Sustainability Challenges of Brazilian Agriculture: Governance, Inclusion, and Innovation 3031298527, 9783031298523

Table of contents :
Foreword
Acknowledgements
Contents
Contributors
Abbreviations
Chapter 1: Introduction: The Sustainability Challenges of Brazilian Agriculture
1.1 Introduction
1.2 Planetary Boundaries
1.3 Sustainability Governance and Agriculture
1.4 The Structure of the Book
References
Part I: The International Dimension of Sustainability
Chapter 2: The Shanghai Connection: Governing the Sustainability Impacts of Brazilian Agri-exports to China
2.1 Introduction
2.2 Sino-Brazilian Agricultural Trade Interdependence
2.3 Impacts of Growing Chinese Demand for Brazilian Soy and Beef
2.3.1 The Chinese Appetite for Brazilian Soy
2.3.2 Consequences of Chinese Demand for Brazilian Beef
2.4 Sustainability Governance and the Sino-Brazilian Trade in Agribusiness
2.4.1 Brazilian Domestic Regulation
2.4.2 Bilateral Governance of Sino-Brazilian Commodity Flows
2.4.3 Transnational Private Sustainability Initiatives
2.5 Governance Pathways for Potential Solutions
2.6 Conclusions
References
Chapter 3: Sustainability Governance of Soybean Trade Between Brazil and Europe: The Road Travelled and the Challenges Ahead
3.1 Introduction
3.2 Soy on the Sustainability Agenda
3.3 Unboxing Corporate Soy Sustainability
3.4 The EU’s Institutionalization of Private Sustainability
3.5 Paths Forward for the European and Brazilian Soy Trade
3.6 Policy Implications
3.7 Conclusion
References
Chapter 4: Brazilian Agriculture and the International Political Economy of Climate Change
4.1 Introduction
4.2 Analytical Framework
4.3 Period One: The Green Revolution in Brazil (1970–2003)
4.4 Period Two: From Indifference to Moderation: The Climate Agenda Impacts the ABS (2004–2010)
4.5 Period Three: The Victory of the Conservatives (2011–2018)
4.6 Period Four: Reformist Changes in the ABS (2019–2022)
4.7 Perspectives and Final Considerations
References
Chapter 5: Brazilian Agriculture and the Global Environmental Agenda
5.1 Introduction
5.2 The Global Environmental Agenda
5.2.1 Food Systems Transition Aligned with the SDGs
5.2.2 Land Use and Brazilian Agriculture
5.3 Agriculture and Climate Change
5.3.1 The Koronivia Joint Work on Agriculture
5.4 Brazilian Strategies Towards Promoting Resilient and Low-Carbon Agriculture
5.5 Agriculture and Biodiversity
5.5.1 Biodiversity at the Core of the Multilateral Environmental Agenda
5.5.2 Conservation and Sustainable Use of Biodiversity
5.6 Conclusions
References
Chapter 6: Carbon Markets and the Financing of Forestry, Agricultural, and Livestock Activities
6.1 Introduction
6.2 Carbon Pricing as an Instrument for Jurisdictional and Corporate Climate Policies
6.2.1 Carbon Trading
6.2.2 Carbon Credits
6.2.3 Nature-Based Solutions
6.2.4 REDD+ Activities in Carbon Markets
6.2.5 NCS in Agriculture and Carbon Markets
6.3 Cost-Effectiveness of NCS in the World and in Brazil
6.3.1 Carbon Market Initiatives in Brazil
6.4 Conclusions and the Way Ahead
References
Part II: Technical Challenges and Innovation
Chapter 7: Effects of Land Use Changes on Soil Biodiversity Conservation
7.1 Introduction
7.2 The Importance of Soil Biodiversity and the Impacts of Land Conversion and Agriculture
7.2.1 Bacterial Diversity
7.2.2 Fungal Diversity
7.2.3 Soil Fauna Diversity
7.3 Conclusions: Sustainability Challenges in Agriculture and Soil Biodiversity Conservation
References
Chapter 8: The Brazilian Way of Farming: Potential and Challenges to Agricultural Decarbonization
8.1 Introduction
8.2 Natural Climate Solutions: Brazil Within the Global Context
8.3 Comparative Advantages and Opportunities for the Brazilian Agricultural Decarbonization
8.3.1 No-Tillage
8.3.2 Biological Nitrogen Fixation (BNF)
8.3.3 Crop-Livestock-Forest Integration (CLFi)
8.3.4 Sustainable Intensification Within the Brazilian Livestock Sector
8.4 Challenges and Incentives for the Engagement of Brazilian Agriculture Within Carbon Markets
8.4.1 The Regulatory Environment
8.4.2 The Task of Measuring, Report, and Verify (MRV)
8.4.3 Cultural Factors and Technification Challenges
8.4.4 Coordination Towards Low-Carbon Agriculture
8.5 Conclusions
References
Chapter 9: Crop-Livestock-Forest Integration Systems as a Sustainable Production Strategy in Brazil
9.1 Introduction
9.2 History and Development of CLFI in Brazil
9.2.1 Emergence and Evolution of CLFI in Brazilian Agribusiness
9.2.2 Challenges for Technological Development
9.3 CFLI: A Sustainable Technology
9.3.1 Benefits of Integrated Production Systems
9.3.2 Use of CFLI by Small, Medium, and Large Rural Producers
9.3.3 Applicability of the CFLI in the Recovery of Degraded Pastures
9.3.4 Economic Viability of the CFLI
9.4 CFLI and Its Role in Climate Change
9.4.1 Public Policies for Fostering the Adoption of CFLI
9.4.2 CFLI as a Sustainable Strategy for the Mitigation of Greenhouse Gases
9.5 Conclusion
References
Chapter 10: Land Sparing and Sustainable Intensification Within the Livestock Sector
10.1 Introduction
10.2 The General Context for Brazilian Livestock Production
10.3 Challenges for Sustainable Production
10.3.1 Supply Chain Complexity
10.3.2 Pasture Degradation
10.3.3 Economic and Environmental Feasibility
10.3.4 Livestock Greenhouse Gas Emissions
10.3.5 Deforestation, Sectoral Agreements, Monitoring, and Traceability of the Chain
10.4 Intensification as a Pathway to Increase Production Without Deforestation
10.4.1 Pasture Management
10.4.2 Technology Adoption
10.4.3 Sanitary Control and Property Management
10.4.4 Optimization of Spatial Distribution
10.4.5 Social Inclusion, Reduction of Informality, and Illegalities
10.4.6 Agricultural Policy and Rural Credit
10.5 Conclusions
References
Chapter 11: Green Digitalization? Agriculture 4.0 and the Challenges of Environmental Governance in Brazil
11.1 Introduction
11.2 Environmental Challenges in the Anthropocene: Theoretical Perspectives
11.3 Beyond Technocentrism: Agriculture 4.0 as a Gradual Transformation
11.4 Agriculture 4.0 in Brazil: Institutions, Agendas, and the Challenges of Environmental Governance
11.4.1 Environmental and Institutional Stakeholders of Brazilian Agriculture
11.4.2 Incipient Digitalization and Environmental Issues in Brazilian Agribusiness
11.5 Final Remarks
References
Part III: The Challenge of Inclusion
Chapter 12: The (Un)Feasibility of Inclusive Rural Development in Brazil
12.1 Introduction
12.2 The Restructuring of Brazilian Agriculture
12.2.1 Sustainable Agriculture
12.3 Inclusive Rural Development?
12.4 Conclusions
References
Chapter 13: Environmental, Social, and Governance (ESG) Reporting and Brazilian Agriculture: Constraints and Opportunities to Sustainability
13.1 Introduction
13.2 ESGs as a Private Governance Mechanism: Origins in the United Nation’s Global Compact
13.3 Materiality and Stakeholder in Focus: A Comparative Analysis of GRI and SASB ESG Standards
13.4 Contextualizing the Brazilian Sugarcane Agroindustry
13.5 Current Use of ESG Frameworks in São Martinho’s Sustainability Report: Insights and Implications
13.6 Conclusion: Effective Conflict Reporting is Essential for Ensuring Sustainability through ESGs
References
Chapter 14: Bioeconomy: Brazilian Potential and Challenges
14.1 Introduction
14.2 The Concept of Bioeconomy
14.3 Brazil’s Challenges in the Bioeconomy
14.4 Bioeconomy of Socio-biodiversity in the Amazon
14.4.1 The Social Context
14.4.2 Bioeconomy as an Opportunity
14.5 The Amazon Bioeconomy Concept
14.5.1 Challenges and Opportunities in the Amazon Bioeconomy
14.6 Conclusion
References
Part IV: Public Governance
Chapter 15: The Brazilian Forest Code: The Challenges of Legal Implementation
15.1 Introduction
15.2 Background of the Forest Code
15.3 How Does the Forest Code Operate
15.3.1 The Forest Code’s Conservation Instruments
15.3.2 The Forest Code’s Special Regime
15.3.3 The Forest Code’s Compliance Procedure
15.4 Challenges in Implementing the Forest Code
15.4.1 The Individual Dimension: Producers’ Challenges
15.4.2 The Institutional Dimension: Government’s Challenges
15.4.3 The Legal Dimension: Regulatory and Judicial Challenges
15.4.4 The Economic Dimension: Finance and Market Challenges
15.5 The Progress of the States in the Implementation of the Forest Code
15.6 Conclusion
References
Chapter 16: Brazilian Biofuel Governance: The Case of Brazilian Ethanol and RenovaBio
16.1 Introduction
16.2 The National Biofuels Policy (RenovaBio): Fundamentals and General Objectives
16.3 Decarbonization Targets
16.4 Decarbonization Credits (CBIO)
16.5 Adjustment Mechanisms
16.6 Fuel Distributors
16.7 Certification of Biofuel Producers
16.8 Conclusion: Program Considerations and Perspectives
References
Chapter 17: Land Governance: Getting the Incentives Right
17.1 Introduction
17.2 Land Tenure and Land Use Regulation
17.2.1 The Hierarchy of Priorities for Allocating Public Lands
17.2.2 Rules to Promote Conservation and Land Use Efficiency in Private Landholdings
17.2.3 The Unfinished Business of Allocating Land Rights
17.2.3.1 The Status of Land Rights and Tenure in the Amazon
17.2.3.2 Indigenous Lands
17.2.3.3 Remnant Quilombo Communities
17.2.3.4 Colonization and Land Reform Projects
17.2.4 Progress and Barriers to Responsible Titling of Individual Landholdings
17.2.4.1 A Program to Disentangle Informal from Illegal Landholders
17.2.4.2 The Vicious Cycles of Illegal Land Regularization
17.2.4.3 Prosecutors and Civil Society Try to Prevent Land Grabbing
17.2.4.4 An Ambitious Plan to Grant Titles to Individual Landholders
17.2.4.5 Evading and Weakening the Rural Land Tax
17.2.5 Brazilian Environmental and Land Rights Policies
17.2.5.1 The Advance of Environmental Rules Enforcement
17.2.5.2 The Creation of Protected Areas and the Acknowledgment of Indigenous Rights
17.2.5.3 Payments for Low-Income Families That Conserved Forests
17.2.5.4 The Soy Moratorium
17.2.5.5 The Cattle Agreement
17.2.6 Other Benefits of Implementing Land and Environmental Rules
17.2.6.1 Increased Land Use Productivity
17.2.6.2 Prevention of Disease and Premature Death
17.2.7 Vulnerabilities of Public and Private Policies Against Deforestation
17.2.7.1 Regulatory Loopholes or Insufficient Market Commitments Lead to Leakage
17.2.7.2 Closed Political System, Flawed Democracy, and a Weak Criminal System
17.3 The Policies That Could Stimulate Sustainable Land Use in the Amazon
17.3.1 Brazilian Public Policies
17.3.1.1 Land Tenure
17.3.1.2 Stimulate Efficient Land Use by Enforcing the Rural Land Tax (ITR)
17.3.1.3 Restore and Sustain the Best Land and Environmental Policies
17.3.1.4 Private Sector Policies
17.3.1.5 International Regulation and Markets
17.4 Conclusions
References
Part V: Private Governance
Chapter 18: Jurisdictional and Landscape Approaches to Sustainability: Principles and Experiences from the Field in Brazil
18.1 Introduction
18.2 Context and Background
18.2.1 Political and Private Sector Commitments on Forests
18.2.2 REDD+ Opportunities
18.2.3 Subnational Protagonism
18.3 Jurisdictional and Landscape Approaches Concept and Key Elements
18.3.1 Concept
18.3.2 Elements of a Landscape or Jurisdictional Approach
18.4 Jurisdictional Approaches and Supply Chains
18.5 The State of Jurisdictional Initiatives
18.5.1 A Closer Look at the Brazilian Jurisdictional Experiences
18.5.1.1 The State of Acre and the SISA
18.5.1.2 Paragominas and Programa Municípios Verdes
18.5.1.3 São Félix do Xingu (SFX) Pact
18.5.1.4 Lucas do Rio Verde Legal and MT Legal
18.5.1.5 Programa Mato Grossense de Municípios Sustentáveis (PMS)
18.5.1.6 Produce, Conserve and Include: PCI Strategy of Mato Grosso
18.5.1.7 PCI Compacts
18.5.1.8 Maranhão on the Spot: Balsas and Chapadinha Initiatives
18.5.2 Lessons Learned from Brazilian Experiences and Key Elements for Success
18.5.2.1 Enabling Factors
18.5.2.2 Effective Implementation
18.5.2.3 The Challenge of Building Trust and Collaboration
18.6 Conclusions and the Future of Jurisdictional Approaches in Brazil
References
Chapter 19: Tracing and Monitoring to Achieve Deforestation-Free Supply Chains in Brazil
19.1 Introduction
19.2 Deforestation-Free Supply Chain on Soy and Beef Industries
19.3 Soy and Beef Companies’ Commitments Associated with Deforestation and Supply Chain Control
19.4 Traceability and Monitoring
19.4.1 The Soy Supply Chain
19.4.2 The Beef Supply Chain
19.5 Challenges and Pieces Missing in Supply Chain Control
19.6 Technological Innovations
19.7 Conclusions
References
Chapter 20: Private Governance: Multistakeholder Initiatives and Moratoriums
20.1 Introduction
20.2 Context
20.3 The Role of Private Governance in Mitigating Deforestation and Climate Change
20.3.1 Moratoriums and Chain Agreements
20.3.1.1 The Amazon Soy Moratorium
20.3.1.2 Public Commitment to Livestock (CPP)
20.3.1.3 Livestock Conduct Adjustment Term (TAC da Pecuária)
20.3.2 Private Certifications and Continuous Improvement Initiatives
20.3.2.1 Roundtable on Responsible Soy Association (RTRS)
20.3.2.2 Bonsucro
20.3.3 Multistakeholder Initiatives Targeting Deforestation
20.3.3.1 International Groups
20.3.3.2 Domestic Groups
20.4 Conclusion: Future Challenges
References

Citation preview

Environment & Policy  64

Niels Søndergaard Camila Dias de Sá Ana Flávia Barros Platiau   Editors

Sustainability Challenges of Brazilian Agriculture Governance, Inclusion, and Innovation

Environment & Policy Volume 64

The series, Environment & Policy, aims to publish research that examines global and local environmental policies. It covers a variety of environmental topics ranging from biodiversity, ecology, pollution, climate change, agriculture, biodiversity, sustainability, resources, to water security. This long-standing series has published renowned authors for over a decade and it continues to be the home for environmentalists, policy experts, and related discipline experts who are genuinely interested in tackling the issues of our days.

Niels Søndergaard  •  Camila Dias de Sá Ana Flávia Barros Platiau Editors

Sustainability Challenges of Brazilian Agriculture Governance, Inclusion, and Innovation

Editors Niels Søndergaard Universidade de Brasília (UnB) Brasília, DF, Brazil

Camila Dias de Sá Insper São Paulo, SP, Brazil

Ana Flávia Barros Platiau Universidade de Brasília (UnB) Brasília, DF, Brazil

ISSN 1383-5130     ISSN 2215-0110 (electronic) Environment & Policy ISBN 978-3-031-29852-3    ISBN 978-3-031-29853-0 (eBook) https://doi.org/10.1007/978-3-031-29853-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

To Sofia, Catarina, Iara, Melissa, Karine, and Julien, who will live long into the future world we leave for them.

Foreword

In recent years, the interface between agricultural expansion and environmental preservation has become one of the most important and challenging issues in Brazil, with a great impact on the country’s international image. The subject has become globally salient with the increase in deforestation rates, which is mostly illegal and occurs mainly in the Amazon biome, in addition to the increasing urgency of mitigating climate change and preserving biodiversity. Sustainability Challenges of Brazilian Agriculture: Governance, Inclusion, and Innovation deals exactly with this multiplicity of themes: sustainable models of agricultural production, technology for emission reduction, carbon markets, social inclusion, renewable energies from biomass, governance in production chains, and between public and private actors. Camila Dias de Sá, senior researcher at Insper Agro Global, and Niels Soendergaard and Ana Flávia Barros Platiau, both professors at the Institute of International Relations at the University of Brasília, have managed to bring together a rich group of specialists with distinct academic backgrounds and professional careers. They each bring their different experiences and views on the Brazilian agro-­ environmental challenges to this book. The first part of the volume deals with the international dimension of sustainability: the global political economy of the climate issue, the theme of sustainability in Brazil’s trade relations with China and Europe, Brazil’s role in the global environmental agenda, and the potential of carbon markets in green finance. The second part analyzes the technical and innovation challenges, addressing topics such as changes in land use and biodiversity, low-carbon agriculture practices that have been adopted in the Brazilian tropics, integrated systems as a means for livestock intensification, in addition to the issue of environmental governance in the digital age of agriculture. The third part deals with the challenges of social inclusion in agriculture, showing the deep transformations and dichotomies of the Brazilian rural world, and the new opportunities and challenges of ESG and bioeconomy.

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Foreword

The fourth part treats the issue of public governance, with chapters engaging with the challenges of implementing the Brazilian Forest Code, the Brazilian experience of ethanol in the decarbonization of the energy matrix, and the creation of incentives for improved land governance. Finally, the fifth part analyzes private governance, showing the Brazilian experience with jurisdictional initiatives, the challenge of creating deforestation-free supply chains with full traceability, and the achievements obtained with multistakeholder initiatives and moratoriums. The work marks an important effort to broaden understanding and dialogue between Brazilian authors and the international public, seeking to highlight that Brazil, as an essential global supplier of food, beverages, fibers, and bioenergy, has advanced, and has the potential to advance even further, in the protection of natural resources in tropical conditions. The book shows that, despite the great challenges, there are ways for the country to guarantee global food security in conjunction with a strong engagement in the global environmental agenda. Insper Agro Global has already published two works bringing together authors with different backgrounds and experiences: one on agriculture and food security in Brazil-China relations,1 and another that reflects on the insertion of Brazilian agribusiness in the main global regions.2 This third work joins authors with different backgrounds and views on the Brazilian agro-environmental issue. The complexity of the topic surely requires deep multidisciplinary analysis that allows for the construction of consensus among thinkers and actors who work with agriculture, the environment, and climate. Brazil is a major player in these areas and can provide an important example of building common knowledge, dialogue, and public-private policies. Senior Professor of Agribusiness at Insper and Coordinator of Insper Global Agribusiness Center São Paulo, SP, Brasil

 Marcos Sawaya Jank

 Jank, M.  S.; Guo, P.; Miranda, S.  H. G.  Brazil-China Partnership on Agriculture and Food Security. Piracicaba: ESALQ/USP and China Agricultural University (CAU) in partnership with Insper Agro Global, 2020 (https://www.esalq.usp.br/biblioteca/pdf/Livro-China-Brazil-­ Digital.pdf). 2  Gilio, L.; Jank, M. S. (Orgs). O Brasil no Agro Global: Reflexões sobre a inserção do agronegócio brasileiro nas principais macrorregiões do planeta (Brazil in global agribusiness: reflections on the Brazilian insertion in the main macro-regions of the planet). São Paulo: Insper and FUNAGMRE, 2021 (https://www.insper.edu.br/wp-content/uploads/2021/11/Livro_O_Brasil_no_Agro_ completo.pdf). 1

Acknowledgements

In the course of organizing this volume, we have come to owe a debt of gratitude to many people who in different ways have contributed to it. First of all, we are deeply thankful to the authors. The different perspectives on the sustainability challenges of Brazilian agriculture presented by this diverse and highly knowledgeable group of individuals converge around the need for constructive solutions to the urgent environmental crisis of our time. Their insights have resulted in a book, which we hope, will make for an important contribution to the debates about what a sustainable future of agricultural production might look like. This book is a result of a partnership between the Institute for International Relations (IREL) at the University of Brasilia and the Center for Global Agribusiness (Insper Agro Global) at the Institute of Education and Research (Insper) in São Paulo. The work is exclusively a product of the insights and research findings of the editors and authors, with no interference from any other parties. We would like to make some institutional acknowledgements to entities who have contributed to a vibrant research environment in which IREL and Insper Agro Global are inserted. On behalf of IREL, gratitude is shown to the University of Brasilia, which in 1974 created the first graduate programme in international relations in Brazil, and which since then has hosted the institute and supported its research activities. Many thanks also to the Earth System Governance Project and the Earth System Governance Research Centre in Brasilia, for the incessant work by its affiliated scholars to understand how governance interventions can provide robust solutions to current sustainability challenges. Finally, gratitude is also shown to the National Council for Scientific and Technological Development (CNPq), the Coordination for the Improvement of Higher Education Personnel (CAPES), and the Foundation for Research Support in the Federal District (FAPDF) for their efforts to promote Brazilian science. On behalf of Insper Agro Global, gratitude is shown to Insper, which as one of the few non-profit private education and scientific institutions has been essential to promoting education and research excellence in Brazil, and specifically to the Center for Public Management and Public Policy and its staff, which has provided ix

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an institutional home for important research efforts to improve public policies. Many thanks also to the centre’s public and private partners: the Brazilian Agricultural Research Corporation (Embrapa), the Brazilian Center for International Relations (CEBRI), Itaú-BBA, Bayer, Cargill, Mosaic Fertilizantes, Rumo Logística and Fundação Brava. We also feel that we should thank the many people who in recent years have shared their knowledge and inspired us with their work towards a sustainable future for Brazilian agriculture. This inspiration has fueled our motivation to publish this volume. Finally, we are all deeply grateful to our families, whose nurturing and patient support has been an indispensable ingredient for the conclusion of the book.

