NewEconomyfortheBrazilian

EXECUTIVESUMMARY

ResearchCoordination

RafaelFeltran-Barbieri,CarlosA.Nobre,

CarolineMedeirosRochaFrasson,

PauloCamuriandCarolinaGenin.

Authors

CarlosA.Nobre,RafaelFeltran-Barbieri,

FranciscodeAssisCosta,EduardoA.Haddad,RobertoSchaeffer,EdsonPauloDomingues,

CarolineMedeirosRochaFrasson,PauloCamuri,CarolinaGenin,AlexandreSzklo,AndreF.P.

Lucena,DaniloAraújoFernandes,HarleySilva,RaulVentura,RicardoTheophiloFolhes,Ana

CarolinaOliveiraFiorini,AdemirM.Rocha,

AlbertoJoséLeandroSantos,AldebaroBarreto

daRochaKlautauJunior,AlineSouzaMagalh?es,AmandaVinhoza,AndréLuizMenezesVianna,

AndreaM.Bassi,Ant?nioJorgeGomesAbelém,BraulinaBaniwa,BrunoFelin,CamilaLudoviqueCallegari,CarlosBlener,DavidCasteloBranco,EllenClaudineCardosoCastro,EugênioPantoja,

FernandoS.Perobelli,FranciscoApurin?,

GabrielPisaFolhes,GabrielaNascimentoda

Silva,GabrielaSavian,GeorgPallaske,Gerd

BrantesAngelkorte,GilCastelloBranco,HeronMartins,HuangKenWei,IaraVicente,InácioF

Araújo,InaiêTakaesSantos,JeffersonF.Ferreira,JoanaPortugalPereira,Jo?oDanielMacedoSá,

JordanoBuzati,KarinaS.Sass,KêniaBarreiro

deSouza,LeonardoBarbosa,LeonardoGarrido,LeticiaMagalarMartinsdeSouza,Leticia

RodriguesSoares,LucasPaivaFerraz,Lucas

SilvaCarvalho,LuccaLanaro,LucianaAlves,

LuizBernardoBaptista,MarcoGuzzetti,Maria

AméliaEnriquez,MariaEduardaSennaMury,

MarianaImpério,MarianaOliveira,Mariana

PadilhaCamposLopes,MaríliaGabrielaSilva

Lobato,MartaSalomon,PedroFilipeCampos

Rampini,PedroR.R.Rochedo,RaissaGuerra,

RodneyRooneySalom?oReis,RoggerMathausMagalh?esBarreiros,TarikMarquesdoPradoTanure,TercianeSabadiniCarvalho,Thiago

CavalcanteSimonatoandVirgíniaBarbosa.

Reviewers

Theauthorswouldliketothanktheexperts

whoreviewedthisreport,formallyorinformally,

atdifferentstagesthroughoutitsdevelopment

process(inalphabeticalorder):AndréBaniwa,

CaioKoch-Weser,CarlosMu?ozPi?a,Elizabeth

Farina,FabíolaZerbini,FernandaBoscaini,GustavoPinheiro,HenriqueEvers,HenriqueRoncada,

ItamarMelo,JoaquimLevy,JulioAlves,Laize

Sampaio,LaraCaccia,LauraMalaguzziValeri,

LuizH.Calado,MarittaKoch-Weser,MonikaRoper,PatriciaPinho,PauloAmaral,PedroFrizo,Robin

King,RodolphoZahluthBastos,SamelaSateré-Maué,LuisAntonioLindauandVanessaPerez.

SuggestedCitation

Nobre,C.A.etal.(2023)NewEconomy

fortheBrazilianAmazon.S?oPaulo:WRIBrasil.Report.Availablein:www.wribrasil.org.br/nova-economia-da-amazonia

Imprint

ResearchSupervision

ThiagoGuimar?esRodrigues

EditorialCoordination

JoanaOliveiradeOliveiraandKarolineBarros

EngagementCoordination

KarolineBarros

PhotoCuration

MarlonF.MarinhoandAnaílePaulino

Mapsedition

LeonardodaSilvaBarbosa

Translation

PatriciaDavanzzo

DesignandLayout

NektarDesign(.br)

Coverphoto

ValdemirCunha/Greenpeace

Junhode2023

COORDlNATlON

THENEWCLMATEECONOMY

TheGlobalcommissionontheEconomyandclimate

PARTNERS

idesam

FlNANClALSUPPORT

CLimateand

LanduseALuiance

.

