investors, farmers and landowners
• More than 650 million hectares of degraded, underperforming land in Latin America and the Caribbean could be restored to generate economic and environmental benefits.
• WRI estimates that achieving Initiative 20x20’s goal of restoring 20 million hectares in Latin America and the Caribbean could yield net benefits of at least $23 billion over 50 years.
• The costs of restoring land are far outweighed by benefits including higher agricultural yields, revenue from the sale of forest products, ecotourism revenue, and the value of carbon sequestered.
• Restoration is a cost-effective tool for Latin America to meet its climate goals. Restoration of 20 million hectares can sequester a total of nearly 5 gigatons of CO2e over 50 years, nearly the total yearly carbon footprint of Latin America.
WASHINGTON (October 28, 2016) – A new report from World Resources Institute finds that degraded land in Latin America is an untapped economic opportunity that can deliver billions of dollars in returns while improving environmental productivity and storing carbon. The report, The Economic Case for Landscape Restoration in Latin America finds that achieving Initiative 20x20’s goal of restoring 20 million hectares of land in Latin America and the Caribbean could yield net benefits of at least $23 billion over 50 years, an amount equivalent to about 10% of the value of food exports from the region.
“Degraded, unproductive land is a drag on local farmers and national economies alike,” said Walter Vergara, Senior Fellow at WRI and lead author. “But it also represents a tremendous opportunity. WRI’s economic analysis of restoration shows for the first time that if we can bring productivity back to underperforming land, restoration not only pays for itself, but it creates billions of dollars of additional value, brings in environmental co-benefits and represents a major opportunity for carbon storage and therefore to efforts in climate change mitigation.”
Twenty percent of all forested and agricultural land in Latin America and the Caribbean has already been degraded. This land, whether logged for timber, overgrazed by cattle or plowed-over for soy, often becomes unproductive over time, lowering agricultural productivity and losing ecosystem services like water filtration and soil richness. WRI has identified 650 million hectares of land suitable for restoration in Latin America and the Caribbean, an area more than double the size of Argentina. WRI calculates that 15 percent of this land can be restored into natural ecosystems, an additional 15 percent can be restored into better-performing agricultural land and 70 percent can be restored into economically productive mosaics of forests, grasslands and agriculture.
“This analysis illustrates the reasons why Colombia is working to restore 1 million hectares of land in partnership with Initiative 20x20 and the Bonn Challenge,” said Luis Gilberto Murillo, Minister of the Environment and Sustainable Development for Colombia. “Restoration will benefit rural Colombians by enriching the quality of our cattle pastures, providing shade for sustainable coffee farms, and creating new ecotourism opportunities. At the same time, it will help us meet our climate goals.”
Eleven Latin American countries as well as several Brazilian states and other private organizations have pledged to restore degraded land through Initiative 20x20 a regional effort in support of the Bonn Challenge, including Guatemala, Honduras, Nicaragua, Colombia, Peru, Chile, Argentina, Ecuador, Costa Rica, El Salvador, and Mexico, along with the Brazilian states of São Paulo, Espírito Santo and Mato Grosso.
“This analysis shows why restoration is one of the most cost-effective ways for Latin America to address climate change and prepare for its impacts,” said Carlos Nobre, Scientific Director and Dean of Brazilian Climate Studies at Brazil's Institute of Science and Technology for Climate Change. “By restoring Latin America’s vast forests and improving agricultural practices, we can pull carbon from the atmosphere into soils and vegetation where it can enrich the land and generate substantial economic benefits.”
WRI’s report makes the economic case for restoration, which is already clear to forward-thinking investors. Public and private financiers have earmarked$1.15 billion to finance Initiative 20x20 restoration projects, including investors such as Althelia, EcoPlanet Bamboo, Permian Global, Sustainable Land Management (SLM) Partners, EcoEnterprises Fund, Terrabella Fund, Moringa Partnership, Carana Corporation the Amazon Reforestry Fund, Amazon Andes Fund, Forestry and Climate Change Sub Fund and Rare.
“Restoration is not just good environmental policy it makes good business sense. That’s why we’ve earmarked at least $70 million to support restoration across farmlands, pastures and forests across Latin America,” said Juan Carlos Aybar, Director of Latin America for Althelia, an impact investment firm. “We expect substantial social and environmental benefits from our work in Peru, Guatemala and Brazil, but we also know that this is a smart financial investment for our firm.”
The report estimates that land owners can benefit from an increase of value of about $1,140 per hectare on average by restoring degraded land in Latin America and the Caribbean. Profits to these landowners can be much higher under certain conditions. Specifically, the report examines the costs and benefits of five key restoration outputs:
• Revenue from gains in agricultural productivity as restoration boosts yields of crops like maize, soy and wheat; and avoided food security costs derived from lower agricultural insurance premiums as restoration buffers farmers from losses;
• Increased revenue from wood forest products like timber and pulpwood;
• Sales and use of non-wood forest products like medicinal and animal products, fruit, nuts, and other tree crops;
• Income from increased ecotourism on restored lands; and
• The value of carbon sequestered in trees and vegetation in restored landscapes.
“As landowners, we have a responsibility to sustainably manage our property, and this report shows that as business people we also have good financial reasons to do so,” said Eric Poncon, owner of Morgan’s Rock Hacienda and Ecolodge in Playa Ocotal State, Nicaragua. “Since we opened our 4,000 acre property, we’ve designated half of it as a private reserve and planted more than two million trees. We’ve benefited from increasing tourism, used the products from our farms, and we will soon see benefits from our sustainable forestry operations.”
The report also emphasizes that in addition to the direct economic benefits, restoration remains one of Latin America’s most cost-effective tools to mitigate climate change and meet climate goals. In Latin America, 56 percent of all greenhouse gas emissions come from land use and land-use change. Restoration, however could sequester nearly 5 gigatons of CO2e over 50 years, nearly the total yearly carbon footprint of Latin America.
WRI is a global research organization that spans more than 50 countries, with offices in the United States, Brazil, China, India, Mexico and more. Our more than 700 experts and staff work closely with leaders to turn big ideas into action at the nexus of environment, economic opportunity and human well-being. www.wri.org