Contents

1

Introduction: The Sustainability Challenges of Brazilian Agriculture��������������������������������������������������������������������������    1 Niels Søndergaard, Camila Dias de Sá, and Ana Flávia Barros Platiau

Part I The International Dimension of Sustainability 2

The Shanghai Connection: Governing the Sustainability Impacts of Brazilian Agri-exports to China������������������������������������������   19 Niels Søndergaard, Victor Thives, and Cristina Inoue

3

Sustainability Governance of Soybean Trade Between Brazil and Europe: The Road Travelled and the Challenges Ahead��������������   45 Aske Skovmand Bosselmann and Sarah Emilie Nøhr Dolmer

4

Brazilian Agriculture and the International Political Economy of Climate Change������������������������������������������������������������������������������������   67 Matias Alejandro Franchini, Eduardo Viola, and Julia S. Guivant

5

 Brazilian Agriculture and the Global Environmental Agenda������������   85 Rodrigo Carvalho de Abreu Lima and Fernanda Kesrouani Lemos

6

Carbon Markets and the Financing of Forestry, Agricultural, and Livestock Activities ��������������������������������������������������������������������������  107 Ronaldo Seroa da Motta

Part II Technical Challenges and Innovation 7

 Effects of Land Use Changes on Soil Biodiversity Conservation��������  125 Mercedes M. C. Bustamante, Francisco J. Simões Calaça, Vinicius Tirelli Pompermaier, Maria Regina Silveira Sartori da Silva, and Rafaella Silveira

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8

The Brazilian Way of Farming: Potential and Challenges to Agricultural Decarbonization������������������������������������������������������������  145 Camila Dias de Sá, Niels Søndergaard, Luís Gustavo Barioni, and Renato Cintra Camargo

9

Crop-Livestock-Forest Integration Systems as a Sustainable Production Strategy in Brazil ����������������������������������������������������������������  165 Renato de Aragão Ribeiro Rodrigues, Isabel Gouvêa Maurício Ferreira, Júlia Graziela da Silveira, Jacqueline Jesus Nogueira da Silva, Felipe Martini Santos, and Marcela Cardoso Guilles da Conceição

10 Land  Sparing and Sustainable Intensification Within the Livestock Sector��������������������������������������������������������������������  183 Marcelo C. C. Stabile, Leila Harfuch, Wilton Ladeira Silva, Victor Rezende Moreira Couto, and Gabriela Mota da Cruz 11 Green  Digitalization? Agriculture 4.0 and the Challenges of Environmental Governance in Brazil������������������������������������������������  207 Vinícius Mendes and Eduardo Viola Part III The Challenge of Inclusion 12 The  (Un)Feasibility of Inclusive Rural Development in Brazil������������  229 Zander Navarro and Maria Thereza Macedo Pedroso 13 Environmental,  Social, and Governance (ESG) Reporting and Brazilian Agriculture: Constraints and Opportunities to Sustainability����������������������������������������������������������������������������������������  249 Carolina Pinheiro 14 Bioeconomy:  Brazilian Potential and Challenges ��������������������������������  271 Claudia Cheron König and Vanessa Cuzziol Pinsky Part IV Public Governance 15 The  Brazilian Forest Code: The Challenges of Legal Implementation ������������������������������������������������������������������������  295 Joana Chiavari, Cristina Leme Lopes, and Lourdes de Alcantara Machado 16 Brazilian  Biofuel Governance: The Case of Brazilian Ethanol and RenovaBio ��������������������������������������������������������������������������  315 Luciano Rodrigues and Leandro Gilio 17 Land  Governance: Getting the Incentives Right����������������������������������  339 Paulo G. Barreto and Brenda Brito

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Part V Private Governance 18 Jurisdictional  and Landscape Approaches to Sustainability: Principles and Experiences from the Field in Brazil����������������������������  369 Fernando Sampaio 19 Tracing  and Monitoring to Achieve Deforestation-Free Supply Chains in Brazil����������������������������������������������������������������������������������������  397 André Meloni Nassar and Taciano Melo Custódio 20 Private  Governance: Multistakeholder Initiatives and Moratoriums ������������������������������������������������������������������������������������  427 André L. Guimarães, Marcelo de Castro Chaves Stabile, and Paulo Moutinho

Contributors

Luís Gustavo Barioni  Empresa Brasileira de Pesquisa Agropecuária (Embrapa), Embrapa Agricultura Digital, Campinas, São Paulo, Brazil Paulo G. Barreto  Instituto do Homem e Meio Ambiente da Amazônia (Imazon), Belém, PA, Brazil Aske  Skovmand  Bosselmann  Department of Food and Resource Economics, University of Copenhagen, Copenhagen, Denmark Brenda  Brito  Instituto do Homem e Meio Ambiente da Amazônia (Imazon), Belém, PA, Brazil Mercedes M. C. Bustamante  Universidade de Brasília, Brasília, DF, Brazil Francisco  J.  Simões  Calaça  Mykocosmos  – Communication, Anápolis, GO, Brazil

Mycology

and

Science

Renato  Cintra  Camargo  Escola Superior de Agricultura “Luiz de Queiroz” Universidade de São Paulo (ESALQ-USP), Piracicaba, São Paulo, Brazil Joana  Chiavari  Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Climate Policy Initiative, Rio de Janeiro, RJ, Brazil Victor Rezende Moreira Couto  Universidade Federal de Goiás (UFG), Goiânia, GO, Brazil Taciano  Melo  Custódio  Banco Rabobank International Brasil, São Paulo, SP, Brazil Marcela Cardoso Guilles da Conceição  Rede Clima, Niterói, RJ, Brazil Gabriela Mota da Cruz  Agroicone, São Paulo, SP, Brazil Ronaldo  Seroa  da Motta  Universidade do Estado do Rio de Janeiro (UERJ), Rio de Janeiro, RJ, Brazil

xv

xvi

Contributors

Jacqueline Jesus Nogueira da Silva  Rede ILPF, Brasília, DF, Brazil Maria  Regina  Silveira  Sartori  da Silva  Universidade de Brasília, Brasília, DF, Brazil Júlia Graziela da Silveira  Rede ILPF, Brasília, DF, Brazil Rodrigo Carvalho de Abreu Lima  Agroicone, Curitiba, PR, Brazil Lourdes  de Alcantara  Machado  Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Climate Policy Initiative, Rio de Janeiro, RJ, Brazil Marcelo de Castro Chaves Stabile  Instituto de Pesquisa Ambiental da Amazônia, Brasília, DF, Brazil Camila Dias de Sá  Insper, São Paulo, SP, Brazil Sarah Emilie Nøhr Dolmer  Municipality of Copenhagen, Copenhagen, Denmark Isabel Gouvêa Maurício Ferreira  Rede ILPF, Brasília, DF, Brazil Matias Alejandro Franchini  Universidad del Rosario, Bogotá, Colombia Leandro Gilio  Insper, São Paulo, SP, Brazil André  L.  Guimarães  Instituto de Pesquisa Ambiental da Amazônia, Brasília, DF, Brazil Julia S. Guivant  Universidade Federal de Santa Catarina (UFSC), Florianópolis, SC, Brazil Leila Harfuch  Agroicone, São Paulo, SP, Brazil Cristina Inoue  Radboud University, Nijmegen, the Netherlands Claudia Cheron König  Fundação José Luiz Egydio Setúbal, São Paulo, SP, Brazil Fernanda Kesrouani Lemos  Insper, São Paulo, SP, Brazil Cristina Leme Lopes  Pontifícia Universidade Católica do Rio de Janeiro (PUC-­ Rio), Climate Policy Initiative, Rio de Janeiro, RJ, Brazil Vinícius Mendes  Radboud University, Nijmegen, the Netherlands Paulo Moutinho  Instituto de Pesquisa Ambiental da Amazônia, Brasília, DF, Brazil André  Meloni  Nassar  Associação Brasileira das Indústrias de Óleos Vegetais (Abiove), São Paulo, SP, Brazil Zander  Navarro  Empresa Brasileira de Pesquisa Agropecuária (Embrapa), Brasília, DF, Brazil Maria Thereza Macedo Pedroso  Empresa Brasileira de Pesquisa Agropecuária (Embrapa), Brasília, DF, Brazil Carolina Pinheiro  Earth System Governance, Brasilia, DF, Brazil

Contributors

xvii

Vanessa Cuzziol Pinsky  Faculdade de Economia, Administração, Contabilidade e Atuária Universidade de São Paulo (FEA-USP), São Paulo, SP, Brazil Ana Flávia Barros Platiau  Universidade de Brasília (UnB), Brasília, DF, Brazil Vinicius Tirelli Pompermaier  Universidade de Brasília, Brasília, DF, Brazil Luciano Rodrigues  União da Indústria de Cana-de-Açúcar e Bioenergia (UNICA), Observatório de Conhecimento e Inovação em Bioeconomia na Fundação Getúlio Vargas (OCBio-FGV), São Paulo, SP, Brazil Renato  de  Aragão  Ribeiro  Rodrigues  Regrow Ag, Rede Clima, Universidade Federal Fluminense, Niterói, RJ, Brazil Fernando Sampaio  Instituto Produzir Conservar Incluir, Cuiabá, MT, Brazil Felipe Martini Santos  Rede ILPF, Brasília, DF, Brazil Wilton Ladeira Silva  Universidade Federal de Goiás (UFG), Goiânia, GO, Brazil Rafaella Silveira  Universidade de Brasília, Brasília, DF, Brazil Niels Søndergaard  Universidade de Brasília (UnB), Brasília, DF, Brazil Marcelo  C.  C.  Stabile  Instituto de Pesquisa Ambiental da Amazônia (IPAM), Brasília, DF, Brazil Victor Thives  Universidade de Brasília (UnB), Brasília, DF, Brazil Eduardo Viola  Fundação Getúlio Vargas (FGV), São Paulo, SP, Brazil

Abbreviations

ABAG Brazilian Association of Agribusiness ABBI Brazilian Bioinnovation Association ABC Low-Carbon Agricultural Program ABCD Archer Daniel Midlands, Bungee, Cargill, Louis Dreyfus Company ABIEC Brazilian Association of Meat Exporting Industries ABIOVE Brazilian Association of Vegetable Oil Industries ABPA Brazilian Animal Protein Association ABRAPA Brazilian Association of Cotton Producers ABS Agribusiness Afi Accountability Framework initiative AFOLU Agriculture, Forestry, and Other Land Use AI Artificial Intelligence AIM Agriculture Innovation Mission for Climate AMF Arbuscular Mycorrhizal Fungi ANEA National Association of Cotton Exporters ANEC Brazilian Association of Grains Exporters ANP National Agency of Petroleum, Natural Gas and Biofuels APP Permanent Preservation Areas APROSOJA Mato Grosso Association of Soybean and Corn Producers ART TREES The Architecture for REDD+ Transactions ASM Amazon Soy Moratorium AU Animal Units BASIC Brazil, South Africa, India and China BC Central Bank of Brazil BCI Better Cotton Initiative BIC Bio-based Industries Consortium BMZ German Federal Ministry for Economic Cooperation and Development BNF Biological Nitrogen Fixation BRICS Brazil, Russia, India, China, South Africa

xix

xx

BSE BV CAR CBD CBIO CCA CCIR CDM CDP CEBC CEBDS CEO CFI CGEE CGF CI CJA CLFi CLI CMA CMN CNA CNI CNPE COFA CONAB CO2 COP CORSIA COSBAN CPP CSA CSI CSR CTFA CTNbio CVM DETER DNA ECP EII EMATER EMBRAPA

Abbreviations

Bovine Spongiform Encephalopathy Bolsa Verde – Environmental Conservation Support Program Rural Environmental Registry Convention on Biological Diversity Decarbonization Credit Climate Commitment Approach Rural Property Registration Certifications Clean Development Mechanism Carbon Disclosure Project Brazil-China Business Council Brazilian Business Council for Sustainable Development Chief Executive Officer Crop-Forest Integration Center for Management and Strategic Studies Consumer Goods Forum Carbon Intensity Commodities and Jurisdictions Approach Crop, Livestock, Forestry integration Crop-Livestock Integration Chinese Meat Association National Monetary Council National Confederation of Agriculture and Livestock National Confederation of Industry National Energy Policy Council Committee Advisor of the Amazon Fund National Corporation of Agricultural Supply Carbon Dioxide Conference of the Parties Carbon Offsetting and Reduction Scheme for International Aviation Sino-Brazilian High-Level Cooperation and Coordination Committee Public Livestock Commitment Climate Smart Agriculture Collaborative Soy Initiative Corporate Social Responsibility Technical Committee of the Amazon Fund National Technical Commission on Biosafety Brazilian Securities and Exchange Commission Real-Time Deforestation Detection System Deoxyribonucleic acid Environmental Compliance Program Earth Innovation Institute Technical Assistance Rural Extension Companies Brazilian Agricultural Research Corporation

Abbreviations

ENSI EPA ESG EU EUTR FA FAO FAPESP FAPCEN FCPF FEFAC FPPO FRC FSB FSN FSS FUNAI GBF GCF GDP GHG GIS GIZ GM GMO GRI GTA GT-ACV GTFI GTPS GTS GVC GWP IAA IADB IAS IBA IBAMA IBGE IBRA ICMBio ICTs IDH IGOs

xxi

European National Soya Initiatives Environmental Protection Agency Environmental, Social, Governance European Union European Timber Regulation Family agriculture United Nations Food and Agricultural Organization São Paulo Research Foundation North Export Corridor Research Support Foundation Forest Carbon Partnership Facility European Compound Feed Manufacturers Federation Federal Public Prosecutor’s Office Forest Risk Commodities Financial Stability Board Food Security and Nutrition Food Systems Summit National Foundation of Indigenous Peoples Global Biodiversity Framework Green Climate Fund Gross domestic income Greenhouse gas Geographical Information System German Technical Cooperation Agency Genetically Modified Genetically Modified Organisms Global Reporting Initiative Animal Movement Permit Life Cycle Assessment Working Group The Indirect Supplier Working Group Brazilian Roundtable of Sustainable Livestock Soy Moratorium Working Group Global Value Chain Global Warming Potential Sugar and Ethanol Institute Inter-American Development Bank Social Cotton Institute Brazilian Tree Industry Brazilian Institute of Environment and Renewable Natural Resources Brazilian Institute for Geography and Statistics Brazilian Institute of Analysis Chico Mendes Institute for Biodiversity Conservation Information and Communication Technologies The Sustainable Trade Initiative Intergovernmental Organizations

xxii

Imaflora

Abbreviations

Instituto de Manejo e Certificação Florestal e Agrícola (Brazilian NGO) INCRA National Institute for Colonization and Agrarian Reform INPE National Institute for Space Research IoT Internet of Things IPAM Amazon Environmental Research Institute IPBES Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services IPCC Intergovernmental Panel for Climate Change IPECC International Political Economy of Climate Change ISCC International Sustainability and Carbon Certification ITMO Internationally Transferred Mitigation Outcomes ITR Rural Land Tax JAP Joint Action Plan JREDD Jurisdictional Reducing Emissions from Deforestation and Forest Degradation KJWA Koronivia Joint Work on Agriculture LAR Rural Environmental Licensing LCA Life Cycle Assessment LDC Louis Dreyfus Company LEAF Lowering Emissions by Accelerating Forest Finance LULC Land Use and Land Cover LULUCF Land Use, Land Use Change, and Forestry Emissions LR Legal Reserve MAPA Ministry of Agriculture, Livestock, and Supply MATOPIBA Maranhão, Tocantins, Piauí, Bahia MB Mass Balance MBRE Brazilian Emissions Reduction Market MDA Ministry of Agrarian Development MoU Memorandum of Understanding MERCOSUR Southern Common Market Mha Million hectares MMA Ministry of the Environment MME Ministry of Mines and Energy MPF Federal Public Prosecutor MRV Measurement, Registration, and Verification MST Landless Peasants Movement MtCO2 Million tons of CO2 Mton Millions tons N2O Nitrous oxide NbS Natured-based Solutions NCR National Rural Credit System NCS Natural Climate Solutions NDC Nationally Determined Contributions NDVI Normalized Difference Vegetation Index

Abbreviations

xxiii

NEEA Energy-Environmental Efficiency Score NET Negative Emission Technology NGO Non-Governmental Organization NT No-Tillage NYDF New York Declaration on Forests OECD Organisation for Economic Cooperation and Development PB Planetary Boundaries PCI Produce, Conserve and Include PGPM-Bio Minimum Price Guarantee Policy for Sociobiodiversity Products Plano ABC Low Carbon Agriculture Plan PLC Public Livestock Commitment PMV Green Municipality Program PMS Mato Grosso Program of Sustainable Municipalities PNAPO National Agroecology Policy and Organic Production PNMC National Policy on Climate Change POCs Organochlorine Pesticides PPAs Permanent Preservation Areas PPCDAm Action Plan for Prevention and Control of the Legal Amazon Deforestation PPCDIF Plan for Prevention and Control of Deforestation and Forest Fires PRA Environmental Regularization Program PRC People’s Republic of China PRI United Nations Principles for Responsible Investment PRODES Remote Sensing Deforestation Measurement Project PRONAF Family Farming National Program REDD Reducing Emissions from Deforestation and Forest Degradation REM REDD Early Movers RIN Renewable Identification Number RL Legal Reserve RTRS Roundtable on Responsible Soy R&D Research and Development Measures SA LFI Silvia-Agricultural, Livestock-Forest Integration SASB Sustainability Accounting Standards Board SATVeg Temporal Analysis of Vegetation System SBCE Brazilian System of Carbon Trading SBRC National Registry System of Offsets SCF Soft Commodities Forum SDGs Sustainable Development Goals SEDECTI The State Secretariat for Economic Development, Science, Technology, and Innovation of Amazonas SIF Federal Inspection Service SISA Environmental Services Incentive System SLRT The Sustainable Landscapes Rating Tool SFA Sustainable Food and Agriculture SFX São Félix do Xingu

xxiv

Abbreviations

SG Segregated SICAR National Rural Environmental Registry System SINARE National System for the Reduction of Greenhouse Gas Emissions SINIMA National System of Information on the Environment SISBOV Cattle and Buffalo Identification and Certification System SISLA Interactive System to Support Environmental Licensing SISNAMA National Environmental System SNUC National System of Protected Areas SOC Soil Organic Carbon SRB Brazilian Rural Society STF Brazilian Supreme Court SPS Sanitary and Phytosanitary TAC Conduct Adjustment Agreement TCFD Task Force on Climate-related Financial Disclosures TDA Agrarian Debt Securities TFA Tropical Forest Alliance TFP Total Factor Productivity TNC The Nature Conservancy TYP Ten-Year Plan UK United Kingdom UN United Nations UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change UNICA Union of the Sugarcane Industry URTPs Research Reference Units US United States ZDC Zero-deforestation-commitments VI Vegetation Indices VoGC Varieties of green capitalism VoC Varieties of Capitalism WP Worker’s Party WRI World Resources Institute WTO World Trade Organization WWF World Wide Fund for Nature ZEE Ecological Economic Zoning

Chapter 1

Introduction: The Sustainability Challenges of Brazilian Agriculture Niels Søndergaard, Camila Dias de Sá, and Ana Flávia Barros Platiau

Abstract  The growth of Brazilian agricultural production from the late twentieth and early twenty-first centuries is one of the most expansive and rapid agricultural transformations throughout history, with direct impacts on global food systems. While this has led to colossal increases in outputs, the scale of this development has also drawn attention to issues such as deforestation, biodiversity preservation, and local livelihoods. The introduction to this volume outlines these challenges and provides an overview of existing experiences and solutions from different disciplinary points of departure. Initially, it presents some of the key dilemmas related to how agricultural production can be kept within planetary boundaries, thus reconciling food security concerns and ecological imperatives. In the context of Brazilian agriculture and rural development, this discussion necessarily involves the issue of governance to provide sustainable solutions that involve a broad range of public and private stakeholders, such as public institutions, civil society, and agribusiness. Given the strong international connectedness of Brazilian agriculture, sustainability governance within the sector crisscrosses national boundaries, involving complex dilemmas and agendas. This chapter briefly outlines these issues, conducting a thematic categorization of the book’s chapters, and the perspectives and solutions they propose for improving the sustainability performance of Brazilian agriculture.