Acknowledgements

ThisreportwasledbytheWRIBrasilandTheNewClimateEconomyteamsand

producedincollaborationwithmorethan75researchersfromvariousBrazilian

regions,andorganizations,whichwethankfortheirtechnicalandinstitutionalsupport:NAEA-UFPA,Nereus-USP,Fipe,Cenergia-

Coppe-UFRJ,Ipead-Cedeplar-UFMG,Ipam,Idesam,Associa??oContasAbertas,CCCAandUmaConcerta??opelaAmaz?nia.

FinancialsupportfromInstitutoClimae

Sociedade(iCS),theDanishMinistryof

ForeignAffairs,theFederalMinistryforthe

Environment,NatureConservation,Nuclear

SafetyandConsumerProtectionofGermany,InstitutoArapyaú,GoodEnergiesFoundation,andtheClimateandLandUseAlliance(CLUA)wasvitalfortheconductionofthestudy.

Wethankallthepeoplewhocontributedtotheresearchatdifferentstages.

Amongthem,thepeopleinterviewed

atAcampamentoTerraLivre(ATL)and

throughout2022,aswellastheconsultantswhoenabledtheproductionofthisreport.

Thefollowinglistshouldnotbetakenas

exhaustive,butexemplifiespeoplewhosharedtheirtimeandknowledge(inalphabetical

order):AdilsonJoanicoBaniwa,AdrianaLobo,AnaTerraYawalapiti,AndersonRogerioLopes,AngelaMendes,Ant?nioAraújodaSilva

Apurin?,BeptukKayapó,BertaPinheiro,Bia

Saldanha,CamilaCarolina,CarinaPimenta,

CiraMoura,CrisantoRudz?Tseremey’wá,

DaniloIgliori,DemetrioTiriyo,DenisonDuartedosSantos,EdilsonMartinsMelgueiro,EdivanSilvadeCarvalho,EdmilsondosSantos

Oliveira,EduardoCorreaTavares,Eduardo

Malta,ElcioFilhoManchineri,ErikadePaula

PedroPinto,EvaldoBrunoMartins,Fábio

HeuselerFerreiraLeite,FabriciaSabanê,

FlorindaTuyuka,FrancineiaFontes,Genilson

Guajajara,GustavoFontenele,HélioJorgeda

Cunha,IzabellaTeixeira,JaneteMartinslana,

JoaquimJoséMartinsGuilhoto,Johannesvan

deVen,JucleisondoSantosAniká,Kreusa

NunesAndré,LindalvaFelixZaquri,Luciane

Rodrigues,LucimarSouza,ManoelSerr?o

BorgesdeSampaio,MaragoIkpeng,Marcela

Rodrigues,MarceloFurtado,MarekHanush,

MárioFadell,Masaw?katxiApurin?,MauriKurio

Boe,NarcisoPantoja,NeuraciCharles,Olavo

KamuuDanWapichana,OremêIkpeng,Oyago

Suruí,PauloMoutinho,RenataCordeiro,Renee

Pineda,RodrigoJunqueira,SamiaApurin?,

SamuelLimaPereiraArara,SandraRegina,

SaulodeTarsoValeBente,Sebasti?oKrah?,

SérgioAndréCastelani,ShirleyAmairé,Suely

Araújo,TariKayabi,TatianaSchor,Terekwyi

Gavi?o,TilhoNascimentoFelixArara,Tuíre

Kayapó,TutumaIkpeng,ValmirOrtega,Vanuza

Guajajara,VivianeRomeiro,Waduwabati

Suya,WagnerKatamyandWalmyrTapirapé.

Wearealsogratefultothecommunication

andengagementteamsatWRIBrasiland

TheNewClimateEconomy(inalphabetical

order):AlexSimpkins,AndreaMendez,

BrunoCalixto,BrunoFelin,CristinaBodas,

FernandoCorrea,GuilhermeCutrim,Lais

Assump??o,JennaEllingson,JoanaOliveira

deOliveira,KarolineBarros,LaioTeixeira,

MadhaviGaneshan,NateShelter,Pandora

Batra,SaraAscher,YelenaAkopian,theentire

WRIBrasilteam,WRI,TheNewClimate

Economyandpartnerorganizations.

FamilyfarmingfruitharvestinApuí,Amazonas.

Photo:DereckMangabeira/Idesam.

