About
Forty million hectares of land have been deforested and degraded in the Brazilian Amazon during the last 40 years. While the government introduced policy measures in the early 2000s that have made significant progress in reducing large-scale, illegal deforestation, the practice of small-scale deforestation (areas less than 50 hectares) continues to grow.
Brazil has pledged to restore 22 million hectares of its degraded and deforested land, 5.6 million of which belongs to smallholders in rural areas. These smallholders require access to long term finance and technical support to implement forest restoration activities that would benefit them economically, and help Brazil meet its environmental goals under its NDC.
INNOVATION
The instrument’s structure addresses the main barriers preventing smallholders in the Amazon from widely adopting agroforestry systems by:
• Providing the upfront investment needed to implement agroforestry systems in smallholdings through a partnership agreement, with production shared between the smallholder and the company
• Engaging smallholders in implementation, providing them with an additional income from the start, and as such, training them in agroforestry so they can expand such systems beyond the scope of the partnership
• Developing markets to sell the shared production
IMPACT
• Store at least ten times more carbon over the next 20 years than the current vegetation in degraded pastures
• Increase smallholders’ income by at least 58% if implemented in 1 hectare, and by 234% if expanded in 4 hectares
• Develop and provide a framework for financial institutions to assess, evaluate, and approve financing of agroforestry systems presented by smallholders across the country, adjusted by regional conditions
DESIGN
The instrument consists of an investment vehicle that will be the main shareholder of a new company. The new company will be responsible for the agroforestry investments in smallholders’ lands. The company will screen and select smallholders that are eligible for agroforestry investments, and enter into Rural Partnership Agreements with selected smallholders, using a portion of their degraded landholdings to invest in the production of agroforestry systems.
It will then engage smallholders by hiring them at their will and training them to implement, manage, and harvest crops in their landholdings. It will also provide all inputs as well as logistics after harvest. At harvest, between 20% and 30% of the harvest would be owned by the smallholder.
The company will select which crops will be grown using agroforestry systems. The crops to be placed in the region will be chosen based on market liquidity, storage capacity (if possible), adaptability to the region. It will also play an aggregator role developing markets and collectively selling the shared agroforestry harvests to end buyers.
Details
News & Events
Lab instruments mobilized USD 816 million in 2021
February 4, 2022Lab instruments mobilized USD 816 million in 2021, making it the best Lab year so far for total mobilization figures. Since the Lab’s inception in 2014, Lab instruments have surpassed USD 3.2 billion in climate investments, with roughly USD 1 billion coming from the private sector. Instrument Cycle USD Blockchain Climate Risk Crop Insurance […]
Investors launch new financial instruments for low-carbon transit, sustainable land use, and clean energy in developing countries
September 27, 2018New York, 27 Sept 2018 – The Lab – an investor-led initiative that aims to drive billions of dollars for climate action by developing and supporting innovative finance instruments – has launched its 2018 class of nine new investment vehicles. Over 30 high-level Lab members from governments, private investors, philanthropies, and development finance institutions convened […]
The Lab’s 2018 class of nine innovative vehicles for sustainable investment makes progress towards launch
May 30, 2018Nine new early-stage investment vehicles that aim to drive millions to clean energy, low-carbon transit, and sustainable land use in developing countries, continue to make progress towards launch. The investment vehicles comprise the Lab’s 2018 class, selected at the start of 2018 from a pool of over 100 crowd-sourced, competitive ideas to mobilize needed investment […]
The Lab picks top finance instruments for action on climate change in developing countries, particularly Brazil, India, and in Sub-Saharan Africa
February 14, 2018LONDON — The Lab – a public-private initiative composed of experts in sustainable investment from governments, development finance institutions, and the private sector – has picked a new class of investment vehicles to drive much-needed finance to low-carbon, climate-resilient global development, out of over 100 ideas submitted into a competitive pool. The nine new instruments […]