N. Søndergaard (*) · A. F. B. Platiau Universidade de Brasília (UnB), Brasília, DF, Brazil e-mail: [email protected] C. D. de Sá Insper, São Paulo, SP, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_1

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1.1 Introduction In recent decades, much of the Brazilian rural landscape has undergone a profound transformation. With an astounding speed, agricultural and livestock production has spread to the furthest corners of the country, changing the face of the countryside and recasting the lives of local residents. Grasping the extent of this development requires a sense of the scale of the Brazilian territory; the 160  million hectares (Mha) of pasturelands in the country (LAPIG, 2023) are roughly equivalent to the combined land areas of France, Italy, the United Kingdom, and Spain. Moreover, the 70 Mha of Brazilian croplands occupy the same land areas as the state of Texas, while the 10 Mha of planted forests (IBÁ, 2022) equal the size of South Korea. The combination of rainfall patterns, modern tropical agricultural technology, and the fact that only a modest share of arable land is currently subjected to intensive modes of production means that the future paths of Brazilian agriculture are closely bound up with issues such as global food security and rural development. A number of equally paramount importance are the 283 Mha dedicated to private conservation, the 139  Mha of non-designated public forests, and the 177  Mha of indigenous lands (Cadastro Nacional de Florestas Públicas, 2022; Embrapa Territorial, 2020). How past and future political choices affect these areas is not only key to defining Brazilian agro-environmental development and local livelihoods but also crucial for the global climate and biodiversity preservation. In a situation of alarming ecological crises and intense social demands for improvements in livelihoods, Brazilian agriculture stands in an absolutely central position, from which it can both contribute to the deterioration of the natural basis for human existence and become an important lever for transformational change. Our resolute purpose with this volume is to shed light on pathways leading toward the latter option. In a historical perspective, the incorporation of Brazilian territory to meet periodic commodity demand is not novel; the country’s economic history since the early phases of colonization has been defined by sugar, rubber, and coffee cycles. A brief interpretation of the current burgeoning soy, beef, maize, and cotton exports could thereby suggest that this is merely a repetition of past experiences. However, the pure extent of the most recent expansion of agriculture and livestock production from the late twentieth century surpasses anything previously witnessed in the country. While previous boom and bust cycles have been mainly restricted to specific production regions or biomes, the agro-industrial complex today encompasses essentially all microregions of this continentally sized country, from the Southern Pampa to the Northern fringes of the Amazon and from the Eastern Atlantic Forest to the Westernmost regions of the inland Cerrado. As such, this inward expansion is likely to be among the fastest and most comprehensive processes of land incorporation in human history. This did not only reorder landscapes through anthropogenic activities but also permeated society and politics from the local to the national level, as agribusiness became one of the most important and dynamic economic sectors within the Brazilian economy. Furthermore, from around the turn of the millennium, the country’s newfound role as one of the world’s largest and most competitive agricultural exporters also redefined its position within a range of international

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forums and contemporary agendas. For good or for worse, agribusiness became a National Champion, and sectorial interests were reframed as national interests by successive Brazilian governments and other policymakers. When the initial attempts to “colonize” the Cerrado region were undertaken in the 1970s as part of a state-led development project, few could have predicted the massive expansion of the agro-industrial complex that would follow from these efforts. A joint cooperation project with Japan, aiming to support food security in this Asian country also led to the introduction of soybeans in this region, a step which eventually would make this one of the world’s most important production regions for this crop. Under the motto “a land without people for people without land,” the military dictatorship also advanced efforts to settle smallholders from other parts of the country in the Amazon region. The lack of proper public planning and assistance for these settlers would lay the ground for many of the deforestation problems which have marked the region since then. With strong public support and land regulations favoring private land appropriation, the adaption of the modes of production characteristic of the green revolution in agriculture to tropical conditions led to a spike in production in the Cerrado. This expansion was initially heavily supported through price guarantees and credit policies amounting to de facto subsidies. The debt crises of the developing world in the early 1980s nonetheless strongly affected Brazilian public finances, which led to cuts in support policies. Yet, by then, producers had gained a foothold and gradually became increasingly economically competitive. By the 1990s, reforms assumed a more proactive and market-enabling character, and the economic activity and external revenues generated by agricultural exports became evident. From this point and onward, the sector evolved into what scholars have characterized as an agribusiness powerhouse (Buainain et  al., 2019; Chaddad, 2016; Klein & Luna, 2018). This sweeping sectorial restructuring was not exclusively the product of domestic developments but also the result of profound changes within the global political economy of agriculture, which was marked by vertical integration, biotechnological innovation, financialization, and corporate consolidation (Søndergaard, 2020). These changes were strongly felt in Brazil, where key sectors such as soy, poultry, citriculture, tobacco, coffee, and sugar were marked by a process of concentration and internationalization (Jank et al., 2001). External investment also meant that foreign multinationals consolidated their market position within capital and technology-­ intensive links of agricultural value chains, while Brazilian players were more present at the point of production (Medina & Pokorny, 2022; Sauer & Leite, 2012). Together, these events paved the way for a deep-rooted corporate rearrangement at the organizational and governance levels, which defined the general contours of Brazilian agribusiness (Chaddad, 2016). Production within the Brazilian agricultural sector boomed at the turn of the millennium. Between 2000 and 2022, the total cropland area expanded more than 80% (Conab, 2023), a trend which now was strongly fueled by foreign and, increasingly, Chinese demand. By 2022, Brazil was among the largest global producers of key crops, such as soy (125 Mton), corn (113 Mton), sugar cane (579 Mton), and cotton (6 Mton). The dramatic expansion in crops has also fueled the growth of a protein

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complex, as especially the abundance of soy and corn provides ample feedstuffs for livestock production. Brazilian production of animal protein in 2021 thus reached around 10  Mton of beef  (Abiec, 2023), 14  Mton of poultry, and 5  Mton of pork (ABPA, 2022). This has added significant value to Brazilian food exports, and especially middle-income countries in the Middle East and East and Southeast Asia have become important Brazilian clients. By the early twenty-first century, Brazilian agriculture displays a mosaic of heterogenous modes of production and life in rural areas (Niederle, 2017). This heterogeneity is also marked by extreme contrasts. Perhaps most staggering are the disparities in land holdings, which reflect the historical social inequalities within Brazilian society. Thus, while 81.4% of the total number of rural properties in Brazil occupies less than 50 hectares, 0.3% of total rural properties that hold more than 2500 hectares occupy 32.8% of all land holdings (IBGE, 2017). The emergence of large-scale agribusiness has thereby favored those properties able to make this transition while severely marginalizing many smallholders (Buainain et  al., 2013). Another trait that highlights the diverse character of Brazilian agriculture regards the technology intensity of the modes of production. So, while some producers are at the absolute forefront of modern ag-tech, making extensive use of innovations that mark the fourth industrial revolution (Schwab, 2016), other producers rely on extremely traditional rudimentary modes of production, characterized by very low productivity and cheap land inputs (Nobre et  al., 2016). The latter regards either those that have been deprived of access to technical assistance and vital production input or frequently ranchers who hold onto traditional forms of extensive cattle herding. Finally, related to the aforementioned dimension, Brazilian rural producers, large and small, also vary substantially with regard to their environmental performance. Hence, some producers combine crops, livestock, and forests within integrated or agroforestry systems, preserve topsoil through cutting-edge direct planting practices, or limit fertilizer and insecticide use through biological nitrogen fixation and pest control. Yet, others still rely on the massive incorporation of native vegetation, make use of periodic burnings of fields, or apply excessive amounts of potentially toxic agrochemicals. In sum, the extreme heterogeneity that marks Brazilian agriculture both highlights the significant sustainability challenges that the sector confronts and simultaneously also presents a broad array of potential avenues for change. Experiences generated throughout recent decades thereby provide valuable stepping stones to address the domestic manifestations and global reverberations of contemporary ecological crises.

1.2 Planetary Boundaries Central among the great contemporary global challenges is the need to remain within planetary boundaries, referring to specific ecological tipping points whose transgression compromises the basic natural conditions for human society. Rockström et al. (2009) point to eight crucial boundaries of climate change, ocean

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acidification, ozone depletion, fertilizer use, freshwater, land use, biodiversity, atmospheric aerosols, and chemical pollution. Notably, among these boundaries, climate change and biodiversity loss have already been overstepped. This general picture is also emphasized by Steffen et al. (2015), who likewise stress the imminent risks related to the thresholds of fertilizer use and land system change. Modern agricultural production is thus intimately interconnected with the main processes risking triggering crucial planetary tipping points. Moreover, in a situation of business as usual, these impacts are only projected to increase due to the pressures generated by a growing global population driven by the desire to access resource-­ intensive foodstuffs. The environmental impacts produced by modern food systems could thereby increase in the order of 50–90% toward 2050, with the production of staple crops and livestock accounting for the main share (Springman et al., 2018). The current modes of agricultural expansion have led to particularly detrimental consequences in terms of tropical forest loss, either directly or indirectly driving 90–99% of deforested areas (Pendrill et al., 2022). The profound transformation in these modes of agricultural and livestock production thereby appears as an essential and inevitable step toward ensuring the integrity of planetary boundaries. Beyond the ecological imperatives for changes within global food systems, agricultural producers will also have to face the challenge of feeding a rapidly growing world population, which could reach 10 billion by 2050. Currently, around 830 million people suffer from insufficient food access (FAO et al., 2022), and projections thus suggest that food consumption could double throughout the first half of the twenty-first century (Tilman et al., 2011). Other studies suggest that there is a “food gap” implying the need for the production of an additional 70% calories from 2006 to 2050 (Ranganathan et al., 2016). What is more, the post-Covid-19 crisis of global supply chains and disruptions caused by geopolitical instability has shown that the concerns related to food access and food security are still highly material and pressing. The global food crises of 2007 and 2011 stand as reminders that although modern agriculture and worldwide logistics should in theory be able to provide for global food needs, these systems rest on a more fragile foundation than is often assumed. When markets fail, the world’s most vulnerable populations may face dire consequences. Climate change stands as the single most significant risk to future food systems disruption. This underscores both the need to make food production more resilient and abundant and also the need to limit its contributions to climate change and other ecological hazards. Reconciling attention to growing global food needs with radically more sustainable modes of production stands as a primordial concern, which we aspire to address in this volume. The goal of providing sustainability outcomes with positive results on several key dimensions should thereby guide initiatives within the Brazilian agricultural sector, in relation to which our contributors provide valuable insights. Presenting the proper diagnosis of the current sustainability challenges within Brazilian agriculture nonetheless becomes a necessary starting point for improvements. Large-scale agricultural commodity production in Brazil has been found to be associated with significant socio-environmental impacts (Henders et al., 2015; Pendrill et al., 2019; Rajão et al., 2020). From 1985 to 2021, native vegetation loss

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amounted to 84.7  million hectares or 13.1% of the total national territory (Mapbiomas, 2022). Estimates suggest that the vast continental Cerrado has lost around half of its native vegetation in the span of a few decades and that 31–34% of remaining natural landscapes could be lost by 2050 if current trends persist (Strassburg et al., 2017). The rapid expansion of agribusiness in Cerrado frontier zones has also led to social strife and marginalization of vulnerable populations (Russo-Lopes et  al., 2021; Lima & Persson, 2020). Agro-industrial expansion within the Amazon region has, historically and up until the day today, led to serious social conflict (Fearnside, 2001; Sauer, 2018) and to serious environmental degradation which threatens the balance of this ecosystem (Maeda et al., 2021; Lovejoy & Nobre, 2018, 2019; Lawrence & Vandecar, 2015). Current developments thereby call for urgent and persistent action to rearrange modes of agricultural expansion to limit detrimental anthropogenic impacts on ecosystems and livelihoods. With the current challenges in mind, this volume seeks to highlight potential avenues for change and constructive solutions through contributions that highlight existing experiences generated in Brazil. Knowledge and innovation related to sustainable agricultural production become fundamentally important to produce sufficient foodstuffs to feed the global population, without depleting planetary resources such as fresh water, fertile soils, and native vegetation reserves (Willett et al., 2019). Meeting the caloric or protein needs of the world by 2050 while not overstepping environmental limits depends in large measure on raising the yields in developing countries through applications of technologies and modes of production which simultaneously increase outputs and provide for improved sustainability outcomes (Tilman et al., 2011). In this regard, Brazilian agriculture also provides many valuable experiences. Thus, despite the great loss of native vegetation, another important trend has also been the expansion of intensified modes of production toward already degraded low-productivity pastures (Zalles et al., 2018). Moreover, agronomic innovations in Brazil have led to significant improvements in soil management practices, placing the country at the forefront at the global level in the use of such techniques, while yielding both productive and environmental gains (Maia et al., 2022). With rapid advances in crop sciences and production systems for both industrial and smallholder agriculture, the current socio-environmental challenges do not appear to be due to a lack of technical capabilities but rather a consequence of human choices. This leads to an important premise that guides this work, which is that despite some important technical progress at the sectorial level, a broader societal engagement in spurring sweeping sustainability improvements within agriculture becomes imperative. This hinges on the involvement and inclusion of a wide array of stakeholders from the heterogenous social universe of rural Brazil – and beyond – in governance arrangements working constructively toward solving current problems and reconciling environmental, social, and economic concerns. Such efforts necessarily rely on the involvement of key actors at the local level in Brazil. Yet, given the global interconnections of modern agriculture, international stakeholders have also become an important part of the equation. Analyzing the interplay between events, processes, and agents at the international and domestic levels thus becomes imperative in order to form a perspective of current sustainability governance arrangements.

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1.3 Sustainability Governance and Agriculture A crucial landmark in the early efforts to advance the environmental agenda at the international level was the Stockholm Declaration of 1972, which sought to guide the relationship between humankind and the natural environment. From 1987, the notion of sustainable development gained traction with the Brundtland Report, which it defined as the need to guarantee “the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987). The Report strongly emphasized the environmental, social, and economic pillars of sustainability. The notion of sustainable development also strongly undergirded the “Earth Summit” in Rio de Janeiro, in 1992, at which it was promoted through a universalist framing as an attainable goal in all countries across the globe. Sustainable development was also present as a key term within the Agenda 21, in relation to which it was highlighted as a holistic development strategy for the twenty-first century. Agriculture has been a key part of the sustainable development agenda since its early inception. The issues of land use and nature conservation have been central to these debates, which nonetheless also encompass other important aspects, such as biodiversity, water use, soil fertility, and rural livelihoods. The salience and increasingly urgent nature of the climate crisis nonetheless mean that the nexus between agriculture and deforestation has received particular attention. While the thematic overlap between agriculture and sustainability has been treated within a range of multilateral fora, related to development, trade, food security, and the environment, the generally nonbinding character of commitments made at this level means that regulating this issue has been a predominantly national prerogative. From around the turn of the millennium, a wide array of multistakeholder voluntary initiatives have been advanced as an attempt to promote sustainability at the sectorial level through agricultural commodity chains. This reflects a broader trend of privatization of governance and soft-law commitments. While some of these initiatives have achieved some success within specific commodity chains, their circumscribed nature, fragmented regulatory structure, and lack of legal sanction mean that voluntary regulation by itself appears insufficient to bring about sustainable transformations. In recent years, events at the multilateral level within the field of climate governance have resulted in more concrete pledges to decouple agricultural commodity production from deforestation. This is exemplified by the Signature of the Forest Agreement at the COP26 in 2021, by which countries together representing 85% of forests worldwide committed to “working collectively to halt and reverse forest loss and land degradation by 2030.” Moreover, a range of individual countries as well as the European Union have either passed or are in the process of defining social and environmental due diligence regulations for imported agricultural commodities. So, despite the frequently narrow focus on deforestation and land use, or the “hard” character of many of the multilateral commitments, specific parameters have nonetheless been established for food production at the global level. This development is bound to wield repercussions in relation to national sustainability

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governance initiatives. Ensuring that the encounter between international demands and domestic capacities and needs leads to positive synergies and produces equitable results at the local level will be key to enhancing robust sustainability outcomes. The Brazilian agricultural sector has seen many important governance initiatives aimed at confronting socio-environmental challenges. In the 2000s, civil society stakeholders, private companies, and public entities were central in shaping multistakeholder agreements in the form of moratoriums which contributed to decoupling soy and, to a much smaller extent, beef production from Amazon deforestation (Gibbs et  al., 2015, 2016). Through its Forest Code, Brazil also has a relatively strong public framework for governing land use within private properties with mandatory conservation requirements. Different categories of protected areas, including indigenous lands and natural conservation units, also make up an important part of the country’s territory and when backed by public enforcement, have contributed significantly to environmental conservation in the country (Gonçalves-Souza et al., 2021). When positive synergies have been created between public engagement and private initiatives, significant sustainability results have also been obtained, as in the period from 2004 to 2012, exemplified by the 80% drop in Amazon deforestation in these years (Nepstad et al., 2014). Brazil also provides extremely important lessons on how to combine production increases with environmental conservation, which is illustrated by the steady growth in both soy and beef in the exact same period as deforestation rates for the Amazon and Cerrado biomes plunged (Stabile et  al., 2020). Posterior events driven largely by changing political winds beginning in 2012 and accelerating from 2019 with a strong rise in socio-environmental problems show that the continuation of sustainability gains are not given (Escobar, 2020; Silva Junior et al., 2021). This also highlights the critical importance of the backdrop of legal enforcement and public engagement with the sustainability agenda. Yet, the positive experiences from previous times nonetheless demonstrate how significant gains can be made when fertile political conditions permit governance initiatives to make a difference, especially when public authorities directly support such measures. This volume is dedicated to showcasing examples and insights generated within the Brazilian context of how proper governance can spur positive-sum dynamics between agricultural development, environmental conservation, and social inclusion. While our main aim is to engage with sustainability improvements within the Brazilian context, we also hope that these contributions can provide valuable knowledge applicable to other countries. Our goal is to stimulate fruitful discussions about effective governance interventions while providing concrete pathways for change.

1.4 The Structure of the Book To guide our readers through some of the key issues that define the current sustainability challenges of Brazilian agriculture, we have chosen to structure the volume around the five thematic areas of international connections, technical challenges

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and innovation, social inclusion, and, respectively, private and public governance initiatives. These themes offer a variety of potentially crucial entry points for efforts to improve the sustainability performance of Brazilian agriculture. Positive synergies arising from such multipronged approaches could, ideally, lead to more deep-­ rooted sectorial transformations. Multidisciplinary debate and joint efforts by scholars, policy-makers, and practitioners thereby appear as an indispensable element in advancing a constructive and propositive sustainability agenda for Brazilian agriculture. The division of this volume, therefore, reflects our confidence in the importance of merging technical, economic, and social concerns which each become important parts of the puzzle of how to provide robust sustainable solutions. For many decades, but with increasing pace in recent years, the international dimension of sustainability challenges, such as deforestation, biodiversity loss, and livelihoods, has become increasingly salient, an issue treated in Part I of this volume. As the supply chains that frequently drive socio-environmental problems in Brazil crisscross national borders, the universe of stakeholders responsible for addressing these issues has grown substantially. With the forceful entry into the market for Brazilian agricultural produce, Chinese clients have become particularly central in defining the speed and depth of incorporation of sustainability demands by Brazilian producers. In Chap. 2, China’s role as a driver of environmental degradation and social conflicts in producer regions is treated by Søndergaard, Thives, and Inoue. To assess how this situation can be confronted, the authors scrutinize regulatory initiatives at the (Brazilian) national, bilateral, and transnational levels, identifying a governance deficit with respect to sustainability-related matters. Although some early movements toward improved due diligence within both the public and private realms could result in more sweeping and robust regulation to decouple exports from socio-environmental transgressions, Chinese soy and beef imports currently constitute a source of market leakage for noncompliant agricultural commodities. A similar focus is adopted by Bosselmann and Dolmer, who in Chap. 3 analyze various governance efforts made to improve the sustainability of European soy imports from Brazil. With a point of departure in data on the deforestation and related GHG emissions embodied in European soy imports from Brazil, the authors examine the different sustainability initiatives undertaken in the downstream part of global soy chains. Importantly, Bosselman and Dolmer identify a process of establishment of more harmonized and streamlined regulations, with recent EU regulations targeting forest-risk commodities as the most salient expression of such efforts. With a different starting point in the political economy of Brazilian agribusiness and its global articulations, in Chap. 4, Franchini, Viola, and Guivant apply the Climate Commitment Approach to assess the degree of internalization of mitigation obligations within different strands of Brazilian agribusiness. This exercise yields a nuanced and highly stratified perspective on the sector, explaining the variation of adoption of international sustainability demands by different sub-sectors with a basis in economic interests, technological endowments, and predominant modes of production. The identification of entities which for different reasons have chosen to engage constructively with the sustainability debate could yield important insights about the potential future policy space for a green

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agenda. The potential to reconcile sustainability concerns with agricultural development also marks Chap. 5 by Lima and Lemos. Through analysis of different multilateral initiatives for agriculture and sustainable development, the authors highlight how Brazil, due to its extensive natural endowments and highly advanced tropical agronomic practices, stands in a key position to engage positively with this agenda. Particularly the many intersections and overlaps between the United Nations Sustainable Development Goals and agriculture are highlighted as an important opportunity to make food systems a lever for addressing these challenges, not least the overarching concerns related to climate change. Finally, the potential for the agricultural sector to contribute to global decarbonization efforts is also highlighted by Seroa da Motta in Chap. 6. In this regard, the author stresses how well-structured carbon markets could provide an important instrument to finance Nature Climate Solutions, given the substantial Brazilian comparative advantages within this field. However, the concretization of this potential hinges on international and domestic institutional developments, which imply a range of regulatory and political challenges, the complexity of which is meticulously treated by the author. Discussions on sustainability transitions often polarize around arguments either highlighting the role of technology and innovation, while others underscore political issues and the need for social systemic transformation. The current volume presents elements of both, with many of the sections related to social and governance-related challenges emphasizing the latter aspect. However, a multi-­ stringed approach to the urgent task of confronting contemporary ecological crises will necessarily also have to seriously contemplate the role of technological innovation and productivity improvements, when the issue comes to the agricultural and livestock sector. Importantly, reflecting on how societies engage with technological development and which types of innovation pathways are chosen instead of others is paramount to sustainability transitions. Part II of this volume engages with the nature of the technical challenges as well as the potential of innovation to provide solutions. While discussions around sustainability and Brazilian agriculture often revolve around the issue of GHG mitigation, biodiversity preservation constitutes another critical challenge. In Chap. 7, Bustamante and colleagues draw attention to the problems of species loss produced by excessive and poorly managed application of agrochemicals within Brazilian agriculture. With a specific focus on bacterial-­ fungal and soil-fauna diversity, the authors emphasize the various biodiversity impacts produced by input-intensive industrial agriculture. The negative effects of this development in relation to the Cerrado and Amazon biomes are also strongly highlighted, as is the need for the implementation of conservation-oriented production practices. In Chap. 8, De Sá and colleagues provide a broad outlook of the productive technologies within Brazilian agriculture which can support Nature Climate Solutions, thereby mitigating GHG emissions and helping to preserve biodiversity. The chapter presents a wide array of existing production models with this potential, such as no-till, biological nitrogen fixation, and crop, livestock, and forestry integration. The authors also engage with the institutional and cultural challenges which thus far have presented a range of barriers to the widespread dissemination of these technologies. With a specific focus on the Brazilian