Foreword

Thecomingdecadeswilldefinewhetherthe

Amazon–hometomorethan28millioninhabitants,

198indigenouspeoples,andharboringthemost

biodiverseforest,thelargestfreshwaterreservoir

andthelargesttropicalblocforclimateregulationontheplanet–willbecomethegreatcatalyst

forBrazil'slow-carboneconomy.Orwhether,in

theoppositedirection,theAmazonwillreachan

irreversiblepointofdegradation,deepeningcurrentinequalitiesandjeopardizingthestabilityand

competitivenessofthecountry'sentireeconomy.

HowtoguidetheLegalAmazontowardsa

decarbonizationtrajectory,transformingtheregion'seconomysothatitgrows,generatesopportunities,valueslocalculturesandenvironmentalassets,

whilefightinginequalityanddeforestation?Thisquestionmotivatedthe76researcherswhosignedtheNewEconomyfortheAmazonreport.

Thestudycombinesdifferenttechniquesand

knowledgetopresentauniquedepictionoftheLegalAmazon’scurrenteconomy,bringingtolighttheregion’seconomicandenvironmentalrelationswiththerestofBrazilandtheworld.Thestudyfocusesoncarbon-intensivesectorsthatmustchangecourseinordertobecome

arelevantpartofastandingforesteconomy,moresuitedtothechallengesofthiscentury.

Thestudyfurtherexplorestheroleofthe

bioeconomy,revealingavigorousactivityhithertoinvisibletoconventionalinstrumentsused

tomeasureeconomicactivity.Althoughitis

basedonthesecularformofproductionoftheoriginalpeoples,constantlyinnovatedbylocaltechnologiesdevelopedinAmazonianvillages,

ruralareasandcities,thebioeconomyremains

underestimatedintermsofitscurrentimpact

andfuturepotential.Theworkprovidesvisibility

totheseactivities,demonstratingtheirrelevance

asasolutionfortheregion’sfutureeconomy.

Thereportalsoassessestheeconomicperformance

oftheLegalAmazonunderdifferentscenarios,

comparingthecurrenttrajectory,whichhas

beendrivingdegradation,withalternative

decarbonizationscenarios,especiallyinthe

agricultural,livestockandenergysectors.

MorethancomparingGDPandjobcreationresults,

aseconomicperformanceistraditionallyassessed,

theNewEconomyfortheAmazongivesshapetoa

qualitativeanalysisofthatwhichiswantedforthe

future–andthereisnofutureforBrazilwithout

theAmazon.Theresultsshowthatitisimpossible

forthecountrytoreachitsParisAgreement

targetsandcontributetocurbingglobalwarming

withouteliminatingdeforestationintheAmazon.

Evenassumingthatdeforestationiseliminated,

itwillstillbenecessarytorestorelargeareasof

theforestandadoptnewwaysofgeneratingand

consumingenergy,whetherinruralorurbanareas.

Thisreportproposesatransitionthatgenerates

qualityjobsandopportunitiesfortheregion's

citizens,whiledrivingimportantchangesintherest

ofthecountry.TheNewEconomyfortheAmazon

canbethegreatcatalystforthedecarbonization

oftheentireBrazilianeconomyandthegreatest

opportunityforeconomicandsocialdevelopment

inthecountry'scontemporaryhistory.

FernandaBoscaini

ExecutiveDirectorofWRIBrasil

NewEconomyfortheBrazilianAmazon7

EXECUTIVE

SUMMARY

SUMMARY

Highlights

TheAmazonrainforestisonthecuspofacrucialtippingpointfollowingdecadesofextensivedeforestationthatwouldhave

widespreadramificationsforBrazil’speopleandeconomy,andtheglobalclimate.

Anewanalysisofvariousscenarios

fortheBrazilianAmazon’seconomy

through2050findsthatadeforestation-free,low-carbonpathwaydeliversthelargestandmostequitableeconomic

growthfortheregionandforthewholecountry.Thisscenario—calledtheNewEconomyfortheBrazilianAmazon—

includesseveralmajoryetachievable

transformations:zerodeforestation,

expandingtheAmazon’sbioeconomytosustainablyproducegoods,expanding

forestrestoration,adoptinglow-emissionsagricultureandlivestockpractices,anddecarbonizingBrazil’senergymix.

Thisscenariowouldproduce

significanteconomic,jobs,and

climatebenefitsforBrazil.By2050,

theBrazilianAmazoneconomy’s

GDPwouldgrowbyBRL40billion

abovethereferencescenario,while

adding312,000additionaljobs.

