Araguaia biodiversity corridor cost benefit analysis: Large scale restoration and sustainable agribusiness in Amazon and Cerrado

Andrea Lucchesi, Madhu Khanna, Paula C. Pereda, Keyi A. Ussami, Patricia G.C. Ruggiero, Victor S. Dornelas and Tess Lallement

Land Use Policy, 2024, vol. 141, issue C

Abstract: Ecosystem restoration is an important tool for reducing ecosystem loss and contribute to diminish the negative impacts from deriving from climate change, but can be very costly. This paper focuses on the cost-benefit and cost-effectiveness analysis of recovering almost one million hectares of legally protected areas in the Araguaia Biodiversity Corridor (Brazil) following the Brazilian Forest code regulation. We analyze two paths for recovery, ecological and economic (including timber and agroforestry systems). We consider the direct and indirect local costs, as well as monetized environmental benefits using the social cost of carbon and avoided soil erosion. According to our estimates, in 50 years, the recovery of the Araguaia Corridor will lead to net societal benefits with either the ecological (US$ 19.8 billion) or economic (US$ 18.9 billion) pathways in all macro-regions (north, central, and south) and rural property sizes (small, medium and large). The recovery captures 262 million tCO2eq and avoids 527 million tons of soil erosion with the economic path; these estimates are 23% and 1.7% higher, respectively, when using the ecological path. Importantly, we show that the restoration activity is not carbon credit dependent on being profitable when based on the economic path proposed. Additionally, this study highlights the high profitability of agroforestry systems, especially in small farms. There are also relevant local impacts, from 12 to 38 thousand new direct jobs. Even considering a limited menu of ecosystem services (carbon and soil), we show that social benefits from the Araguaia biodiversity corridor restoration exceed its social costs, justifying the subsidization of ecosystem restoration. In this sense, land use policies can incorporate mechanisms for financial support, grants, or incentives to encourage and facilitate ecosystem restoration efforts in the region.

Keywords: Ecological reforestation; Carbon capture and social cost of carbon; Avoided soil erosion and replacement cost; Amazon and Cerrado recovery; Cost benefit analysis; Climate change economics (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:lauspo:v:141:y:2024:i:c:s0264837724000747

DOI: 10.1016/j.landusepol.2024.107122

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