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experiences with crop, livestock, and forestry integration (CLFi), in Chap. 9, Rodrigues and colleagues provide an incisive account of how the evolution of polycultural agriculture can yield substantial economic, environmental, and social benefits. Brazil has seen significant efforts to harness the gains yielded by the positive synergies between crops, trees, and grassing animals, which also have led to official goals of scaling these production systems countrywide. The authors highlight the many-­folded advantages of CLFi systems but also engage with issues warranting attention, such as applicability, economic viability, and the role of adequate public policies in spurring their growth. In Chap. 10, Stabile and colleagues apply a different focus on the horizontal dimension of the expansion of Brazilian agriculture and, notably, livestock production. With a point of departure in the historical process of settlement and territorial expansion, the authors present an illustration of the current Brazilian rural landscape, strongly marked by large swath of degraded pasture areas. In this context, the notion of sustainable intensification has been widely embraced, as more efficient livestock production has been shown to hold the potential to both raise production output, while leaving areas for expansion of food production and afforestation projects, without the need for continued deforestation. The authors present a wide range of data and tested experiences which could help move the Brazilian livestock sector toward more sustainable production models. Finally, in Chap. 11, Mendes and Viola analyze the gradual introduction of cutting-edge production practices within Brazilian agriculture in the form of technologies associated with the fourth industrial revolution. The authors provide strong conceptual insights into the intricate interplay between technology and society and the political economy of sustainability-driven innovations. Moreover, Mendes and Viola outline the structure of the Brazilian R & D landscape for Ag-tech, as well as its dominant actor constellations, and their positions in relation to the environmental agenda. This critical outlook on the process of innovation within the Brazilian agricultural sector thus also highlights the inequality of access and of implementation capabilities that still characterize the sector. While many sustainability-related discussions about Brazilian agriculture often tend to adopt a strong conservationist focus, with emphasis on deforestation, GHG mitigation, and biodiversity preservation, social issues are equally crucial. The interconnected character of socio-natural processes also means that it is difficult to separate these two sustainability pillars, especially when the discussion revolves around smallholders, indigenous peoples, and other traditional populations. Part III engages with the current socio-environmental challenges of Brazilian agriculture. In this regard, a somewhat bleak perspective is presented by Navarro and Pedroso in Chap. 12, who stress how systemic upheavals within rural Brazil in recent decades have led to a clear bifurcation, with the modern agribusiness sector as the clear winner, while legions of smallholders have lost out. What is more, according to the authors, structural conditions, such as urbanization and marginalization of small-­ scale producers with the intensification and capitalization of Brazilian agribusiness, have left very little room for socio-economic inclusion of these destitute segments. Another perspective on contemporary social issues within Brazilian agriculture is presented by Pinheiro who in Chap. 13 analyzes how ESG commitments are

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internalized and operationalized within the Brazilian sugar cane sector. With an outset in the historical evolution of the notion of ESGs, Pinheiro initially scrutinized their key concepts and undergirding values. Applying this conceptual framework in a study of the San Martino sugar mill, Pinheiro identifies three fundamental challenges for future ESG reporting, related to conceptual clarity and consistency with underlying principles, improved linkages of social and environmental issues, and finally, the need for more contextualized reporting. The economic pillar of sustainability is central to no notion of a bioeconomy, which is treated by Konig and Pinsky in Chap. 14. The authors provide a quantitative overview of the current state of the bioeconomy in Brazil and in the world while illustrating the Brazilian potential to engage and develop this sector, which is rooted in the country’s mega-diverse flora and fauna. The prospects of developing the bioeconomy are closely interconnected with the agenda to alleviate poverty, as this is seen as a means to employ local populations in sustainable production activities, especially within the Amazon. Konig and Pinsky point to concrete examples where activities associated with the bioeconomy have provided improved livelihoods but also highlight the diverse challenges revealed by existing experiences from project development and implementation. In order to confront the various socio-environmental challenges related to the dynamic process of agricultural expansion in Brazil in recent decades, public legislation stands as a key baseline to regulate this process in accordance with broader societal needs. The Brazilian constitution of 1988 is a highly extensive document specifying a wide array of rights and obligations which together provides a relatively strong regulatory framework for confronting sustainability problems. Nevertheless, lacking implementation capacity, or absence of political priority, has meant that significant challenges remain. Part IV of this volume thus treats the role of public legislation in confronting current sustainability challenges. In Chap. 15, Chiavari, Lopes, and Machado examine the gains and remaining obstacles to the implementation of the Brazilian Forest Code, the predominant legislative framework for land governance in the country. As the Forest Code specifies the need for preservation – and restoration – of large areas of native vegetation on private rural properties, a consistent implementation of this law could result in substantial gains in terms of biodiversity preservation and GHG mitigations. In this chapter, the authors conduct a detailed analysis of the complex process of ensuring all-round legal implementation in a situation in which a wide range of different societal and sectorial interests push in very different directions. On a sectorial level, Gillio and Rodrigues in Chap. 16 examine the currently predominant legislation to support the production and use of Brazilian biofuels in different parts of the country’s energy matrix, the RenovaBio program, from 2016. Sugarcane-based biofuels date back many decades in Brazil and may provide substantial mitigation benefits, depending on their mode of production and the fuel sources they displace. Despite the periodic growth of ethanol-based biofuels in Brazil, the sector has often been marked by inappropriate and inconsistent legislative frameworks. The authors not only examine the potential of the RenovaBio as an attempt to remedy previous regulatory failures but also pinpoint continued shortcomings and limitations of the program,

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such as the complex array of rules, agents, and institutions on which it relies. In Chap. 17, Barreto and Brito (2023) engage with the many inconsistencies and paradoxes that mean that public legislation in many cases has accommodated predatory expansion and land speculation. Thus, despite legislation which in theory should be able to ensure orderly territorial expansion, lacking implementation as well as opportunistic behavior by politicians aligned with certain agribusiness segments has fomented large-scale land grabbing. In this chapter, the authors outline these challenges and reflect on the potential scope for both public and private actors to join efforts to support more sustainable land use. While public legislation provides an indispensable institutional bulwark to promote sustainable development within Brazilian agriculture, private initiatives can also play an important role. As the most significant Brazilian agricultural commodity chains are marked by strong international articulation, a multitude of sustainability demands and other types of product standards are constantly conveyed to Brazilian producers from international clients. As such, private demands have given rise to a range of voluntary sustainability initiatives and certifications which in many cases become de facto requirements for market entry. These initiatives are treated in the fifth and final part of this volume. In Chap. 18, Sampaio presents landscape governance approaches as an alternative solution to ensuring compliant products. Focused on specific jurisdictions, landscape governance seeks to engage with sustainability issues in these geographical areas and to bring local stakeholders together around compacts that confront socio-environmental problems while aiming to raise output, thereby guaranteeing the sustainable origin of products sourced from this jurisdiction. Despite the relatively incipient nature of this governance approach, Sampaio still manages to condense a wide span of concrete implementation experiences from landscapes-based projects in Brazil. Lessons learned, in form of failures and successes, are highlighted, thus leading to a valuable guide for practitioners within this field. In a similar vein, in Chap. 19, Nassar and Custódio conduct a detailed analysis of the current state of the ongoing efforts within both the soy and beef sectors to ensure compliant exports. Monitoring and traceability instruments are absolutely essential pieces of these efforts and have undergone rapid development in recent years. Making sure that export commodities are not associated with deforestation or social transgressions is nonetheless a highly complex task, given the inaccessibility of many producer regions, as well as the many links in the upstream part of the production chains of these products, which blurs attempts to identify the origins of agricultural commodities. Nassar presents the state of the art of the discussion about how to provide robust and realistic solutions to this challenge. Finally, in Chap. 20, Guimarães, Stabile, and Moutinho present a wide range of specific private governance initiatives within the Brazilian agricultural and livestock sector. The authors highlight the importance of the soy and beef moratoria implemented in the late 2000s, through which industry and civil society agreed not to source from recently deforested areas in the Amazon. Moreover, the authors also contribute with a synthesized account of the evolution of a wide range of multistakeholder initiatives in recent years, which seek to reach specific sustainability-­ related objectives through deliberations between groups of stakeholders. The

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authors underscore positive aspects of the many voluntary initiatives examined and also emphasize challenges associated with fragmented governance spaces as well as the critical importance of providing a firm baseline of national legislation to support sustainability outcomes.

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Part I

The International Dimension of Sustainability

Chapter 2

The Shanghai Connection: Governing the Sustainability Impacts of Brazilian Agri-exports to China Niels Søndergaard, Victor Thives, and Cristina Inoue

Abstract  Since the turn of the millennium, Brazilian agricultural exports to China have undergone an exponential growth trend. As the two countries have become closely interlocked in a transborder vegetable and animal protein complex, Brazil has become key to Chinese food security, while export revenues from China now play an important role within the Brazilian economy. However, beyond substantial the flows of money and goods between the two countries, Brazilian agricultural agri-exports have also come to embody significant socio-environmental impacts, in the form of deforestation and biodiversity loss. This is not least the case in Brazilian agricultural frontier regions, where land conflicts often also have been associated with agricultural expansion. This situation has led to a need for robust governance solutions to confront the socio-environmental challenges arising from this interdependence. In this chapter, we scrutinize existing governance mechanisms at both the domestic, bilateral, and transnational levels in order to assess how current regulatory arrangements address these issues. We conclude by identifying a clear sustainability governance deficit for trade flows of soy and beef from Brazil to China and by delineating potential pathways for solutions within this field.

2.1 Introduction In recent decades, globalization has connected distant parts of the world into one integrated system. The political-economic aspect of globalization is its most visible facet and has therefore been systematically studied. Yet globalization also associates distant regions in other ways that have received less scholarly attention. N. Søndergaard (*) · V. Thives Universidade de Brasília (UnB), Brasília, DF, Brazil e-mail: [email protected]; [email protected] C. Inoue Radboud University, Nijmegen, the Netherlands e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_2

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Sustainability research, in turn, has commonly addressed particular places and cases, minimizing their distant connections, not least because socio-environmental impacts take time to materialize in remote locations (Liu et al., 2013). Nonetheless, these distant interconnections can seriously damage local ecosystems, as consumption shifts in one place impact other places’ land demand and practices of production, potentially inducing deforestation, land use change, and biodiversity loss. Socioeconomic and environmental sustainability in a specific region thus hinges not only upon choices made by the community and the local government; it frequently also depends on decisions of actors elsewhere (Garrett & Rueda, 2019). Overseas players are thereby capable of impacting sustainability at variegated spatial and temporal scales (Newig et al., 2020). As a consequence, socio-environmental governance of globalized flows must encompass local and global scales alike, without neglecting all that is in between (Challies et al., 2019). Against this backdrop, agri-food systems have become deeply integrated, as remote markets sway flows of goods, services, capital, and information (Eakin et al., 2017). In the past two decades, Brazil and China have profoundly connected their food systems first through soy and eventually also through beef flows, as Brazilian protein became fundamental for the Chinese diet, either directly or indirectly. Hence, the Sino-Brazilian relationship today is arguably the world’s most important in the agricultural sector. For one thing, China is now the world’s largest agricultural importer, having surpassed both the European Union and the United States in 2019 (Jiang, 2020). Brazil also became China’s main agricultural supplier in 2018, surpassing the United States.1 Consequently, this interdependence has had remarkable political-economic reverberations. China has gained a central position in Brazil’s trade diplomacy, which has focused on overcoming political, sanitary, and administrative obstacles. Conversely, the significant negative sustainability externalities of the burgeoning Chinese demand for Brazilian protein have been overlooked. Available data nevertheless indicates that exports to China have become a considerable driver of socio-environmental violations in soy frontiers and livestock-­producing regions in the Brazilian Amazon and Cerrado alike. This chapter is based on multiple qualitative and quantitative empirical data on the Sino-Brazilian protein complex. Qualitative data consists of official documents – either publicly available or obtained through Brazil’s Information Access Act –, documents gathered through archival research conducted by the authors in Brazil’s Ministry of Foreign Affairs, interviews with Brazilian public authorities, and reports and statements from private companies. Some of these sources contain unpublished information, and others are recently released official documents, which have not yet been examined elsewhere. Therefore, these novel sources should help to shed light on some unappreciated aspects of the China-Brazil protein complex. As for quantitative data, we have relied on public statistics of Brazilian state agencies (Comex Stat, Agro Stat), as well as the Trase database, which depicts key trends

 Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §27. 1

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concerning soy and beef production, trade, and their environmental repercussions. Trase has thus been crucial to our analyses, since it has allowed monitoring the path of protein exports from Brazil to China, detailing the origins and embodied deforestation, while associating these trends to specific Brazilian states. This data was then triangulated with the aforementioned primary and secondary sources, aiming to contextualize both the political-economic and the socio-environmental facets of the Sino-Brazilian protein complex. Considering the size and the socio-environmental repercussions of Brazilian protein exports to China, understanding the public and private governance arrangements covering these flows has become of paramount importance. In this chapter, we, therefore, explore existing sustainability governance mechanisms at various levels, and relate such a framework to the socio-environmental impacts of the growing Chinese demand for Brazilian protein, while also assessing possible solutions. The chapter starts by discussing the Sino-Brazilian agricultural trade interdependence in section one. Section two then presents the growing socio-environmental impacts of Chinese demand for Brazilian soy and beef, zeroing in especially on how these exports have affected specific Brazilian states. Section three scrutinizes three governance layers covering the Sino-Brazilian protein complex – Brazil’s domestic regulatory framework, China-Brazil bilateral governance mechanisms, and voluntary private commitments – aiming to assess their ability to meet sustainability challenges of Brazil’s exports to China. Considering the shortcomings previously identified, section four discusses how some current trends could possibly improve the sustainability governance of Sino-Brazilian agricultural flows. Reflecting upon the scope for improved governance, the conclusion presents the wider implications of the protein complex interconnections between Brazil and China.

2.2 Sino-Brazilian Agricultural Trade Interdependence Brazil and the People’s Republic of China (PRC) established diplomatic relations in 1974 after Beijing surmounted the isolationist phase of the Cultural Revolution (1966–1971). The establishment of the diplomatic relationship was chiefly due to political interests, as relations between China and Brazil were not marked by significant commercial complementarities at the time. Moreover, the geographical and cultural distance impeded denser relations. In 1988, a bilateral space cooperation initiative, known as Cbers, was established, which brought Brazil and China closer, leading to the establishment of a “strategic partnership” in 1993. Nevertheless, only in the 2000s was the good political dialogue complemented by a significant growth in trade flows, after China entered the WTO in 2001. Trade between Brazil and China has grown rapidly from US$ 4 billion in 2001 to over US$ 135 billion in 2021 – a 33-fold increase in two decades (Comex Stat, 2021). As shown in Fig. 2.1, China has thereby surpassed Brazil’s historical trading partners, such as the European Union in 2013 (US$ 74 billion, 2021) and the United States in 2009 (US$ 70 billion, 2021), which had been Brazil’s main trading partner

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China (Mainland+HK)

US

Japan

UE

Mercosur

Middle East

Fig. 2.1  Brazil’s foreign trade with selected partners, in US$ billions. (Authors’ elaboration, with data from ComexStat, 2021) 80 70 60 50 40 30 20 10 0

Trade balance

Export

Import

Fig. 2.2  Brazil’s trade balance with China in US$ billions. (Authors’ elaboration with data from ComexStat, 2021)

since the 1860s. Moreover, while Brazil has presented consistent trade deficits with both the United States and the EU, it has enormous surpluses with China, as displayed in Fig. 2.2, which in 2021 alone accounted for over US$ 40 billion, amounting to 68.5% of Brazil’s total trade surplus.2 As of the 2000s, Chinese demand for commodities became vital to Brazil’s macroeconomic stability, not least because,  Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §22. 2

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throughout its history, Brazil has suffered successive balance of payment crises, with strong negative impacts upon its economy. This reality has significantly changed since the 2000s Chinese-driven commodity boom. Whereas China accounts for about 30% of Brazil’s foreign trade (Comex Stat, 2021), Brazil accounts for roughly 2% of Chinese trade, as China’s eighth largest trading partner (Wise, 2020, p. 159). Brazilian soy exports to China have grown sharply since the beginning of the century, from US$ 542 million in 2001 to US$ 27.6 billion in 2021 – a 51-fold increase in two decades. Beef exports to China are more recent, burgeoning in the 2010s, from US$ 336 million in 2011 to US$ 4.5 billion in 2021 – a 13-fold increase in a decade (Comex Stat, 2021). While soy still represents 30.8% of all Brazilian exports to China, and 61.5% of total agricultural exports, the country has also entered the market for animal protein. Beef has thus become the second most important Brazilian agricultural export to China. From 2017 to 2020, meat exports increased by 268%: chicken exports grew 67%, after the settling of an anti-dumping proceeding (February 2019), and swine meat exports underwent a 12-fold increase, due to the African swine fever outbreak.3 On the national level, Brazil and China display important economic complementarities. Brazil has an extensive and diversified territory, which makes it a leading commodity exporter. China is the world’s most populous country but has relatively scarce water resources and fertile lands, as well as rising labor and supply costs, which makes it an important consumer of primary goods.4 On the systemic level, Sino-Brazilian trade has indirectly benefited from the bilateral tariffs and investment restrictions of the trade war between the United States and China. From 2018, Brazil became China’s largest supplier of agricultural goods, with a market share of 20.9%, surpassing even the United States (17.2%).5 Trade diversions favoring Brazil encompassed traditional markets, such as soy and beef, as well as new ones, for example, lobster and tobacco.6 Although Brazilian producers worried that the signing of the first phase of the US-China Economic Trade Agreement (2020) would harm Brazilian exports, this proved not to be the case, since Chinese imports from the United States have not reached the goals originally established.7 Brazil’s most recurrent critique regarding trade with China is that exports are too concentrated on a limited number of primary goods. Today, soy, iron ore, and oil

 Management Report, Ambassador Paulo Estivallet de Mesquita (2018–2022). Brazilian Embassy in Beijing, 2022, §28. 4  Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §34. 5  Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §27. 6  Nicacio, Adriana. “Brasil ganha US$ 8,1 bilhões com guerra comercial entre China e Estados Unidos”. Agencia de Notícias CNI.  Acessado 10 de maio de 2022. https://noticias.portaldaindustria.com.br/noticias/internacional/brasil-ganha-us-81-bilhoes-com-guerra-comercialentre-china-e-estados-unidos/ 7  Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §25. 3

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constitute over 80% of Brazilian exports, while its imports consist of highly diversified industrialized goods. The Brazilian government has thus adopted a proactive position seeking to diversify exports to China8 and to add value to its agricultural exports.9 China’s increased demand for animal protein, stemming from a dietary shift relying on more diverse and sophisticated options, has favored Brazil as a leading beef exporter.10 However, given the severe famines China has faced in its recent history, the country has adopted a self-sufficient food policy seeking to produce as much as 95% of its internal demand in some sectors, such as rice, wheat, and pork – a policy that nonetheless had to be relaxed amid China’s African swine fever epidemic. Beijing thus sees food security as a fundamental component of its national security.11 Considering the political sensitivity of the issue, Brazilian bureaucracies have worked to promote Brazil’s image as a reliable supplier, capable of strengthening Chinese food security.12 China’s aspiration toward a plentiful domestic food production grounded in sovereignty concerns has resulted in substantial sanitary and phytosanitary (SPS) measures as a way of curbing imports. The Brazilian government nevertheless views China’s SPS measures as too strict, perceiving them as unfair trade barriers against its agricultural products, chiefly meat.13 Potential for export growth was thus limited, but the outbreak of the African swine fever epidemic in China in 2018, which disrupted its domestic meat production, has changed this situation, stimulating imports (Patton, 2021). The Brazilian government, for its part, has invested heavily in its political-­ economic relationship with China, aiming at increasing and diversifying exports. From 2018 to 2021, the Brazilian Embassy in Beijing expanded its agribusiness sector, which now is Brazil’s only Embassy to have two agricultural attachés.14 Brazil’s commercial offensive has especially targeted the beef market.15 The Brazilian Embassy has supported various business trips to China as well as e-­commerce initiatives.16 Its Trade Promotion Offices in Shanghai and Beijing have successfully worked to include Brazil in Tmall Fresh’s  – one of China’s main e-commerce platforms, associated with the Alibaba group – online “Single’s Day”  Management Report, Ambassador Roberto Jaguaribe (2015–2016). Brazilian Embassy in Beijing, 2016, §69. 9  Cable no 154, from the Brazilian embassy in Beijing to Brasilia, Feb 6, 2013, §6. 10  Management Report, Ambassador Roberto Jaguaribe (2015–2016). Brazilian Embassy in Beijing, 2016, §68. 11  Cable no 768, from the Brazilian embassy in Beijing to Brasilia, June 10, 2015, §11. 12  Management Report, Ambassador Roberto Jaguaribe (2015–2016). Brazilian Embassy in Beijing, 2016, §68. 13  Cable no 768, from the Brazilian embassy in Beijing to Brasilia, June 10, 2015, §9. 14  Interview with Brazilian diplomat, 2022. 15  Management Report, Ambassador Marcos Caramuru de Paiva (2016–2018). Brazilian Embassy in Beijing, 2018, § 32. 16  Management Report, Ambassador Marcos Caramuru de Paiva (2016–2018). Brazilian Embassy in Beijing, 2018, §29. 8