Brazilwouldalsohave81million

morehectaresofstandingforests

comparedtobusinessasusualand

reduceitsemissionsby94%,meeting

itsParisAgreementclimatetarget.

Theinvestmentstofinancethis

transitionare1.8%ofBrazil’snational

GDPperyear,just0.8%more

thanthereferencescenario,oran

additionalBRL2.56trillionby2050.

TheAmazonwouldbethegreat

catalystforthedecarbonizing

theentireBrazilianeconomy,

asinvestmentswouldflow

throughoutthecountry.

NewEconomyfortheBrazilianAmazon9

Context

TheBrazilianLegalAmazon(LAM),anarea

coveringalmost60%oftheBrazilianterritory,holdsthemostextensiveandbiodiverseforestintheworld,thelargestfreshwaterreservoirand

themostimportantclimateregulatingforest

blockontheplanet,embracingasignificantpartoftheCerradobiodiversityhotspot.Itishometo28millionBrazilians,198indigenousethnic

groupsfromalmost50languagefamilies.Despiteitsuniqueculturalandbiologicalrichness,LAMhassufferedachronicprocessofdegradation,with83millionhectaresofprimaryforestshavingbeencleared,jeopardizingitscapacitytoabsorbcarbonandprovideecosystemservices-suchasclimateregulationandrainfallirrigation-forwhichtherearenoeconomicallyviablesubstitutesonsucha

largescale,fortheownAmazonandsurroundseconomy,especiallyagricultureandlivestock.

Climatechangenegativelyimpactstheforest

andtheeconomy,disproportionatelyaffectingthepoorestandalreadyvulnerablepopulations.

Inadditiontoforestdegradationanderosionof

biodiversity,reducingtheconditionsofsubsistence

oftraditionalpopulations,climatechangehasadirectimpactonagriculture,whichishighlydependentonrainfall,as96%ofplantedareasand99%ofpasturesinBrazildonothaveanyirrigationsystemsinplace(IBGE,2019).Thepoorestpeoplearethebiggest

victimsoffoodpricefluctuationsresultingfrom

cropfailuresandshortagesduetosystemicweathereventssuchasdroughtsandfloods.Livinginareasatrisk,withpoorsanitationandwithoutadequateassistance,thepoorarealsoprimarilyaffectedby

increasesinflashfloods,landslides,andepidemics.

Stoppingdeforestationandcurbingglobal

warmingarecrucialforthepeopleofAmazon

andbeyond.AchievingtheParisAgreementgoals

andreducingemissionstocurbglobalwarmingto

1.5°Crequiresinvestmentsofaround2%ofglobal

GDPperyear–untilstabilityingreenhousegas

(GHG)concentrationsintheatmosphereisachieved

(Stern,2015).Exceedingthe1.5°Cthreshold

considerablyincreasestheinvestmentsneededto

adaptandreplacecarbon-intensiveprocesses,aswellasincreasesthecostsofrecoveringfrommoresevereclimateimpacts,whichmayrequireupto9%of

globalGDPperyear(Guo,Kubli,&Saner,2021).

LateafternoonintheVer-o-Pesomarket,inBelém,Pará.Photo:NayaraJinknss/WRIBrasil.

10.br

Brazil'sroleincontainingglobalwarmingisvitalandwillrequireshiftingtoaneconomythatis

freeofdeforestationandforestdegradation,withlow-carbonagricultural,livestockandindustrialproduction.Brazilemittedabout67gigatonsof

carbondioxide(GtCO2)overthepast30years

(SEEG,2022).TomeettheParisAgreement

goalsandcurbglobalwarmingto1.5°C,thisstudyestimatesthatthebalanceofBrazil’semissions

between2020and2050(carbonbudget)cannotexceed7.7GtCO2.IntheLegalAmazon,net

emissionscannotexceed1.4GtCO2by2050,

whichcorrespondstoa96%reductioncomparedtothe36GtCO2emittedoverthepast30years.

