The Challenge of Low-Carbon Development - World Bank Internet ...

orrowers have demonstrated the ability to raise fundingfar in excess of that provided by IFC, so IFC’s financing perse was not catalytic of deforestation. On the other hand,neither did IFC catalyze the kind of widespread change inindustry practice that would redeem its endorsement of soyand beef production at the forest frontier.Alternative approaches to ensuring supplier compliancewith environmental rules. IFC’s strategy was to holdbuyers responsible for the legality of their supply chain,tracing the chain of custody to the original producerand verifying that producer’s compliance with the law.Without significantly strengthened supporting institutions,this strategy was unviable. First, without effectiveinstitutions and infrastructure to create traceability, noncompliantfarmers could potentially launder their salesthrough “complying” farms. Second, being “out of compliance”was difficult to define. Cases of land invasion,rural violence, and forced labor in the Amazon remain inlegal limbo for decades. Third, an effective, comprehensivegeoreferenced land registry was required to enforcethe requirement that landholders keep 80 percent of theirproperty under forest cover (the legal forest reserve). Butno such registry exists. And finally, the commitment ofthe beef purchasers lacked credibility.Although IFC’s strategy had limited success in the Amazon,alternative strategies have shown more success. These relyon a combination of external pressure on buyers and theuse of simple but geographically comprehensive approachesto monitoring compliance.The Soy Moratorium and governmentenforcement to restrict deforestation forcattle development have shown moresuccess in reducing deforestation pressuresSoy. In the soy sector, industry groups announced in July 2006a moratorium on the purchase of soybeans planted in theAmazon in areas deforested after that date. This closely followedGreenpeace’s report “Eating up the Amazon” (Greenpeace2006) and its subsequent international campaign.Industry and nongovernmental organizations joined to implementthe Soy Moratorium, which continues to date. Thismonitoring system uses existing remote sensing data fromthe Brazilian Space Agency, supplemented by aerial flyovers.The success of the Soy Moratorium is based on three factors.It is a policy of zero new deforestation, which bypasses thequestion of the Legal Reserve and land ownership andtherefore is simple to monitor. Second, as an industrywideaction, it avoids leakage and achieves economies of scale inmonitoring. Third, Greenpeace’s participation as an independentmonitor lends credibility to the enterprise.Beef. In June 2008, Greenpeace launched Slaughtering theAmazon, an international campaign exposing the marketingof beef and leather products from illegally deforestedAmazonian areas. Shortly thereafter, the federal prosecutorof Pará and the Brazilian Environmental Agency broughtaction against 21 ranches and more than 13 slaughterhousesthat purchased cattle from these ranches, includingIFC’s client. Following warnings that they would besubject to prosecution if they continued to purchase fromthese slaughterhouses, 35 supermarkets and wholesalerssuspended contracts with the offending meat processors.Subsequently, four meat processors (including the client)agreed not to purchase cattle from ranches that are embargoedby the Brazilian Environmental Agency or that engagein unlicensed new deforestation in the next two years.Success in the beef sector is being won through a strategythat depends heavily on government enforcement and thecomprehensive use of remote sensing and georeferencingtechnologies. In February 2008, the national monetarycouncil in Brazil began embargoing the economic use oflands illegally deforested, as well as making all agents inthe productive chain co-responsible for deforestation fromthese areas. The Brazilian Environmental Agency publisheda “dirty list” consisting of municipalities in which mostillegal deforestation is occurring and an Internet site listingproperties embargoed due to deforestation.In addition, the 2008 resolution required that all farmerswishing to receive credit in the Amazon biome presentdocuments (issued by the state environmental agencies)demonstrating compliance with Brazilian environmentallegislation. Mato Grosso and Pará have begun to createrural environmental cadastres that register land for environmentalcompliance purposes, sidestepping the complexissue of regularizing ownership.Finally, the Brazilian government has built on an existingcattle-tracking system to control the spread of hoofand-mouthdisease. Environmental compliance of landholdersis now also tracked, incorporating the deforestationBeyond Energy: Low-Carbon Paths in Cities and Forests | 59