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(Nov. 11th) campaign, which is China’s “Black Friday” equivalent. Furthermore, in 2020 Brazil’s Ministry of Agriculture (MAPA) created a China desk (“Núcleo China”) to facilitate trade with China.17 China is also the only country to have an exclusive division within MAPA.  Brazil’s Confederation of Agriculture and Livestock (CNA) has had an office in Beijing since 2012. In 2019, the structure of Brazil’s Foreign Ministry was reformed, and a whole China department with two divisions was created.18 China is likewise the only country to have an exclusive department within Itamaraty. Moreover, Brazil’s highest trading authority from 2020 to 2022, Special Secretary of Foreign Trade and International Affairs Roberto Fendt Junior (2020–2022), was a China specialist, who previously served as Executive-Secretary of the Brazil-China Business Council (CEBC).19 His predecessor, Marcos Prado Troyjo (2019–2020), was appointed in 2020 as president of the BRICS’ New Development Bank in Shanghai. These bureaucratic reforms indicate how important trade with China has become, especially in the agricultural sector. From Beijing’s vantage point, Brazil has become “China’s jewel in the crown” (Wise, 2020, p. 160), as it has the resources China lacks to feed its population of 1.4 billion people and to fuel the world’s future largest economy. The Sino-Brazilian relationship in the beef sector has been repeatedly tested. In March 2017, Brazil’s Federal Police launched Operation Weak Meat (Operação Carne Fraca), targeting Brazilian sanitary inspectors accused of receiving bribes to allow rancid products to be sold, falsifying export documents, and conducting flawed inspections of meatpackers.20 This episode demanded close interaction with Chinese sanitary authorities, but in a week the crisis had been resolved bilaterally.21 In 2019, beef exports were suspended for about 2 weeks due to an atypical bovine spongiform encephalopathy (BSE) case, in accordance with the bilateral sanitary protocol. In September 2021, China embargoed Brazilian beef exports due to another two atypical BSE cases. The longer suspension period, which lasted until December, reportedly was a diplomatic retaliation against the anti-Chinese posture the Bolsonaro administration adopted for domestic electoral reasons.22

 Walendorff, Rafael, and Daniel Rittner. 2020. “Ministério Cria o ‘Núcleo China.’” Valor Econômico, February 11, 2020. https://valor.globo.com/agronegocios/noticia/2020/02/11/ ministerio-­cria-o-nucleo-china.ghtml 18  Decree no. 9683, January 9th 2019. 19  Available at https://www.gov.br/economia/pt-br/acesso-a-informacao/institucional/quem-e-­ quem/secretaria-especial-de-comercio-exterior-e-assuntos-internacionais 20  ​​Alberto Alerigi and Thais Freitas. 2017. “‘Operation Weak Flesh’ Takes Bite out of Brazil’s Meat Exports.” Reuters, March 24, 2017, sec. Commodities News. https://www.reuters.com/article/ us-brazil-corruption-food-exports-idUSKBN16V281 21  Management Report, Ambassador Marcos Caramuru de Paiva (2016–2018). Brazilian Embassy in Beijing, 2018, §12. 22  Gaspari, Elio. 2021. “China jogou pesado ao tratar do embargo às importações de carne bovina.” Folha de S.Paulo, November 16, 2021, sec. Elio Gaspari. https://www1.folha.uol.com.br/colunas/ eliogaspari/2021/11/china-jogou-pesado-ao-tratar-do-embargo-as-importacoes-de-carne-­­ bovina.shtml 17

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Dating from 1974, diplomatic relations between Brazil and China are relatively recent, and bilateral trade is even more so, accelerating in the 2000s. China has nonetheless transformed Brazil’s macroeconomic foundations in two decades. Never has such a structural transformation occurred so swiftly in Brazil’s economic history. On the national level, this can be ascribed to the growing economic bilateral complementarities, as Brazil has the resources China needs to advance its development strategy and to feed the world’s largest population. Moreover, the African swine fever epidemic in China has made the trade with Brazil all the more necessary for the country’s food safety – a sacrosanct priority for Beijing. In recent years, a systemic force – the Sino-American trade war – has favored China-Brazil trade even more. The new realities faced by Brazilian exporters have shaped the country’s foreign policy apparatus, which has been overhauled to better manage relations with China. Sino-Brazilian commercial relations have deepened to a point where not even sanitary crises, such as Operation Weak Meat, or diplomatic adversities, such as Bolsonaro’s anti-Chinese rhetoric, have been capable of impeding trade, as it has hit record highs year after year.

2.3 Impacts of Growing Chinese Demand for Brazilian Soy and Beef Today, the production of agricultural and livestock commodities stands as one of the main drivers of global deforestation (Henders et  al., 2015; Pendrill et  al., 2019). This has become increasingly evident in the Global South, where the loss of tropical forests functioning as important global carbon implies the risk of triggering important climate tipping points (Lawrence & Vandecar, 2014; Lovejoy & Nobre, 2018, 2019). The growing commercial interconnectedness of the Brazilian and Chinese economies thereby draws attention to sustainability outcomes, especially given the elevated carbon intensity of the emissions embodied in this trade relationship (Kim & Tromp, 2021). Soy and beef products both constitute the most important Brazilian agricultural exports to China, but are also the two main drivers of deforestation in the country. As such, it becomes critical to scrutinize the socio-environmental impacts of the spiking Chinese demands for these Brazilian products in the course of recent years.

2.3.1 The Chinese Appetite for Brazilian Soy Since the first variants of soy adapted to the climatic conditions of the Brazilian Cerrado were developed in 1980, this crop has expanded from the temperate southernmost parts of the country to all regions of the continental biomes. Toward the turn of the century, soy production even reached the fringes of the Amazon, but due

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to great environmental concerns, its expansion in this region has been faced with more significant regulatory constraints. The Cerrado has now become the hotspot for Brazilian soy cultivation, reaching a level as one of the main regions for vegetable protein production worldwide. Environmental costs of the soy expansion have nonetheless been significant, as around half of this entire biome has been cleared in the course of a few decades (Strassburg et al., 2017). While soy is not solely responsible for this development, it has been among the key drivers up until today. Thus, in the course of the 2010s, soy expansion in recently deforested Cerrado areas reached levels between 500.000 and 800.000 hectares annually (Ermgassen et al., 2020). From 2008 to 2014, around 20% of the total Cerrado deforestation of 3.8  million hectares has been ascribed to soy expansion (Nepstad et  al., 2019). Deforestation in the Cerrado also constitutes a significant biodiversity threat in the form of species extinction and could produce hydrographic disruptions (Soterroni et al., 2019). China’s role as a driver of demand for Brazilian soy has become increasingly evident throughout the 2010s. The Brazilian land area dedicated to supplying the Chinese market with soy (13.8 MH) in 2018 thus surpassed the combined soy area covering the domestic market (9 MH) and demand from the EU (3.6 MH). In terms of deforestation produced by soy expansion to meet global sources of demand, Chinese soy imports that year also accounted for the largest embodied deforestation impact of 34,557 ha, far higher than the native vegetation loss produced by European imports (6291 ha) and domestic demand (11,479) (Thives et al., 2022, p. 2134). A more detailed look at the Brazilian soy exports to China on the level of individual states (see Table 2.1) shows that the main sources of Chinese imports in fact originate from “old” soy-producing states in the South and Southeast, such as Paraná, Rio Grande do Sul, São Paulo, and Minas Gerais. Other important suppliers are Mato Grosso and Goiás, which despite being situated in Brazilian core regions for soy production have become relatively consolidated regions. Frontier regions, such as the MATOPIBA states (Maranhão, Tocantins, Piauí, Bahia) have also become increasingly important soy suppliers of the Chinese market in the period from 2008 to 2018, although they account for much smaller volumes than the aforementioned regions. Considering the embodied deforestation in Chinese soy imports from specific Brazilian states, a somewhat different picture emerges. The four MATOPIBA states thus appear among the five states with the highest recent deforestation rates driven by Chinese demand (see Fig. 2.3). Hence, despite only representing a very limited share of total Chinese soy imports from Brazil, states in this soy frontier region account for a disproportionate share of deforestation driven by this commodity in recent years.23 Together, the data for Brazilian soy exports to China (Table 2.1) and its embodied deforestation levels (Fig. 2.3) illustrates that the loss of native vegetation – and  The data for deforestation derives from the Trase database. Trase applies a 5-year cut-off data for measuring commodity-driven clearances of native vegetation, meaning that only soy planted in areas deforested within the preceding 5 years is registered. 23

Rio Grande do Sul 1635 3405 3509 3638 1162 5582 5909 7769 7033 9936 10,501

Authors’ elaboration of Trase (2022)

Mato Year Parana Grosso 2008 2718 2181 2009 2730 4106 2010 4957 4383 2011 5379 5354 2012 3518 8084 2013 6823 6815 2014 5266 7896 2015 7425 8433 2016 6594 8435 2017 7816 10,149 2018 10,937 10,897

Mato Grosso do Sul 1288 1000 1606 1669 2192 2483 3145 4014 3211 4261 4597 Goias 1089 1336 1080 1666 2520 2657 2105 2183 2729 3399 5256

São Paulo 430 480 350 356 662 906 771 1175 1506 1708 2400

Minas Gerais 415 857 586 628 1455 1351 1323 1119 1632 2430 2411

Santa Maranhão Tocantins Catarina 395 249 242 344 276 295 237 163 564 551 208 669 330 290 496 412 486 808 567 617 977 926 889 865 407 703 757 1146 1290 1200 1097 1388 1194

Table 2.1  Brazilian soy exports to China from individual states in thousand tons, from 2008 to 2018 Bahia 177 286 456 889 764 684 1235 1781 822 2215 3241

Piauí Others Total 148 1543 12,531 113 1140 16,418 53 1987 19,987 104 1590 22,759 116 1724 23,387 136 3610 32,782 174 2823 32,839 613 3824 41,047 200 4439 38,808 709 7769 54,039 405 13,292 67,700

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14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tocantins

Bahia

Maranhão

Mato Grosso

Piaui

Fig. 2.3  Embodied deforestation risk in Brazilian soy exports to China on the states of Tocantins, Bahia, Maranhão, Mato Grosso, and Piauí from 2008 to 2018, in hectares. (Authors’ elaboration of Trase, 2022)

the consequent socio-environmental pressures generated by Chinese demand  – appear to be highly concentrated in the MATOPIBA soy frontier. In other words, for every additional ton of soy produced in this region, much more native vegetation is currently displaced than in other parts of the country, where expansion tends to occur on degraded pastures, cleared in a more distant past. This converges with recent findings that suggest that deforestation in the MATOPIBA is 214% higher than the average rates in the Cerrado (Trigueiro et al., 2020). The latest data from 2018 shows that of the 8,3 million tons of CO2 emissions produced by soy-driven deforestation in the Cerrado that year, 4,6  million tons derived from Chinese imports. This situation is also clearly evident in the MATOPIBA region, where Chinese soy imports represented 3.9 of the 6.6 million tons of soy-driven CO2 emissions (Trase, 2022). Beyond ecological impacts, the rapid large-scale soy expansion in MATOPIBA has also displaced smallholders from their land holdings and excluded these groups from access to vital natural resources (Lopes et al., 2021). Moreover, benefits from soy expansion in the MATOPIBA region have often been concentrated in processing hubs, with limited or no gains for producing municipalities (Favareto et  al., 2018). In a baseline situation with a continuation of current demand trends, projections thus indicate that toward 2050, Chinese imports would account for an additional 1.15 million hectares of Cerrado deforestation, with an associated 37 million tons of CO2 emissions (Soterroni et al., 2019, p. 6). This accentuates the urgency of envisioning governance solutions to decouple future Chinese soy demand from future socio-environmental transgressions in Brazil.

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2.3.2 Consequences of Chinese Demand for Brazilian Beef Consumption and trade in beef products have been found to be among the most significant drivers of deforestation in both South America and Brazil, specifically (Henders et al., 2015; Pendrill et al., 2019). Although historically, cattle have been raised throughout the entire country, in recent decades, beef production has expanded notably in the Cerrado and Amazon regions (McManus et al., 2016). Estimating the relative contributions of cattle to deforestation is a recognizably complex task, given that cattle ranching frequently constitutes one of the first activities of the cycles of deforestation, as it is used to make claims to recently cleared lands, which latter may be sold or dedicated to crop production. Some studies nonetheless suggest that beef production accounts for well over half of all Amazon deforestation (Seymor & Harris, 2019). In Brazil, the bulk of cattle-driven deforestation (86%) is associated with domestic beef demand (Ermgassen et  al., 2020). However, as shown in the previous section, recently, beef exports have also been rising significantly, and with them, also the risk of associated environmental impacts. The most important export destinations for Brazilian beef are China (Hong Kong), China (mainland), Egypt, Russia, and Iran (Trase, 2022). The large volumes of beef imported by Hong Kong can be ascribed to reexports to the Chinese mainland. A significant difference in the sourcing patterns between these two destinations can nonetheless be observed. So, while Brazilian beef exports to mainland China principally originate from consolidated producer regions in the Southeast (São Paulo and Minas Gerais), exports to Hong Kong mainly originate from states in the Centerwest (Mato Grosso and Mato Grosso do Sul), or Northern regions (Rondônia and Pará), as shown in Fig. 2.4 below. The different sourcing patterns of Hong Kong and mainland China become highly relevant to consider from a sustainability perspective. Thus, while deforestation rates in Southeastern Brazil are very low and a situation of relative legal compliance in relation to labor and environmental issues is evident, frontier regions in the Centerwest and notably, Northern Brazil are marked by much more elevated deforestation rates, associated with a situation of poor legal compliance in relation to socio-environmental issues. This state of affairs also appears to be reflected in the embodied deforestation rates in Brazilian beef exports to Hong Kong, where states such as Rondônia, Pará, and Mato Grosso, which are home to large swaths of the Amazon rainforest, account for the largest amounts of native vegetation loss (see Fig. 2.5). As was the case with soy-driven socio-environmental transgressions, sustainability impacts from Brazilian beef exports to China also appear to be concentrated in specific producer regions marked by low degrees of legal compliance and public enforcement. This is corroborated by estimates that show that of the 1200 Brazilian municipalities supplying the Chinese market with beef, 25% of emissions risks embodied in exports to this Asian country can be traced back to only 5 municipalities, while only 25 municipalities account for 50% (Trase, 2022). Although they refer to exports to other global regions, recent estimates have also shown a somewhat similar picture of the concentration of environmental transgressions at the property level in frontier zones, where only 2% of producers account for the majority of illegal deforestation (Rajão et  al., 2020). The significant concentration of

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1,20,000 1,00,000 80,000 60,000 40,000 20,000 0

Hong Kong

China (main)

Fig. 2.4  Brazilian beef exports to China and Hong Kong on individual states, in tons, 2017. (Authors’ elaboration of Trase, 2022) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

HK

China

Fig. 2.5  Embodied deforestation risk in Brazilian beef exports to China and Hong Kong, in hectares, per state. (Authors’ elaboration of Trase, 2022)

sustainability problems embodied in Brazilian agricultural and livestock commodity exports to China raises the question of why regulatory arrangements, at the domestic, international, and transnational levels, thus far have not been able to convincingly address these issues. This calls for the need to critically assess existing governance structures as they apply to Brazilian exports to China in order to evaluate how innovations and advances within this dimension could lead to improved sustainability outcomes.

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2.4 Sustainability Governance and the Sino-Brazilian Trade in Agribusiness As soft-commodity chains today crosscut borders in a globally interconnected network of production and consumption, governance arrangements regulating these flows can rarely be pinned down at specific sites and are more likely to be layered at different geographical and jurisdictional levels. This is also the case with the soy and beef trade from Brazil to China, which is subjected to different public and private regulations at the domestic, international, and transnational levels. In this subchapter, we analyze the layering of sustainability governance at these different levels in order to conduct a wider assessment of its capacity to confront sustainability challenges related to Brazilian exports to China.

2.4.1 Brazilian Domestic Regulation Assessing public regulation within Brazil is important in terms of evaluating the sustainability impact of agribusiness trade between the two countries, as it constitutes the initial regulatory layer applying directly to the point of production. Originally from 1965, but revised in 2012, the Brazilian Forest Code is a cornerstone of the legal framework governing land use and environmental conservation in the country. Among its most important provisions, the Forest Code stipulates that private properties should maintain a legal reserve of native vegetation, ranging from 80% in the Amazon region, 35% in parts of the Cerrado, and 20% in the rest of the country. Moreover, permanent preservation areas should also be kept intact in areas such as riverbeds and hilltops. Within the social dimension, Brazilian legislation also stresses a range of labor-related issues, frequently expressed through the concept of “work analogous to slave labor” that encompasses a series of degrading and forced labor conditions. Indigenous and traditional peoples’ rights are also firmly established within the Brazilian Constitution of 1988, as are their claims to territories which they have historically inhabited. Despite the existence of a relatively ample legal framework to ensure socio-­ environmental compliance in rural regions, a number of limitations have become evident with respect to either lacking enforcement or specific political initiatives to provide amnesty for legal infringements. A case in point of the latter is the pardoning of environmental crimes committed by rural producers before 2008 which was conceded during the revision of the Forest Code in 2012. Moreover, due to varying forms of exemptions and fraudulent schemes, only 22% of properties in the Amazon maintain their legal reserve to its full extent (Esteves & Almeida, 2021). Likewise, the implementation of the rural environmental registry and the environmental restoration programs under the new Forest Code from 2012 has also been severely neglected in many states and faces practically boundless time horizons (Chiavari et  al., 2020). Finally, estimates also suggest that environmental noncompliance

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among beef and soy exporting properties reach a level of 45% in the Amazon, and 48% in the Cerrado (Rajão et al., 2020). Another expression of this situation is the proportion of illegal deforestation as a share of total deforestation in soy and beef expansion zones, which stands at a level of 75%  +  in the Cerrado frontier, and 95% + in the Amazon frontier (Valdlones et al., 2021). In terms of labor conditions, the agricultural and livestock sector accounts for 73% of all cases of work analogous to slave labor in the country. Under the Bolsonaro administration, the executive branch has made signals of tolerance of this practice, and public resources to combat it have been cut (Lemos, 2019). Indigenous peoples’ rights have also been undercut by the Bolsonaro administration, which beyond a confrontative rhetoric directed at these populations also has taken concrete steps by legalizing farms comprising 250 thousand hectares on indigenous lands. A large share of these land grabs has occurred in the MATOPIBA soy frontier (Paes, 2022). In sum, in the current situation of neglect of important socio-environmental issues by Brazilian authorities, the layer of public regulation has proved to be insufficient in order to ensure sectorial compliance at the domestic level. Consequently, as shown in previous sections, large amounts of deforestation and other sustainability impacts are embodied in Brazilian soy and beef exported to China. The fact that the predominant share of transgressions is illegal calls attention to the significance of public legislation and to the role that legal adherence could play in future attempts to guarantee that Chinese demand for agricultural commodities does not result in environmental degradation and social hardship in Brazil. The current weakness of domestic legal enforcement nonetheless draws attention toward the potential significance of regulatory layers beyond the domestic level and how they impact Brazilian agricultural and livestock exports to China.

2.4.2 Bilateral Governance of Sino-Brazilian Commodity Flows Until 2021, the Sino-Brazilian strategic partnership’s fundamental documents were the Joint Action Plan (JAP) 2015–2021, which set goals for a 5-year period, and the Ten-Year Plan (TYP) 2012–2021, which established bilateral intentions for a decade. As the last versions of both of these documents expired in 2021, China and Brazil seized the opportunity to reform the structure of the strategic partnership. In 2022, new documents were signed, namely, the Strategic Plan (2022–2031) and the Executive Plan (2022–2026). As a more concise and longer-term piece, the Strategic Plan recognizes sustainability as a general principle to be pursued transversally (§3). Specifically regarding agriculture, the document establishes that the parties will seek a stable agricultural trade, considering its economic and food security importance while promoting agricultural and animal exports “produced in a sustainable manner and respecting the best standards of health and safety” (§18). The Executive Plan, which sets forth more detailed orientations for a shorter period of

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time, determines that the parties will cooperate to promote agricultural sustainability, under the coordination of their Ministries of Agriculture. These direct mentions to agricultural trade sustainability are a development vis-à-vis former documents, namely, the TYP and JAP, which treated agriculture exclusively through the lenses of market facilitation and only had sporadic environmental concerns, mainly in the sustainable energy sector (Thives et al., 2022, p. 2140). Despite this improvement, Chinese and Brazilian environmental authorities are still left out of the strategic partnership altogether. The Brazilian delegation to the 6th Plenary Session of the Sino-Brazilian High-Level Cooperation and Coordination Committee (Cosban) had representatives from over 15 bureaucracies, such as ministries and state agencies, but none from the Ministry of the Environment or, for that matter, from the environmental department of the Foreign Ministry. This same situation has characterized all five previous Cosban plenary sessions. This absence is remarkable, partly because the Environmental Ministers of Brazil and China normally meet more than once at within BASIC and BRICS environmental conferences and partly because Brazil and China have environmental dialogue mechanisms with other important partners, such as the European Union24 and the United States.25 Brazilian ambassadors serving in Beijing have long noted this incongruity and have more than once advised Brasilia to establish a regular bilateral mechanism for sustainable development cooperation within the Cosban framework.26 What is all the more striking is that at the beginning of the 2000s, Brazil and China started to cooperate bilaterally in sustainability affairs. Their environmental authorities signed two memoranda of understanding (MoU)27 – although none of which directly concerned agricultural sustainability, not least because bilateral agricultural trade then was minimal when compared to today. Moreover, at the time, the parties had a Common Agenda on Sustainable Development, within the scope of which a meeting was held in Brasilia in August 2004.