TheNewEconomyfor

theBrazilianAmazon

TheNewEconomyfortheBrazilianAmazon

(NEA-BR),aninitiativebyWRIBrasilin

partnershipwithBrazilianresearchinstitutionsandorganizationsfromdifferentregions,recognizes

thatadvancingeconomicandsocialdevelopment

combinedwithclimatemitigationcallsfor

profoundchangesinBrazil’seconomy.TheinitiativepositionstheAmazonasthegreatcatalystfor

thesechangesacrossBrazil.Thisreportshowsthat

investmentsinconservingandexpandingnatural

assets,strengtheningthebioeconomy,andshifting

agricultureandlivestockproductionandtheenergy

matrixtolow-carbonmodelsintheLegalAmazon

(LAM)wouldresultinastrongereconomy,with

betterperformancethanthatbasedonthecontinuedexpansionofcarbon-intensiveactivities.ThestructuralchangesofthetransitiontotheNEAledbythe

AmazonwouldreachtheentireBrazilianeconomy

throughtheflowsofinvestments,inputsandproductsexchangedbetweenregions,leadingthecountry

towardsthedecarbonizationofitsentireeconomy.

TheNEAstudypioneeredtheintegration

ofmultipleeconomicmodelsdevelopedby

differentresearchgroupsinthecountrytobuildacomprehensiveanalysisoftheLAM’scurrenteconomyandoutlinedifferentscenariosforits

futureeconomy.Differenteconometrictechniqueswerecombined,withthedevelopmentofInter-

regionalInput-OutputMatrix(IIOM-LAM),GeneralEquilibrium(GEM)andDynamic

Optimization(DOM)Modelscoupledto

Combuisland,Belém,Pará.

Photo:NayaraJinknss/WRIBrasil.

NewEconomyfortheBrazilianAmazon11

FigureSE1|TheNewEconomyfortheBrazilianAmazonreport

THENEWECONOMYFOR

THEBRAZILIANAMAZON

Bioeconomy,agricultureand

livestock,mining,infrastructure,andfinancing

THECURRENTLEGALAMAZONECONOMY

IIOM-LAM

PERSPECTIVESFOR

THELEGALAMAZON

ECONOMYIN2050

Economicmodels

(GEM,DOMandIOM-Alpha)

TheInter-regionalInput-Output

MatrixofLegalAmazon(IIOM-LAM)with27regionsallowedtheanalysisofregionaleconomicrelations,as

wellaswiththerestofBraziland

foreigntrade.Furthermore,it

segmentedtheforestsectorinto

logging(nativewoodandtimber)andnon-timberforestproducts(native

seeds,fruits,leaves,resinetc).

In-depthdiscussionson:

?themainlandusesectors(responsiblefor94%of

greenhousegasemissionsintheLegalAmazon),

?thechangesrequiredinthe

energymatrix(4%ofemissions)

?necessaryinvestmentsfortheNewEconomyfortheAmazon.

ThecombinationofGeneral

EquilibriumModels(GEM),

DynamicOptimization(ODM)and

theBioeconomyInput-Output

AlphaMatrix(MIP-Alpha)enabled

multisectoralanalysisandscenario

projectionsfortheeconomyofthe

LegalAmazonupto2050,

incorporatingenvironmentalassets

andgreenhousegasemissionsin

anunprecedentedway.

Source:Elaboratedbytheauthors.

computablemodulesoflandusechanges,andInput-OutputAlphaAccountsMatrix(IOM-Alpha)for

thebioeconomy.TheworkenablestheanalysisofthepeculiaritiesoftheLAM,thecharacteristicsofits

differentregions,theirtradeflows,inputs,products,emissionsanddeforestationincorporatedintothem.

Themethodologicalchoicesforthecoupling

andinteractionofanalyticalmodelshavesome

limitations.AlthoughtheNEA’soriginalityoffersanewperspectivefortheassessmentandplanningoftheLAM’seconomy,therearelimitsandrestrictionsinherenttothemodelsandinterpretationofresults,suchas:(1)underestimationofpotentialpositive

effectsgeneratedbygainsinhumancapitalor

technologicalprogressoneconomicperformance,(2)undervaluationofthedegradationanddepletionofnaturalresources,(3)undervaluationofecosystem

services,(4)underestimationofthecurrent

bioeconomyand,therefore,ofthefuturebioeconomy,particularlyinthesecondaryandtertiarysectors,

and(5)non-spatiallyexpliciteconomicresults.

NEA'sanalyticalapproach

TheNEAadoptstheboundariesoftheBrazilian

LegalAmazonasitsstudyarea.TheAmazonbiomecoversapproximately6.2millionsquarekilometers

ineightcountriesinSouthAmericaandinFrench

territory,approximately60%ofwhichisinBrazil.