 Itamaraty. 2020. “8o Diálogo Político de Alto Nível União Europeia-Brasil sobre a Dimensão Ambiental do Desenvolvimento Sustentável, em 16 de outubro de 2020 (reunião virtual)  – Comunicado conjunto à imprensa.” Ministério das Relações Exteriores. October 16, 2020. https:// www.gov.br/mre/pt-br/canais_atendimento/imprensa/notas-a-imprensa/2020/comunicado-conjuntoa-imprensa-8-dialogo-politico-de-alto-nivel-uniao-europeia-brasil-sobre-a-­dimensao-ambientaldo-desenvolvimento-sustentavel-em-16-de-outubro-de-2020-reuniao-virtual 25  U. S. Mission Brazil. 2020. “Declaração Conjunta: Lançamento do Diálogo Quadro Brasil-EUA sobre Meio Ambiente.” Embaixada e Consulados dos EUA no Brasil. November 10, 2020. https:// br.usembassy.gov/pt/declaracao-conjunta-lancamento-do-dialogo-quadro-brasil-eua-sobremeio-ambiente/ 26  Cable 157 Brazilian Embassy, Beijing, 2013 §22; Cable 1257 Brazilian Embassy, Beijing, 2008, §§9–11. 27  MoU on Cooperation in the Environmental Protection between the Ministry of the Environment of the Federative Republic of Brazil and the State Administration of Environmental Protection of the People’s Republic of China (August 17, 2005), and MoU between the Ministry of the Environment of the Federative Republic of Brazil and the Ministry of Water Resources of the People’s Republic of China on Technical and Scientific Cooperation in the Field of Water Resources (September 24, 2003). 24

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By the same token, the Brazil-China Business Council (CEBC), which is the strategic partnership’s business branch, has published a report titled “Sustainability and technology as foundations for Brazil-China cooperation,” in which it advocates for the establishment of a “Ministerial Dialogue on Climate Change” as well as for the adoption of a “Joint Declaration on Agriculture and Sustainability,” recognizing sustainable agriculture and livestock as one of the solutions to climate change. The strategic partnership was updated in 2022, but none of these suggestions has been adopted thus far. In the 2022 Cosban reform, the Agricultural Subcommittee gained three new work groups (Crop protection, Digital agriculture, and Pesticides), but none of which are primarily concerned with sustainability. The only mention of sustainability in the report of activities of the Agricultural Subcommittee, presented before Cosban’s 6th Plenary Session, was the “Brazil-China Dialogue on Sustainable Agriculture,” which had two editions (2021 and 2022). The initiative was promoted by the CEBC, and although relevant, it is a non-official exploratory dialogue, thus without immediate consequences or binding decisions that could improve the sustainability governance of bilateral agriculture trade. The most recent management report of the Brazilian Embassy in Beijing (2018–2022) noted a rise in the demand from Chinese authorities for information and guarantees regarding food safety, which led to the enlargement of the agricultural sector of the Embassy.28 However, the recent increased importance of agricultural trade did not translate into improved public sustainability governance of these bilateral flows. The report has various thematic sections, among which one is for agriculture and another for the environment. The section on agriculture (§§ 27–35) mentions only commercial and sanitary aspects of the trade – no mention of sustainability – whereas the section on the environment (§§ 56–57) treats general aspects of Chinese environmental policy but does not mention bilateral agricultural trade. Likewise, the Embassy’s Strategic Planning does not propose any significant sustainability governance mechanism to cover agricultural trade. The section on agriculture set objectives regarding trade, investment, and sanitary issues. The only mention of sustainability appears in the objective of organizing bilateral seminars covering various issues, including agricultural sustainability. Such an objective is nevertheless too vague and without immediate concrete impacts, especially considering that Brazil is the main provider of agricultural goods to China and China is the main market for Brazilian agricultural exports. In the section covering the environment, the most promising goal is the negotiation of a framework agreement for bilateral and trilateral technical cooperation between Brazil and China, but no specific reference to agricultural trade is made. The analysis of these various documents indicates that currently there are no appropriate public governance mechanisms in place covering China-Brazil agricultural trade. Moreover, the fundamental documents that direct the strategic partnership, which have been recently updated (i.e., the Strategic Plan 2022–2031, the

 Management Report. Brazilian Embassy in Beijing (2018–2021). Ambassador Paulo Estivallet de Mesquita, §33–35. 28

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Executive Plan 2022–2026, and secondarily the Embassy Planning 2022–), indicate that there is no clear intention of establishing effective public governance mechanisms to ensure the sustainability of the agricultural trade, which, as shown in previous sections, entails significant environmental risks, such as deforestation, CO2 emissions, biodiversity loss, and harm to vulnerable and indigenous populations. Furthermore, the low degree of priority of environmental concerns on the operational level of China-Brazil relations indicates a detachment of official commitments and multilateral rhetoric. In addition to repeated environmental pledges within BASIC and BRICS (Thives et al., 2022, pp. 2136–2139), both Brazil and China have signed the Glasgow Leaders’ Declaration on Forests and Land Use (2021), which aims to “halt and reverse forest loss and land degradation by 2030.” Not only did the commitment encompass conservation and restoration within national borders but also the need to align trade policies with the objective of reducing deforestation and land degradation. It is thus imperative that the Sino-Brazilian strategic partnership aligns with any professed multilateral commitments made by Brazil and China.

2.4.3 Transnational Private Sustainability Initiatives In line with a wider trend of regulatory privatization of commodity-specific environmental governance, a range of different multistakeholder initiatives and compacts address Brazilian soy and beef production. While direct participation by Chinese actors in these initiatives has been very limited, they nonetheless often have an indirect effect on exports to China, as traders handling commodity flows adopt different company-wide sustainability commitments (Søndergaard & Mendes, 2022). As one of the main forest-risk commodities globally, a range of multistakeholder governance arrangements target different parts of Brazilian soy production. The Roundtable for Responsible Soy (RTRS) is the most comprehensive multistakeholder initiative based on commodity certification. The RTRS was established in 2006 by industry actors and NGOs and comprises participants from all links in the soy chain. The Chinese COFCO is a member of the RTRS and has certified processing and logistics facilities. Beyond the RTRS, companies within the soy sector have also been assuming different kinds of sustainability commitments, although only a few have established target years for the complete elimination of deforestation from their supply chains. COFCO has so far only committed to conducting a socio-­ environmental evaluation of its suppliers in MATOPIBA and to reaching complete traceability for its Brazilian soy suppliers by late 2023 (COFCO, 2019). The Amazon Soy Moratorium (ASM) is another example of a multistakeholder agreement with an impact on Brazilian soy flows to China. The Moratorium was established in 2006 by civil society actors and traders as a means to decouple soy production from deforestation in the region and banned the sourcing of soy from areas converted after that cut-off year (which later was changed to 2008). The ASM has enjoyed a significant degree of success, as it made the share of soy expanding

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into recently cleared native vegetation drop from around 30% in 2006 to 1% in 2013 (Gibbs et al., 2015). Of COFCO’s soy imports to China, 683.125 tons are covered by the ASM, 1.004.983 tons are covered by company deforestation commitments, while 2.206.660 are not subjected to any such commitments (Trase, 2022). Plans for expansion of the Soy Moratorium to cover production in the Cerrado have also been made, but these have stalled mainly because of resistance from Brazilian soy farmers, due to perceived elevated opportunity costs. It has been defended that zero deforestation demands from Chinese buyers could be crucial to spurring the adoption of similar measures, given the buyer power that this country has in relation to the Brazilian soy sector (Nepstad et al., 2019). In sum, private initiatives within the soy sector have been relatively successful in severing the direct link between soy expansion and Amazon deforestation and possibly in lowering the intensity with which soy has expanded into recently deforested native vegetation in recent years. Although the sustainability demands spurring these initiatives have come mainly from Europe, their adoption on a territorial and/or company level appears to have impacted soy flows to China. However, Chinese actors have not themselves been a significant force in terms of pushing for more compliant soy products, and, as was shown in Sect. 2.3, demand from this country has been a strong driver of socio-­ environmental problems in Brazilian soy frontier zones. As such, China may to some extent be considered a source of regulatory leakage (Thives et  al., 2022). Thus, for transnational private initiatives to produce substantial improvements of sustainability outcomes, Chinese buyers would need to more actively present demands for socio-environmental compliance that could make behavioral change among Brazilian soy producers imperative. The Brazilian beef sector has seen different private sustainability governance initiatives in recent years, albeit they are less numerous than those within the soy sector. The Brazilian Roundtable for Sustainable Livestock comprises a range of multinational and Brazilian companies within the beef sector, which also is the case with the transnational Global Roundtable for Sustainable Beef initiative, of which different Brazilian companies are a central part. In 2017, together with the World Wildlife Foundation (WWF), the Chinese Meat Association (CMA) signed the Chinese Sustainable Meat Declaration. The document presented a range of general principles for sustainable livestock production but has so far been less consequential in terms of affecting sourcing policies for Brazilian beef. The most impactful private governance initiative indirectly impacting Brazilian beef flows to China is likely the G4 Cattle Agreement, signed in 2009 between the largest Brazilian meat packers and Greenpeace. The G4 Agreement builds on agreements between these same companies and the Regional Public Prosecutor’s Office, the Termos de Ajuste de Conduta, or TAC. Yet, while the latter implies a commitment by meat packers not to source from areas in the Amazon biome deforested illegally after 2009, the G4 rests on a commitment not to source from direct suppliers with any areas cleared after 2009, legally or illegally. Although Chinese actors were not part of establishing the TAC or G4 Agreements, the latest Trase data from 2017 shows that these deforestation commitments still cover most exports to Hong Kong, while beef exports to mainland China from the Amazon region were

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negligible. The Cattle Agreements appear to have had a significant effect in terms of lowering the number of direct suppliers to slaughterhouses with recent deforestation from 36% in 2009 to 4% in 2013 (Gibbs et al., 2016). However, the main challenge regards the continuation of cattle-driven deforestation among indirect suppliers in the earlier links of the cattle chain, which has proven to be much more difficult to confront. Consequently, as shown in the previous section, Brazilian beef exports to Hong Kong still embody significant amounts of Amazon deforestation. The Brazilian meat packers mainly responsible for these exports to Hong Kong and China are JBS, Irmãos Gonçalves, Marfrig, Mercurio Alimentos, Miverva, and Frigol. Of these companies, the most internationalized meat packers, such as JBS, Minerva, and Marfrig, have adopted company-based sustainability commitments which seek to go beyond their G4 and TAC commitments and eliminate all legal and/or illegal deforestation from their entire supply networks. Yet, some of the implementation dates for these policies are set as far into the future as 2030, which leaves much doubt about these companies’ ability to effectively decouple sourcing from deforestation. As was evident with soy, the quickly growing importance of China as a buyer of Brazilian beef does indeed appear to endow it with a significant amount of potential leverage in terms of defining sustainability standards in Brazil. However, thus far, the absence of such demands at the private level perpetuates a status quo in which Chinese beef imports still embody significant environmental impacts.

2.5 Governance Pathways for Potential Solutions As China today is the predominant source of international demand for Brazilian soy and beef products, and given the current sustainability impacts produced by this demand, it becomes important to present an assessment of potential avenues for change. The current governance deficits, reviewed in previous sections of this chapter, play a central role in this regard, which calls for new solutions within the governance dimension. In this section, we present a brief overview of some current trends which if not individually then in conjunction might spur improved sustainability governance of the Sino-Brazilian agribusiness trade flows. First of all, growing attention toward environmental, social, and governance (ESG) parameters for investment could impact Chinese sourcing of Brazilian products, even if not directly adopted by Chinese companies. Resilience and socio-­ environmental risk management have recently become increasingly important for many international investors, especially since the disruptions caused by Covid-19 highlighted the vulnerabilities of the global economy to externally induced shocks caused by the impact of human activities on the Earth system. While companies with a large share of their portfolio following ESG principles have displayed superior financial performance during the pandemic, investors exposed to companies associated with environmental transgressions face a series of portfolio risks (Richards et al., 2020). Both Brazilian and Chinese companies engaged in this trade

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are subjected to financial pressures from international investors, which potentially could make it more difficult to refinance operations. Poor sustainability policies have thus been found to subject Chinese companies heavily engaged in sourcing soy and beef from Brazil to significant revenue, financing, and reputational risks potentially reaching as much as 30% of company equity value (Prodani et  al., 2020). Financial pressures could impact the operational incentives of both Brazilian and Chinese private actors within soy and beef chains. However, it is noteworthy that this type of engagement appears more as a defensive risk management strategy rather than an offensive attempt to fundamentally reshape current modes of operations. It is thereby highly unlikely that significant ESG-related factors alone can spur more compliant sourcing policies, especially within product categories and sectors with low public exposure. Another potential source of change to improve the sustainability of agri-trade between Brazil and China relates to domestic opinion and consumer behavior in this Asian country. Consciousness about environmental problems has advanced in China in recent years, and albeit most attention initially might have been directed at very visible and proximate sources of pollution within China, distant and global environmental challenges, and especially climate change, have increasingly become a public concern. On the official level, the Chinese 5-year plans have dedicated a growing amount of attention to environmental issues, within both the national and international spheres. On the individual level, Chinese consumers also appear to have become more environmentally conscious and demanding of sustainable products. Consequently, in the food sector, some incipient collective sustainability commitments with a specific focus on deforestation have been made through branch organizations, such as the China Meat Association and the China Soybean Industry Association. The ability of these organizations to facilitate the exchange of information and promote standards has been highlighted as an important point to spur change at the industry level (WEF, 2022). Yet, despite the potential that a strong shift toward sustainable sourcing practices as a new industry baseline for imports of Brazilian agricultural commodities could imply, thus far, such demands have not been transmitted in any significant way to suppliers in Brazil. Finally, a central question regards whether China will establish official due diligence rules for the import of soft commodities to ensure that they do not embody deforestation and other sustainability impacts. Such legal frameworks have been implemented in countries such as France and Germany, and legislative drafts are currently under elaboration in the EU, United Kingdom, and the United States. A circumstance which nonetheless makes China differ substantially from these countries is the extreme emphasis on national sovereignty and non-intervention in domestic affairs which is a long-standing feature of its foreign policy. Imposition of due diligence rules reaching beyond requirements stipulated within the national legislation of producer countries could thereby conflict with a core feature of Chinese policy. This would be especially complicated in the case of Brazil, which despite its dependence on sales to the Chinese market also enjoys a significant amount of leverage as a supplier of animal and vegetable protein, a position which has been further affirmed with the global supply crisis in the wake of the Covid-19 pandemic.

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However, parts of Chinese legislation do in fact foresee the possibility for due diligence in relation to commodity imports, as long as these requirements are restricted to a demand for adherence to national legislation in producer countries. The Article 65 of the Chinese Forest Law, for example, requires importers to avoid sourcing illegal timber (Neo & Zhu, 2022). If such a demand for legal adherence was adopted in relation to forest-risk commodities, such as soy and beef, it could have significant impacts in Brazil, as it would provide very strong incentives for producers to adhere to the Brazilian Forest Code. Given that by far the largest share of deforestation is illegal, effective monitoring and tracing systems for the implementation of this law could cut off legally noncompliant properties from exporting to the Chinese market, which by far is the largest international client. Given that China currently imports six times more soy and beef than the EU, a legal adherence-based Chinese due diligence requirement is likely to lead to much more significant sustainability outcomes in Brazil than, for example, the current EU draft, −even if its scope would be slightly more restricted. Pitfalls related to potential relaxation of national legislation, as well as pardoning for past legal transgressions in Brazil, could partly compromise the effectiveness of such a measure. This highlights the need for a cooperative stance on behalf of Brazilian authorities and public policy-makers and for a mutual understanding about such a law as a useful instrument to support efforts to ensure effective legal compliance within the agricultural and livestock sector.

2.6 Conclusions Since the turn of the millennium, Brazilian and Chinese food systems have become interlocked in a protein complex of staggering economic significance. Brazilian vegetable and animal protein has thus either directly or indirectly become a cornerstone of Chinese diets. Exports of Brazilian soy and more recently, beef, to China have grown at an exponential pace resulting in extremely concentrated trade flows, in terms of both products and export destinations. The economic significance of these agricultural exports to China is thereby hard to underestimate, so are the political repercussions of this interdependence, and the place that these economic ties have gained within the Brazilian commercial diplomacy, which in recent years has come to place special emphasis on strengthening agri-trade relations with China. Much attention has thereby been put into efforts to remove political, sanitary, and administrative barriers to these product flows, which has been internalized as a key objective on different levels of the Brazilian state. With this growing emphasis on trade, the substantial sustainability impacts of the spiking Chinese demand for Brazilian soy and beef have received less emphasis. Available data thus strongly suggests that Chinese demand has become a substantial driver of socio-environmental transgressions in Brazilian soy frontiers and in many livestock-producing regions in both the Brazilian Cerrado and Amazon. This has not only fueled deforestation but also led to biodiversity loss and harm to vulnerable populations. This situation calls attention to analyzing the array of public and

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private governance arrangements which in different ways cover Brazilian flows of soy and beef to China. The initial governance layer regards Brazilian public legislation, which applies to the point of agricultural production. Here, an important legislative framework exists, not least in the form of the Brazilian Forest Code. However, lacking implementation and enforcement of Brazilian legislation nonetheless means that soy and beef produced on noncompliant properties still reach the Chinese market. At the second governance layer, which regards regulatory arrangements at the bilateral level, the Sino-Brazilian strategic partnership lacks a clear environmental orientation, especially concerning the sustainability governance of agricultural trade. This is despite the extensive environmental agenda Brazil and China have presented in multilateral fora. At the beginning of the 2000s, Brazil and China started to develop a bilateral sustainability dialogue, which nonetheless has been abandoned. Environmental concerns have thus become conspicuous by their absence, especially considering both the massive Sino-Brazilian trade with significant environmental repercussions and the fact that Brazil and China have in fact maintained dialogues with other important partners. This absence has been observed by former Brazilian ambassadors in Beijing and by the Brazilian business community, who have recommended the establishment of a ministerial dialogue on climate change and the adoption of a Joint Declaration on Agriculture and Sustainability. However, the recent overhaul of the Sino-Brazilian strategic partnership – with the reform of the High-Level Bilateral Committee (Cosban) and the approval of new plans covering the next decade of the relationship – has not advanced any tangible mechanism to ensure the sustainability of agricultural trade. At the third governance layer, referring to private initiatives and voluntary commitments, some important steps have been taken within the soy sector to effectively decouple the direct link between soy production and Amazon deforestation. However, similar commitments have not been made in regard to the Cerrado, where a few frontier states in MATOPIBA account for large amounts of embodied sustainability impacts, despite their relatively limited importance in terms of the volumes of Chinese soy sourced from these areas. Notwithstanding the lack of significant sustainability demands deriving directly from Chinese buyers, indirect commitments by global traders nonetheless also appear to have mitigated the embodied sustainability impacts of products sourced from more consolidated regions. A similar picture becomes evident with regard to beef exports to China. Here, voluntary agreements and commitments at the company level have also had some indirect effects on exports to China. However, beef exports round-tripping in Hong Kong from a few states in the legal Amazon, such as Rondônia, Pará, and Mato Grosso, nonetheless, embody significant sustainability impacts in these areas. The gaps in existing sustainability governance arrangements highlight the need to consider potential solutions. One potential source of change could derive from financial markets, which indirectly could impact both Chinese and Brazilian companies in the agri-food sector with poor sustainability performance. As exposure to socio-environmental risks gains increasing materiality, this could contribute to change incentives in some sectors. However, it is noteworthy that soy and beef producers’ incentives and strategic goals frequently do not overlap with those of traders

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and meat packers, which often find themselves in a complex position between international clients and domestic producers. Another potential source of change could derive from the domestic level in China, as domestic opinion and consumer behavior become more conscious of environmental problems. Although environmental consciousness in China originally grew due to visible and proximate sources of pollution, distant and global environmental problems are gaining more attention. Whereas environmental concerns have become more evident in recent versions of China’s 5-year plans, a similar trend is gradually pervading society, as Chinese consumers start to demand more sustainable products. This movement has, in turn, been reflected in collective sustainability commitments tackling deforestation made by branch organizations, such as the China Meat Association and the China Soybean Industry Association. Although these initiatives have the potential to spur important shifts favoring more sustainable sourcing practices, they have not yet been significantly conveyed to Brazilian suppliers. Finally, if China were to adopt similar due diligence legislations as those that are either under elaboration or have already become implemented in Western countries, this could have a significant impact in Brazil due to this Asian country’s leverage as a buyer. While it is very doubtful whether the country would introduce mandatory sustainability requirements for imports of soft commodities that would “go beyond” national legislation in producer countries, due diligence rules based on adherence to national legislation in sourcing countries could be argued to converge with the central Chinese foreign policy tenets. In Brazil’s case, given the importance of China as an international client, − especially in the soy sector – and given the widespread legal noncompliance among soy and beef producers in critical commodity frontier zones, such legislation is likely to have a significant effect. De-facto exclusion from important internationally articulated value chains could thereby provide a strong incentive for behavioral change toward more sustainable practices within the Brazilian agricultural and livestock sector.

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Esteves, B., & Almeida, R. (2021). Reserva Legal; uma Ilusão Amazônia. Revista Piaui, 5(2). https://piaui.folha.uol.com.br/reserva-legal-uma-ilusao-amazonica/ Favareto, A. S., Nakagawa, L., Pó, M., Seifer, P., Kleeb, G., & Suzana, C.. (2018). Segure a Linha: a expansão do agronegócio e a disputa pelo Cerrado. Greenpeace_Climate and Land use Alliance. Garrett, R., & Rueda, X. (2019). Telecoupling and consumption in agri-food systems. In C. Friis & J. Ø. Nielsen (Eds.), Telecoupling: Exploring land-use change in a globalised world (Palgrave studies in natural resource management) (pp.  115–137). Springer International Publishing. https://doi.org/10.1007/978-­3-­030-­11105-­2_6 Gibbs, H. K., Munger, J., L’Roe, J., Barreto, P., Pereira, R., Christie, M., et al. (2016). Did ranchers and slaughterhouses respond to zero-deforestation agreements in the Brazilian Amazon? Conservation Letters, 9(1), 32–42. https://doi.org/10.1111/conl.12175 Gibbs, H. K., Rausch, L., Munger, J., Schelly, I., Morton, D. C., Noojipady, P., Soares-Filho, B., Barreto, P., Micol, L., & Walker, N. F. (2015). Brazil’s Soy Moratorium. Science, 347(6220), 377–378. https://doi.org/10.1126/science.aaa0181 Henders, S., Persson, U.  M., & Kastner, T. (2015). Trading forests: Land-use change and carbon emissions embodied in production and exports of forest-risk commodities. Environmental Research Letters, 10(12). https://doi.org/10.1088/1748-­9326/10/12/125012 Jiang, H. (2020). China: Evolving demand in the world’s largest agricultural import market. https://www.Fas.Usda.Gov/Data/China-­Evolving-­Demand-­World-­s-­Largest-­Agricultural-­ Import-­Market Kim, T.-J., & Tromp, N. (2021). Carbon emissions embodied in China-Brazil trade: Trends and driving factors. Journal of Cleaner Production, 293, 126206. https://doi.org/10.1016/j. jclepro.2021.126206 Lawrence, D., & Vandecar, K. (2014). Effects of tropical deforestation on climate and agriculture. Nature Climate Change, 5(1), 27–36. https://doi.org/10.1038/nclimate2430 Lemos, V. (2019). ‘Ficava sem salário e tinha que tomar água suja’, diz resgatado de trabalho análogo à escravidão. BBC, 1/8, 2019 (online). https://www.bbc.com/portuguese/brasil­49186678. Accessed 16 Aug 2022. Liu, J., Hull, V., Batistella, M., DeFries, R., Dietz, T., Feng, F., Hertel, T., et al. (2013). Framing sustainability in a Telecoupled world. Ecology and Society, 18(2). https://doi.org/10.5751/ ES-­05873-­180226 Lopes, R. G., Bastos Lima, M. G., & Reis, T. (2021). Maldevelopment revisited: Inclusiveness and social impacts of soy expansion over Brazil’s Cerrado in Matopiba. World Development, 139(1), 1–17. Lovejoy, T. E., & Nobre, C. (2018). Amazon tipping point. Science Advances, 4(2). https://doi. org/10.1126/sciadv.aat2340 Lovejoy, T.  E., & Nobre, C. (2019). Amazon tipping point: Last chance for action. Science Advances, 5(12). https://doi.org/10.1126/sciadv.aba2949 McManus, C., Barcellos, J. O. J., Formenton, B. K., Hermuche, P. M., Carvalho, O. A., Guimarães, R., & Neto, J. B. (2016). Dynamics of cattle production in Brazil. PLoS One, 11(1), e0147138. https://doi.org/10.1371/journal.pone.0147138 Neo, G.  H., & Zhu, C. (2022). China’s unique opportunity to tackle deforestation. World Economic Forum, Forests (online). https://www.weforum.org/agenda/2022/07/ china-­deforestation-­biodiversity/ Nepstad, et al. (2019). Pathways for recent Cerrado soybean expansion: Extending the soy moratorium and implementing integrated crop livestock systems with soybeans. Environmental Research Letters, 14, 044029. Newig, J., Challies, E., Cotta, B., Lenschow, A., & Schilling-Vacaflor, A. (2020). Governing global Telecoupling toward environmental sustainability. Ecology and Society, 25(4), ­10.5751/ ES-11844-250421. Paes, C. F. (2022). Porteira aberta: governo Bolsonaro reconhece 250 mil hectares de fazendas em Terras Indígenas. Mongabay Brasil, 13/6, 2022 (online). https://brasil.mongabay.com/2022/06/ porteira-­aberta-­governo-­bolsonaro-­reconhece-­mais-­de-­250-­mil-­hectares-­de-­fazendas-­em-­ terras-­indigenas. Accessed 2 Aug 2022.

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Patton, D. (2021). Analysis: African Swine Fever Inflicts Renewed Toll on Northern China’s Hog Herd. Reuters, April 1, 2021, sec. Commodities News. https://www.reuters.com/article/ us-­china-­swinefever-­resurgence-­analysis-­idUSKBN2BO5AV Pendrill, F., Persson, U.  M., Godar, J., & Kastner, T. (2019). Deforestation displaced: Trade in forest-­risk commodities and the prospects for a global forest transition. Environmental Research Letters, 14(5). https://doi.org/10.1088/1748-­9326/ab0d41 Prodani, K., Rijk, G., & Piotrowski, M. (2020, July). Major deforestation footprint a risk for Yum China’s secondary listing. Chain Reaction Research. Rajão, R., et al. (2020). The rotten apples of Brazil’s agribusiness. Science, 369(6501), 246–248. Richards, M., Stern, R., Kobayashi, N., Fleming, P., & Nash, J. (2020, June). CERES. The investor guide to deforestation and climate change. Available at: https://www.ceres.org/resources/ reports/investor-­guide-­deforestation-­and-­climate-­change. Accessed 10 Apr 2022. Seymor, F., & Harris, N. L. (2019). Reducing tropical deforestation. Science, 365(6455), 756–757. Søndergaard, N., & Mendes, V. (2022). Global soy chains and the contested implementation of zero deforestation commitments in Brazil (Forthcoming). Soterroni, et al. (2019). Expanding the soy moratorium to Brazil’s Cerrado. Science, 5, eaav7336. Strassburg, B. et al. (2017, March 23). Moment of truth for the Cerrado hotspot. Nature, 1, Article number 0099. Thives, V., Søndergaard, N., & Inoue Cristina, Y. A. (2022). Bringing states Back into commodity-­ centric environmental governance: The Telecoupled soy trade between Brazil and China. Third World Quarterly, 43(9), 2129–2148. https://doi.org/10.1080/01436597.2022.2081144 Trase. (2022). Trase–intelligence for sustainable trade (online). https://www.trase.earth/. Accessed 7 July 2021. Trigueiro, V.  R., Nabout, J.  C., & Tessarolo, G. (2020). Uncovering the spatial variability of recent deforestation drivers in the Brazilian Cerrado. Journal of Environmental Management, 275, 111243. Valdlones, A. P. et al. (2021). Desmatamento ilegal na Amazônia e no Matopiba. 3ICV, IMFLORA, LAGESA.  Available at: https://wwfbr.awsassets.panda.org/downloads/desmatamento_ilegal_ na_amazonia_e_no_matopiba___estudo_completo.pdf. Accessed 10 Apr 2022. WEF. (2022, July). World economic forum. China’s Role in promoting global forest governance and combating deforestation. Insights Report. Wise, C. (2020). Dragonomics. Yale University Press.

Chapter 3

Sustainability Governance of Soybean Trade Between Brazil and Europe: The Road Travelled and the Challenges Ahead Aske Skovmand Bosselmann and Sarah Emilie Nøhr Dolmer

Abstract  Brazil has historically been an important supplier of agricultural products to the European Union, not least soybeans and soybean meal to support the European livestock sector. In recent years, sustainability-related concerns have led to the conveyance of environmental demands from European buyers to Brazilian producers, mainly related to deforestation and biodiversity preservation. This process has often led to friction within supply chains, as European actors have raised serious sustainability concerns, which frequently have been refuted by Brazilian producers. This chapter provides an overview of how sustainability-related matters have been raised in European countries and resulted in specific standards and sourcing criteria that have been transmitted along supply chains to actors upstream in Brazil. It examines which particular governance initiatives and certifications have been established in response to environmental demands from downstream chain actors such as feed companies, retailers and food processors. Finally, the chapter treats the question related to the institutionalization of private and corporate chain-­based sustainability initiatives and reflects on the paths towards responsible and deforestation-free soy supply chains from high-risk areas in Brazil to consumers in Europe.

3.1 Introduction During the last two decades, the trade in goods between Brazil and the European Union (EU) has almost doubled, cementing the important trade relations between the two economic regions. The EU is the second largest market for Brazilian exports, A. S. Bosselmann (*) Department of Food and Resource Economics, University of Copenhagen, Copenhagen, Denmark e-mail: [email protected] S. E. N. Dolmer Municipality of Copenhagen, Copenhagen, Denmark © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_3

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after China, and Brazilian exports to the EU reached a value of around 33 bn. EUR in 2021, almost matching the imports from the EU at 34 bn. EUR. While Brazil’s imports from the EU are dominated by machinery and chemical products, the export from Brazil to the EU is more diversified, though focused on raw materials from the agricultural sector, minerals and wood, and food products. The trade between the two regions is currently governed by the WTO trade rules and the 1999 EU-MERCOSUR interregional cooperation agreement, which sets a broad framework for economic and trade relations, with both regions having trade defense measures in place. The ongoing discussions of the EU-MERCOSUR free trade agreement are expected to result in lowered defense measures for certain commodities, opening up for further trade between the two regions. The EU-MERCOSUR agreement contains a chapter on trade and sustainable development, which integrates principles and actions related to labor and environmental governance in the parties’ trade relations. This is part of the EU’s shift in focus within social and environmental policies, from mainly focusing on the internal market to also addressing impacts outside the EU’s borders, particularly related to global environmental risks such as climate change (Hey, 2007). An early example of a regulation that targeted ‘imported environmental damage’ is the European Timber Regulation (EUTR) from 2010 to combat trade with illegally deforested timber. This is now being integrated in the 2021 proposal for deforestation regulation from the European Commission, as part of the European Green Deal, to reduce the environmental and social impacts of the EU’s consumption of Forest Risk Commodities (FRC1), i.e. imported commodities in supply chains associated with deforestation or forest degradation. Besides China, the EU is the largest importer of FRCs in the world (Pendrill et al., 2019). One-sixth of the climate footprint of EU citizens comes from their consumption of food and agricultural products produced in tropical countries, mainly because of tropical deforestation (ibid.). Fuchs et al. (2020) argue that the transition to a greener EU through the policies in the European Green Deal from 2019 is happening at the expense of nature and the environment in the tropics since the EU’s import of one-fifth of its consumed crops enables Europeans to farm less intensively. Said differently, the EU is ‘outsourcing’ the environmental damage from its food consumption. The agricultural exports from Brazil are central to the EU’s global footprint. Soybeans, wood and beef imported from Brazil are all on the top six of EU’s imports of FRC measured in deforestation risks and carbon emissions. The Brazilian exports to the EU of agricultural and food products reached almost 14 bn. EUR in 2021, with oil seeds, feedstuff, coffee and vegetables and fruits as the dominant product categories (see Fig. 3.1). Oils seeds and feedstuff, consisting almost entirely of soybeans and soybean meal, make up half of the agricultural and food exports in 2021. Besides being the largest supplier of soy products to the EU with 48% of the total 2021 soy import (in trade value), Brazil is also the single largest producer of soy in  Forest risk commodities (FRC) are agricultural products associated with a high risk of deforestation and forest degradation. The proposed regulation covers at the moment beef, cocoa, coffee, palm oil, soy, wood, and certain derived products. 1

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Million EUR 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

Other agricultural products

Oil-seeds

Coffee, tea, cocoa, spices

Vegetables & fruit

Feed stuff

Fig. 3.1  Brazilian exports of agricultural and food products to the EU-27 in million EUR during the two decades 2001–2021. (Reproduced from Eurostat, 2022) Note: Based on SITC categories 01–12, 22, 29, 41, 42, 61 and thus include food, beverages, tobacco, oils seeds, crude animal and vegetable materials, animal and vegetable fats and oils and leather and fur)

the world. Since 2015, the area cultivated with soy has increased by 25% or five million ha (FAOSTAT). The consistent increase in soy area and production since the 1970s has been associated with many environmental and social problems, such as deforestation and land use change (Song et al., 2021) and associated greenhouse gas emissions (Pendrill et al., 2019), biodiversity loss (Green et al., 2019), land conflicts and displacement of local farmers and indigenous communities (Baletti, 2011; Sauer, 2018), pesticide contamination of waterways (Castro Lima et al., 2020) and health issues among farm workers and communities living near intensive soy production (Motta & Arancibia, 2015). Over the years, a number of sustainability governance arrangements and mechanisms have been developed to counter these negative impacts in Brazil, at both ends of the soy supply chain in Brazil and in Europe. The best-known of these arrangements and mechanisms are perhaps the Amazon Soy Moratorium (ASM) and voluntary certification schemes for sustainable soy. The Soy Moratorium, implemented in 2006 by Brazilian and international private stakeholders, and supported by public policies and programs, succeeded in drastically reducing deforestation in the Amazon region for more than a decade (Macedo et al., 2012) but also moved deforestation activities into other natural biomes in Brazil (Nepstad et al., 2019). The first certification schemes for sustainable soy were established at the same time as the Soy Moratorium, soon leading to a plethora of independent and corporate standards and schemes for ‘sustainable’, ‘responsible’ and ‘deforestation-free’ soy, mainly developed by actors located outside the soy-producing countries. The different

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initiatives have led to demands from downstream supply chain actors being transmitted to the primary producers of soy, as the producers are often required to meet these demands to be able to export to the EU. Meanwhile, deforestation from soy expansion continues (Vasconcelos, 2022). In this chapter, we provide an overview of the development in sustainability requirements among European actors for sustainable soy production in Brazil and trade to Europe and examine the particular sustainability governance initiatives emanating from downstream chain actors in Europe. Furthermore, we assess the institutionalization of corporate standards into EU regulations and reflect on the European private sectors’ envisaged paths towards responsible and deforestation-­free soy supply chains. The chapter is based on the authors’ long-term engagement in public advisory on the EU’s import of forest risk commodities and stakeholder interaction with European, mainly Danish, feed and food companies, non-­governmental organizations, standard-setting organizations, private interest organizations, consultancies and public authorities. Specifically, the chapter relies on a review of trade data, certification schemes and corporate policies, as well as recent literature.

3.2 Soy on the Sustainability Agenda With the desire to integrate the Amazon region into the Brazilian national economy, state-subsidized development programs and infrastructure projects led to large-­scale deforestation in the 1970s and 1980s (Barona et al., 2010; Macedo et al., 2012). In the following decades, deforestation increased further around the Amazon’s ‘arc of deforestation’ as more land was needed to keep up with the increasing international demand for cattle and other agricultural products. Even though pasture expansion remains by far the primary direct reason for deforestation in these areas (Arima et al., 2011), soy gained a more prominent role in the deforestation debate in the late 1990s (Barona et al., 2010). With the introduction of genetically modified (GM) soy in the late 1990s in Brazil, soy production could now take place and be expanded to other regions, where it had previously been biologically inefficient to grow (Walker et al., 2009). This led to rapid growth in terms of both area and production (Amaral et al., 2021). From 2015 to 2020, the soy area in Brazil increased by around five million ha and the production of soy increased by 26 million tons to 134.3 million tons, making Brazil the world’s largest producer (FAOSTAT). Together with the globalization of agribusiness, the intense growth in soy production in Brazil has increased the pressure on the environmental and social systems in the producing areas, beyond deforestation and land conversion. These are issues, such as biodiversity loss, pesticide use, impacts on human health, land grabbing and displacement of indigenous communities (e.g. Sauer, 2018; SchillingVacaflor et al., 2021), that through the global trade of soy are being driven by the consumption of especially food products of animal origin in many parts of the world. This is also true for European imports and consumption of soy from Brazil. In 2021, the EU27 imported 31.7 million tons of soy products, half of which came

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from Brazil, by far the largest exporter of soy products to the EU. Around 98% of the total import of soy was soybeans (47%) and soybean meal (oil cakes, 51%), both destined for the European livestock sector (Voora et al., 2020). Figure 3.2 depicts the EU-27’s soy imports from Brazil and the associated deforestation risk in ha annually and the CO2 emissions from the deforestation. While the combined imports of soybean products are relatively stable in the period from 2005 to 2021 – with a surge in soybean imports since 2019 – the deforestation and deforestation emissions have decreased substantially, from 123.000 ha of forest and 56 MtCO2 in 2005 to 23.000 ha and 9,8 MtCO2 in 2018. The deforestation data, based on Pendrill et al. (2022), only cover the period until 2018, after which year the annual deforestation almost doubled in the Amazon region, especially in the Pará state (INPE, 2022). In 2006, as a reaction to the scale and pace of the Brazilian Amazon deforestation and the exposure of company links in the Greenpeace campaign and report Eating up the Amazon (Greenpeace, 2006), Brazilian and international private companies, supported by public policies and programs, set in motion the Amazon Soy Moratorium. The ASM remains to this day one of the most well-known zero-­ deforestation commitments2 (ZDC). The ASM was a success in terms of reducing soy-related deforestation in the Amazon region (Heilmayr et al., 2020), and it was hailed as a win for the soy sector as well as for the Amazon forest. The impacts arrived fast and deforestation rates decreased substantially for more than a decade, also visible in Fig. 3.2, and discussions on sustainability among actors in the international soy value chain subsided for a time. Ha / '000 tCO2

Ton soy import 1,00,00,000

1,40,000

90,00,000

1,20,000

80,00,000

1,00,000

70,00,000 60,00,000

80,000

50,00,000

60,000

40,00,000 30,00,000

40,000

20,00,000

20,000 No data available

0

Deforestation risk (ha)

Deforestation emissions ('000 tCO2)

Soy oil cakes

10,00,000 -

Soybeans

Fig. 3.2  EU-27 import of soybean and soy oil cakes from Brazil and associated deforestation and climate emissions related to deforestation, in the period 2005 to 2018/2021. (Trade date based on EuroStat and associated deforestation risk in ha and related emissions in thousand tons CO2 are from Pendrill et al., 2022)

 A zero-deforestation commitment (ZDC) is a voluntary commitment undertaken by companies to eliminate deforestation associated with the commodities in their supply chain. 2

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Even though direct soy-related deforestation was curbed with the ASM, the area used for soy production in the Amazon increased substantially, from 1.6 million ha in 2006 to 4.7 million ha in 2019 (Amaral et al., 2021). This expansion mainly took place on existing agricultural land cleared in the Amazon before 2008, but this may have pushed other agricultural activities, such as pasture for livestock, to open up new plots of land in the forest or in other biomes, thus causing indirect land use change and leakage. This is a possible implication of policies that focus on one specific commodity or a specific region in relation to deforestation in commodity-­ specific supply chains, as there is a risk that ‘cleaning’ one supply chain will lead to deforestation in another one. Due to leakages of deforestation to other biomes, such as the Cerrado forest savannah to the East of the Amazon (Bonanomi et al., 2019; Lima et al., 2019), the overall rate of ecosystem conversion remained substantial in Brazil. The ASM was accompanied by similar initiatives related to the cattle and meat sector. The two initiatives Termos de adjuste de conducta (TAC), an agreement between slaughterhouses and the public federal prosecutors office, and the G4 Cattle Agreement, signed by Greenpeace and the major meat-packing companies, both aimed at excluding beef from illegally deforested areas in the Amazon. The two initiatives, known combined as the Beef Moratorium, only had a partial effect on deforestation, as only illegal deforestation was targeted and calving and breeding ranches were not part of the agreement, leading to potential ‘cattle laundering’ and deforestation leakages (Carvalho et  al., 2019; Massoca et  al., 2017; Søndergaard et al., 2021). By 2019, the soy and beef moratoria seemed to lose their combined grip on deforestation, as the rate of forest clearing in the Amazon started to rise again as did the amount of soy area not in compliance with the ASM (IDH, 2022). Changes in the political and environmental regulatory frameworks and rhetoric were blamed for the turning tides (Ferrante & Fearnside, 2021), and the discussions and concerns related to the environmental sustainability of Brazilian soy production were reignited, especially on the European market. Alongside the start of the Soy Moratorium, the first soy-specific third-party certification schemes were initiated by European stakeholders as market-based mechanisms to regulate the production and trade of responsible soy. ProTerra foundation, headquartered in the Netherlands, and the Roundtable of Responsible Soy (RTRS), initiated by WWF and established as a multi-actor organization in Switzerland, both created standards with a point of departure in the Basel Criteria for Responsible Soy Production from 2004, which were originally coined by WWF and the Swiss retailer COOP.  With sustained growth in the use of the two standards since the start, they are today the largest independent certification schemes for soy, also in Brazil, from where the majority of RTRS and Proterra soy is sourced. In 2019, ProTerra and RTRS certified 2.5 and 3.3 million tons Brazil, respectively, corresponding to 4.6% of the Brazilian production (RTRS, 2022; Proterra, 2022). The two standards have many similarities, but the RTRS standard left out the non-GMO requirement from the Basel Criteria, thus being accessible to many more producers in South America than ProTerra. They also differ in their main supply chain models, as the RTRS so far have depended on sales of RTRS credits through

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the Book & Claim supply chain model. This is a more cost-effective and flexible model vis-à-vis supply chain logistics than physical trade, (see Box 3.1). The sales of mass balance (MB) are increasing, but similar to credits, MB does not ensure full responsibility in the physical purchase. ProTerra soy, on the other hand, is mainly sold as segregated (SG) due to the non-GM requirement. The increased cost of segregation is particularly a disadvantage during high commodity prices, as witnessed in 2021, where price hikes reduced the demand and supply of certified soybeans affecting the ProTerra-certified soybeans substantially more than RTRS. Credits are not without issues, as the low premiums, hovering around 2–3 USD per credit for many years, challenge some producers, who may not have their costs covered. This decreases the incentive to become or stay certified.