TheLAM,ontheotherhand,isalegaldelimitationthatincludestheentiretyoftheBrazilianAmazon

Basin,encompassingthetropicalforestandadjacentCerradoareas.InstitutedbyLawN.1.806/1953,it

amountsto5Mkm2–59%oftheBrazilianterritory.

Withabout28millioninhabitants(Ipeadata,

2022)andanaverageHumanDevelopmentIndexbelow0.58(Firjan,2020),itfullycoversthestatesofAcre,Amazonas,Amapá,Pará,Rond?nia,

TocantinsandMatoGrosso,inadditionto

Maranh?oinitsportionwestofthe44thmeridian.

TheLAMisamosaicofforestandsavannah

environments,withuniqueculturalandbiologicalrichness.Withdozensofecosystemsmanagedbynativepeoplesformorethan10thousandyears,

theindigenouspopulationoftheLAMcurrently

standsatnearly600thousandpeoplefrom198

ethnicgroupsand49languagefamilies(ISA,2023)(MuseuEmílioGoeldi,2023).Forestmanagement,agricultureandmanufacturingtechniquesbring

togetheraprofusionoftraditionalknowledge

aboutmedicinaldrugs,cosmetics,food,fibers,

infrastructurematerialsandenergy,stillunknowntoscience,butcommonplaceintheoriginaleconomy

–orindigenousbioeconomy–characterizedbyits

capacitytosupporttheenvironmentandrespectfor

intangibleassetsthatareinseparablefromproduction.

12.br

TheLAMhousesthemostextensiveandbiodiverseforestintheworld,alsoencompassingasignificantpartoftheCerradobiodiversityhotspot.Thelargesttropicalcarbonstockintheworld,theAmazon

stores120GtCaboveground(Gattietal.,2021),

equivalenttotwelvetimestheannualemissions

resultingfromglobaleconomicactivities(Valsecchi

doAmaraletal.,2017).TheLAMisresponsibleforrecyclingbetween6.3and7.4trillioncubicmeters

ofwaterperyearthroughtheso-called"flying

rivers",whichirrigatetheBraziliancenter-south

andistheregion’smostimportantserviceprovided

totheagribusiness,hydroelectricpowergeneration,

industryandsanitationsectorsinthecountryand

theSouthernCone(Bakeretal.,2021).Overthe

past30years,thelanduseandenergysectorhas

accountedfornearly98%ofallcumulativeAML

emissions.Theyare,therefore,thefocusofthisreport.

Despiteitsrelevanceandroleintheeconomy,theAmazonisapproachingapointofnoreturn

duetoitscurrenttrajectoryofaccelerated

degradation.About83millionhectaresofprimaryforestshavealreadybeendeforestedintheAmazon(Prodes,2022b).ConsideringtheentireLAM,

approximately23%oftheoriginalcoverhasalreadybeendeforested,with59millionhectaresofprimaryforestsandCerradoareasdeforestedinthelast36

years(Mapbiomas,2022c).Thecontinuityofthisprocessisleadingtoapointofnoreturn(Nobreet

al.,2016),withchangesinthecarboncyclesthat

causetheregiontobecomeanetcarbonemitter,

whichhappenswhenitscapacitytoabsorbfalls

belowitsownemissions(Gattietal.,2021).

Mainresults

TheLegalAmazon’s

currenteconomy

TheLAM’scurrenteconomyrunsadeficitin

commercialtransactionsandasurplusinemissions,

withhighlycarbon-intensivetransactions.Under

thecurrenteconomicarrangement,theregionisa

largedepositaryoflandthatsupplieslowaddedvalue

inputstothenationalandinternationaleconomy,

exportingprimaryproductsandpurchasingqualified

goodsandserviceswithhigheraddedvalue.The

useofIIOM-LAMshowsthat,in2015–themost

recentdataavailable–theLAM’stradeflowswith

therestofBrazilresultedinexportsofBRL355

billionandimportsofBRL469billion,withaBRL

114billiondeficit.Ontheotherhand,emissionsof

863MtCO2weregeneratedintheLAMtomeet

internalandexternaldemands,withdeforestation

ofaround1.5millionhectares.Thecomplete

IIOM-LAMisavailableat

.

br/publicacoes/nova-economia-amazonia-nea.

RivertransportinCombuisland,inBelém,Pará.Photo:NayaraJinknss/WRIBrasil.

NewEconomyfortheBrazilianAmazon13

AbroadRestofBrazilLAM

RestofBrazilLAM

CENTERSOUTHMATOGROSSO

CUIABáMETROPOLITANAREA

FigureSE2

ThecurrentLegalAmazoneconomyrevealedbyIIOM-LAM

ThedevelopmentofanInput-OutputMatrixfor27regionsofthe

LegalAmazon,definedbytheirtechnologicaltrajectories,

madeitpossibletoanalyzeregional

economicrelations,withtherest

ofBrazilandforeigntrade

BELéMMETROPOLITANAREA

LOWERAMAZONASINTHESTATEOFPARá

S?OLUISMETROPOLITANAREA

MANAUSMETROPOLITANAREA

MARAJó/LOWERTOCANTINS

AMAZONASCOUNTRYSIDE

PARAGOMINAS

WESTMARANH?O

CENTRALAMAZONAS

SOUTHEASTPARá

SOUTHWESTPARá

CHAPADASINMARANH?O

PORTOVELHOMETROPOLITANAREA

NORTHTOCANTINS

NORTHMATOGROSSO

TOCANTINSCERRADOAREAS

RIOBRANCOMETROPOLITANAREA

ARIQUIMES-GUAPORE

27

regions

TheLegalAmazonimportsmorethanitexports,

generatingaCOMMERCIALDEFICIT...

RestofBrazilLAM

BRL653BRL469

BRL355

BRL10.833

BRL12.177billion

BRL114BRL875

billionbillion

billion

BRL1.122billion

billionbillion

billion

Sales

Purchases

…Anditsexportsarelinkedto

MUCHHIGHERDEFORESTATIONRATES

259thousandha41thousandha

1540thousandha

919thousandha

580thousandha

807thousandha

362thousandha

186thousandha

Deforestationdrivenbyproduction

Purchaseofproductsthatcauseddeforestation

AbroadRestofBrazilLAM

Bysellingbasicproductsandpurchasinggoodsandserviceswithhigheraddedvalue, theLegalAmazoneconomyhasaBRL114billiondeficitincommercialtransactions.

BRL

million

byexternal

demand

Morethan83%ofdeforestationin

theLAMisstimulateddirectlyor

indirectlybyexistingdemandfrom

therestofBrazilandabroad.

Note1:tradeflowsatbasicpricesintheyear2015,accordingtotheIIOM-LAM(at2020prices).

Note2:Deforestationincorporatedintocommercialtransactionsperonethousandhectares.

Note3:Resultsofthisstudy.

Source:Elaboratedbytheauthors.

14.br

Morethan83%ofdeforestationintheLAM

originatesfromdemandarisingfromtherestof

Brazilandfromforeigntrade.Deforestationisoftenassessedfromtheperspectiveofsupply,thatis,whichproductivesectorsarepromotingthereplacementofforestsbyotherlanduses.TheIIOM-LAMmakes

itpossibletoseethedeforestationphenomenon

fromtheperspectiveofdemandaswell,identifyingthesourcesofincentivesfortheproductivesectors

toengageindeforestation.IntheIIOM-LAM,thebreakdownbyoriginofdemandindicatesthat,while46%oftheLAM’sVAisstimulatedbyexisting

demandfromoutsidetheregion,83%ofdeforestation

istriggeredbythisexternaldemand,astheregion’s

exportsarecharacterizedbylowVAandintensive

deforestation.Only12%ofdeforestationobserved

todayintheLAMresultsfromdirect,indirectand

inducedstimulifromtheregion’sinternaldemand.

Inabsoluteterms,oftotaldeforestationinthe

LAMin2015,919thousandhectareswereinduced

bydemandfromtherestofBrazil,362thousand

hectaresbyinternationaldemandand259thousand

hectaresbydemandfromtheLAMregion.

FigureSE3|AnalysisofdeforestationandemissionsbyLAMsectorand

sourceofdemand

LIVESTOCKPRODUCTIONGRAINS-COTTONMINING

Sourceofdemandbysector

5%

8%

25%

15%

20%

23%

75%

60%

69%

85%ofdemandisnationalMorethantwothirdsofdemandareinternational

LAMRestofBrazilWorld

ShareofLegalAmazonGDPin2015(in2020prices)

BRL104billionBRL103billionBRL39billion

HectaresofdeforestationforeveryBRL1millionaddedbytheLAMeconomy

582

haha0,01ha

Annualemissions