Box 3.1: The Three Most Common Trading Models for Certified Soy Supply chain models for certified soy Book and claim (credits): The certified manufacturer meets the standard but sells the physical product through the conventional supply chain without additional traceability of the product. For each ton of produced soy, 1 credit is issued to the producer, who sells the credit on an exchange to, for example, feed or food companies that use conventional soy but want to support certified production. Credits can be bought as blind credits or as regional credits, where the origin of the certified production is known. Regional credits can be used to target a specific area with a high risk of deforestation to support the promotion of responsible soy. Mass balance (MB): Certified production is mixed with non-certified raw materials and the proportion of both is documented throughout the supply chain. Depending on the standard requirements, the certified proportion may be of any size. This model is often used for raw materials in the supply chain where it is costly and logistically difficult to keep the certified item separate from non-certified raw materials. Segregated (SG): The certified raw material is kept completely separated from non-certified throughout the supply chain. The advantage of the segregated model is that ‘you get what you buy’, giving an assurance that the physical product has been produced in accordance with the requirements of the certification standard. The disadvantage can be challenges in scaling up – both for demand, as the additional prices due to logistics can be high, and on the supply side due to low demand and limitations in the supply chain. An even stricter version is segregated identity preserved (SG-IP) adding traceability of the product to the primary producer. While the ASM had a substantial effect on deforestation rates in the Amazon, the RTRS and ProTerra have had less visible impacts on responsible production at a large scale, for both environmental and social indicators (Schilling-Vacaflor et al.,

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2021; van der Ven et al., 2018). The main reason is the low adoption of certification, at less than 4% globally for ProTerra and RTRS combined at any time. Despite the lack of clear impacts of the standards, RTRS and ProTerra were just the start of a large development of standards for responsible soy production.

3.3 Unboxing Corporate Soy Sustainability The RTRS and ProTerra initiated a race among other stakeholders to participate in the market for responsible soy, leading to the development of a plethora of private standards, including corporate certification schemes and standards belonging to individual trading companies. A database by the International Trade Centre contains more than 50 standards related to responsible production of soy. The increase in standards is mainly driven by market demands in Europe. Some standards specifically demonstrate compliance with the EU Renewable Energy Directive II, such as ISCC EU by the International Sustainability and Carbon Certification, but most are broader in scope. The ABCD companies – ADM, Bungee, Cargill and Louis Dreyfus Company (LDC) – besides all being signatories to the ASM in 2006, are among the companies with their own corporate standards and certification schemes for responsible soy. Cargill launched its Triple S standard for soy in 2010, followed by Bunge’s PRO-S certification program from 2012 and later ADM with their Responsible Standard in March 2015. LDC’s Sustainable Agriculture certification came later, in 2019. Just as other standards, they are all built upon the same principles and include the same categories of criteria, such as requiring legality in production, good agricultural practices including responsible use of chemical inputs, decent working conditions, good relations with local communities and protection of forests or other natural ecosystems. In the implementation of the standards, the requirements for assurance processes and definitions of, for example, forest and cut-off dates3 for the last deforestation, the standards vary. Most often, independent standards like RTRS and ProTerra have a larger scope and more assurance points (Bosselmann & Dolmer, 2022). As a reaction to the many standards and definitions of responsible soy, the European Compound Feed Manufacturers Federation (FEFAC) created the soy sourcing guidelines to give a common direction to and use of definitions in the private standards in the soy feed manufacturing industry. An evaluation by Kusumaningtyas and van Gelder (2019) found the first sourcing guidelines from 2015 and the compliant corporate standards to be substantially weaker than the independent standards from RTRS, ISCC and ProTerra in their requirements for the protection of nature and their procedures for developing and complying with  The cut-off date in ZDCs and certification schemes refers to the last date deforestation or conversion of natural ecosystem is allowed on an area included in a commitment or scheme. Deforestation or conversion after that date renders the area, and the commodities produced on the area, non-­ compliant with the commitment or scheme. 3

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requirements. In an effort to stay relevant, the soy sourcing guidelines were updated in 2021 to cover a more comprehensive list of criteria and requirements, in terms of both production and assurance processes. This first led to most of the corporate standards being non-compliant, which then triggered revisions of the standards. By 2022, 18 individual standards – corporate and independent – were compliant with the FEFAC guidelines according to a benchmark carried out by the International Trade Centre. However, most corporate standards remain the less strict. The standards from Bunge and LDC have cut-off dates for illegal deforestation but allow legal deforestation, and Bunge is vague in their definition of what geographic areas and types of natural system are covered (Bosselmann & Dolmer, 2022).4 This is in part due to the FEFAC sourcing guidelines are still not at level with the independent schemes. The criteria regarding the no-conversion of natural ecosystems – arguably the single criterion being discussed the most among all stakeholders  – remains a desired criterion only, and with a cut-off date in 2020. New discussions are underway in FEFAC, and an upcoming guideline revision is expected to change the criterion to be mandatory, as well as further strengthen the requirements for the verification and accreditation processes. As FEFAC is a membership-based organization, which includes integrated companies with business along the entire soy-feed supply chain, there are limits to how fast and how progressive the guidelines are forming. The strength of the guidelines lies in the ability to ‘lift the bottom’ among corporate standards. Parallel to creating their own standards, the majority of soy trading companies have committed themselves to achieving a goal of 100% deforestation and conversion-­free supply chains. These ZDCs sometimes rely on the standards for responsible soy. Garrett et al. (2019) evaluate 52 commitments, mainly related to soy and palm oil, and identify several weaknesses that limit the effectiveness of ZDC. Targets for zero deforestation are often formulated as zero net deforestation, which means deforestation can be compensated with afforestation elsewhere in time and space, and have future implementation deadlines, allowing for ‘preventive’ deforestation. Some of the large trading houses have ZDCs targeting 2025, which provides leeway and flexibility in action plans and implementation. Some do not mention a cut-off date, thereby creating perverse incentives for deforestation activities in anticipation of future cut-off dates. The same risk appears if cut-off dates are moved, as has been seen for even the independent standards. Furthermore, in ZDCs as well as in the many standards, deforestation-free may refer to a specific type of forest (e.g. primary forest, high conservation value or high carbon stock forest) or a specific geographic area (e.g. the Amazon biome), thus leaving out other forested

 Bosselmann and Dolmer (2022) compares seven of the compliant soy standards from ITC that represent the major trading companies (ADM, AMAGGI, Cargill and Cefetra) and independent standard schemes (RTRS, ProTerra and Europe Soya) with respect to criteria concerning deforestation remediation, use of chemical inputs, human rights and local communities and find that the definition of what is considered deforestation-free varies a great deal not only between the standards but also on the other criteria regarding human rights and use of chemical inputs. They briefly mention Bunge and LDC. 4

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ecosystems or areas. This is another potential source of leakage. Villoria et  al. (2022) show that as much as 50% of avoided deforestation in Brazil prompted by zero deforestation policies are offset by leakages. Bager and Lambin (2022) also points to internal challenges within the companies when implementing ZDCs, such as insufficient resources allocated for implementation and lack of alignment of the commitment with company operations and suppliers. The competitive nature of the many standards and ZDCs hinders a sector-wide agreement on the definitions and use of either deforestation-free or conversion-free supply chains, cut-off dates and coverage of specific geographic areas and types of natural ecosystems. A common framework with common definitions is needed, as it is widely believed that only a sector-wide agreement will lead to lasting impacts. Box 3.2 describes the essential aspects of a conversion and deforestation-free and responsible soy production and supply chain, which should be considered in individual initiatives as well as in sector-wide policies. The Accountability Framework initiative (AFi) is an example of an organization that aims to do just this and build consensus-based guidelines, definitions and principles to help buyers and investors assess policies and achieve and monitor progress towards responsible and ethical supply chains. Among others, the updated FEFAC soy sourcing guidelines are referring to AFi (FEFAC, 2021), which means compliant corporate standards do the same.

Box 3.2: Essential Aspects to Consider in a Definition of Responsible and Deforestation-Free Soy Supply Essentials, when no single definition exists There is likely no single definition of ‘deforestation-free’ or ‘responsible’ that fits all possible scenarios for forest risk commodities. However, commitments, standards and other initiatives that aim to ensure responsible and deforestation-free production, taking into account the above aspects, should include the following essential aspects: • Requirements for no conversion (gross) or degradation of natural ecosystems in line with the underlying issues (climate change, biodiversity loss, deterioration of ecosystem services). • Differentiated cut-off dates for different biomes depending on deforestation processes, context and existing private initiatives with established cut-­ off dates. • General principles of human rights (workers, local communities and indigenous peoples), good agricultural practices and minimal impacts on the environment. • Ensure involvement of and benefits to relevant local actors, in addition to producers, in the production area. (continued)

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Box 3.2  (continued) • Transparency in development and implementation. • Align objectives and approaches with other measures for responsible and conversion-free production in the landscape. • A focus on responsible suppliers and not only responsible supply to ensure landscape and biome-level impacts and reduce the risk of leakage. Note: Authors’ own concoction of essential aspects based on research-­ based advisory to the Danish Ministry of Food, Agriculture and Fisheries (Bosselmann & Dolmer, 2022).

3.4 The EU’s Institutionalization of Private Sustainability ‘We all will have to open our eyes to the fact that our consumption in Europe can lead to the destruction of forests elsewhere in the world, and at an alarming rate’. These were the words of the executive vice president for the European Green Deal, Frans Timmermans, when a new proposal for an EU regulation to minimize EU-driven deforestation and forest degradation was in public hearing in 2020. The regulation will make it mandatory for businesses that import or trade FRCs, including soybeans and soybean meal, to perform a due diligence procedure to verify the geographical origin of the imported goods and that they are not associated with deforestation or in breach of human rights, also in relation to indigenous communities. The proposed regulation is a result of the historical tropical deforestation linked to European imported goods that, despite the many private and corporate initiatives for responsible production and trade, continues today (Vasconcelos, 2022). The regulation is expected to be finalized in 2023 as the European Council and Parliament are negotiating the last disagreements, such as the definition of deforestation, cut-­ off dates for the last deforestation and which types of forestlands to include, with the Parliament opting for the most ambitious scope and thus impacts of the new law. The regulation is only one of several new policies that will affect European companies that import and trade soy products. A new directive on corporate due diligence, with emphasis on environmental impacts and human rights, also requires companies to set up new due diligence systems to verify their environmental and social impacts in the global supply chains. Legislation similar to the deforestation regulation is being pushed in the UK through the UK Environment Act 2021, and in the USA through the proposed bill, the FOREST Act. The UK and US legislations are still in the early process of development and approvals, but they represent the same underlying notion as in the European deforestation regulation: that private initiatives, certification schemes and corporate policies are not sufficient to address trade-driven deforestation; public regulations are needed.

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The phenomenon of standards underlying private initiatives for responsible production being adopted or integrated into public legislative framework is not new. The process, also called institutionalization, is the last phase in a long course starting with emerging sustainable behaviour among a few actors due to urgency, followed by new business models based on sustainability standards and market rewards, and mainstreaming of the standards in multi-actor fora and partnerships (Simons & Nijhof, 2020). As described in this chapter, soy production and exports from Brazil to Europe have been through all the steps leading to institutionalization – and deforestation and irresponsible soy production remains. Emerging from the havoc wreaked upon tropical forests by soy and agriculture, the RTRS and ProTerra standards partially took their point of departure in the idea that the production of soy could be made sustainable through a market-based approach. New corporate policies soon followed in the form of companies’ own standards for sustainable soy and zero-deforestation commitments. During the last couple of years, corporate sector organizations, like FEFAC, and multi-stakeholder environmental and human rights organizations, such as AFi, have created common frameworks to guide industries and actors and sought to mainstream deforestation-­free and responsible soy. It now seems the voluntary ‘mainstreaming’ of responsible soy will be quickly replaced by legislation, at least in the European markets. The EU deforestation regulation is expected to be a strong driver towards a common and sector-wide agreement on cut-off dates as well as target dates for deforestation-­free supply chains. Though the proposal in its first version may not include all types of natural ecosystems, the regulations will lead to the implementation of supply chain management and due diligence systems among importing and trading companies, which may facilitate wider transformations of the industry. With due diligence systems in place and initial investments in supportive information systems made, the addition of new requirements  – whether mandatory or voluntary – will require marginal efforts and costs. Previous legislation regulating business management from the EU offices in Brussels has affected supply chains beyond the EU borders, as major international companies have implemented, for example environmental systems to be compliant with EU regulations not just in their European activities but also across their global supply chains. This is known as the Brussels effect (Bradford, 2020). To what extent the EU deforestation regulation will have the same effect is uncertain, as the trade of soybeans is dominated by China. In 2021, China imported 60% of Brazil’s soybean and oil cake exports  – against the EU’s 15% – and is also by far the largest importer of US soybeans. Many global traders serve both the European and Chinese markets, but the EU market may not be sufficiently large to extend EU regulations beyond the companies’ European activities. An institutionalization of environmental concerns and standards in the Chinese-Brazil trade relations, similar to the EU deforestation regulation, is currently not playing any major role in China’s trade policies (Thives et  al., 2022). Thus, a dual environmental governance of the global soy trade may in effect be the outcome.

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3.5 Paths Forward for the European and Brazilian Soy Trade Since the first talks of an EU regulation on FRCs, companies, sector organizations and standard-setting organizations have been preparing for the impacts on soy trading without fully knowing the details and requirements of the legislation. The regulation comes at a time when members in the major soy-importing industry  – the European feed manufacturers – have aligned their standards and policies with the FEFAC guidelines of 2021, and EU member states, companies and civil society organizations alike are joining or endorsing multi-stakeholder coalitions and international fora for sustainable soy. In several EU member states, national coalitions or alliances for responsible soy have been created by groups of diverse stakeholders. Nine EU member states are aligning their national policies to manage forest risk commodities in the Amsterdam Declaration Partnership and, specifically for soy, in the network of European National Soya Initiatives (ENSI). The national initiatives under ENSI, along with companies and civil society, are working together in the Collaborative Soy Initiative (CSI), which aims for responsible soy at a global scale. This development of coalitions, including the Accountability Framework initiative, has begun to move standards, initiatives and policies for imports of responsible soy in a common direction, though differences still exist, as described earlier in this chapter. The EU deforestation regulation may be expected to mainstream further the definitions of deforestation-free and cut-off dates in use, at least in setting the minimum requirements. While commonalities emerge in the definitions of standards and thus requirements to producers in, for example, Brazil, different general approaches are being applied in different EU member states. In France, a soy manifesto signed by all major retailers and supported by the Earthworm Foundation was launched in 2020, while the feed sector has developed a sustainability charter. Both the manifesto and charter take a low-risk approach through a natural segregation model, where soy is sourced from crushing plants in Southern Brazil with a low-risk (of deforestation) profile. The ability of traders to cooperate rather than the use of certification schemes is in focus. A quite different approach has been taken in the Netherlands, where a goal of 100% responsible and certified soy by Dutch companies has been in place since 2011 (with a 2015-target). Today, all Dutch feed companies are signatories to the national initiative for responsible soy sourcing, the Dutch Soy Dialogue. The initial ambition to import RTRS (or similar) certified soy was later amended to FEFAC-compliant soy due to a lack of supply, which is still an obstacle today (Bosselmann & Dolmer, 2022; Hoste & Judge, 2018). In 2021, 85% of the Dutch net import of two million tons of soybean meal was FEFAC compliant, of which 84% was covered by RTRS certificates and other kinds of book and claim (IDH, 2022). This highlights the great difficulty in sourcing physically certified, responsible soy, which will be the requirement under the EU deforestation regulation.

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A third approach is taken by businesses in Norway, where national policies are often aligned with EU policies though the country is not a member of the Union. The fish feed industry requires not only conversion-free and non-GMO feed supplies but entirely conversion-free suppliers, meaning suppliers cannot engage in soy value chains that are not verified conversion-free (NSC, 2021). A small number of Brazilian companies, who are able to meet the requirements set by ProTerra and WWF Brazil on behalf of the fish feed industry, are serving the relatively limited soy demands from Norwegian aquaculture. Other companies, in the poultry sector, have opted out of Brazilian soy altogether to avoid the risk of association with deforestation. In Denmark, a national alliance for sustainable soy has been established by Ethical Trade Denmark. The alliance combines the efforts of environmental NGOs, retailers, food companies, livestock cooperatives and feed companies to create a path towards responsible and deforestation-free soy that also have the EU deforestation regulations in mind. The members cover a large majority of the soy importing and consuming companies, who have agreed on a common vision and general requirements for imports of soy that are compliant with the FEFAC guidelines plus conversion free. The alliance is funded partly by public finance and the ministry representatives are members, thus creating direct linkages to the Danish public initiatives for FRCs and further to international coalitions such as ENSI and CSI.  Initially focused on RTRS book and claim soy and regional credits, due to availability, the members have now partly progressed to mass-balance certified soy. Figure 3.3 shows the current progress in Danish imports of soy traded under different trading models and the expected developments toward 2025. In 2021, 61% of Denmark’s net import of 1.6  million tons of mainly soybean meal were mass-­ balance certified under corporate schemes, covered by RTRS credits or purchased as segregated ProTerra. The increasing share of MB soy (see Fig. 3.3) is a result of new contracts between pig and poultry producers and the feed companies, requiring a transition toward 100% MB over 5 years, with 2022 set at 40%. The increase in MB soy is partly a replacement of RTRS credits and therefore a shift from the independent scheme under RTRS to corporate schemes. This also means a likely change in requirements to producers, such as the cut-off date for the latest legal and illegal deforestation, and in assurance processes, such as the scope of audits – both areas where RTRS has more strict requirements than most corporate schemes. The transition towards MB soy does not fulfil the expected requirements in the EU deforestation regulations, as it, among others, requires all soy to be deforestation-­ free. In MB trade models, the non-certified soy products would carry substantial risks. The volumes and logistics in the supply chains for certified segregated soy are not yet sufficiently developed to allow a competitive cost model. Standard setters are therefore focusing on developing the MB model to allow their certified soy to be compliant with EU regulations. RTRS is working to solve this by creating a new verification mechanism, through which certification bodies can verify the non-­certified share of the MB soy and make sure it complies with the EU regulations based on data provided by the supply chain actors, such as geographic coordinates of the production site. A new RTRS platform will facilitate sharing of relevant data, improve the

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Share of soy imports 100%

Segregated (Due dilligence compable)

Mass Balance (MB)

Regional credits 50%

MB + verified deforestaon free (Due diligence compable)

Covered by credits

MB

Convenonal soy

0% 2020

2021

2022

2023

2024

2025

Fig. 3.3  The development in Denmark’s import of soy in different trading models for certified and verified responsible soy Note: Based on data from Danish RTRS members progress reports (annual reports to RTRS) and interviews with soy importing and consuming companies in Denmark and representatives from standard-setting organizations. From 2022 onwards these are assumptions based on interviews. ‘EUDR compatible’ indicates compliance with the new EU deforestation regulation

traceability of certified as well as non-certified material and the mix and become part of the backbone of companies’ due diligence system, also in the case of audits by public authorities. The trade model for mixed certified and verified deforestation-free soy, dubbed controlled mixing by RTRS, is also being developed by other standard setters. The competitive edge of being first mover lies with those who first offer a model for controlled mixing that complies with the EU deforestation regulation. Similar developments in soy imports, as portrayed in Fig. 3.3, are to be expected in other EU member states, when the EU deforestation regulation is implemented, and national and corporate soy sourcing strategies are adjusted for compliance reasons. The Danish transition model, which counts on the model for controlled mixing (see Fig. 3.3), includes capacity-building programs in Brazil, managed by WWF-­ Brazil and WWF-Denmark in collaboration with Danish alliance members and funded by public resources. Unlike the French soy charter and manifesto, the Danish soy alliance members purposefully maintain sourcing from certain high-risk soy areas, such as the MATOPIBA region in the Cerrado (Costa et al., 2021), based on a strategy to be a positive force for change (Bosselmann & Dolmer, 2022) and likely in order to maintain current supply chains. This is where the local capacity-building projects play a role. The project targeting the soy landscape in MATOPIBA is an example of a landscape or jurisdictional approach, where different stakeholders, who are active in the area, as well as financial institutions, are working towards common goals. This form of multi-stakeholder initiatives is described in more detail in Chap. 10. One of the

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six routes promoted by the CSI to conversion-free and responsible soy is landscape initiatives (CSI & Proforest, 2021). Among others, IDH, the Sustainable Trade Initiative, has worked on jurisdictional approaches and recently launched the SourceUp program, where multiple stakeholders in a producing region are organized in coalitions called compacts. Compact members, rather than companies on foreign markets, agree on priorities for development issues for the local area, such as deforestation or living income, and set goals and develop strategies in collaboration with buying companies (IDH, 2021). A compact focusing on soy has been set up in Brazil covering 12 jurisdictions and including various local initiatives and projects for sustainable landscape management in accordance with the SourceUp guidelines. Based on a self-verification approach, there is external assurance of goal setting and progress among stakeholders, but progress reporting will be validated by a regional and global panel. The emphasis on local stakeholders’ sustainability goals is a reaction to Brazilian stakeholders’ critical view on externally defined and enforced requirements in sustainability standards and policies emanating mainly from the European market. The involvement of an international buyer in the soy compact is meant to ensure alignment with export market demands without compromising the emphasis on local priorities. When projects and initiatives developed by organizations and companies representing European interests meet and interact with projects and initiatives developed and implemented by Brazilian stakeholders, previous contrasting attitudes may be aligned for sustainable management of soy-producing landscapes. Whether or not the new EU deforestation regulation will drive this congruency of sustainability governance depends on how international and domestic market actors implement the European legislation on the ground in Brazil.

3.6 Policy Implications Producing and consuming regions often have different perceptions of what is a sustainable development for an economic sector, the people in it and the landscape surrounding it (Lipschutz, 2004). That is also the case for EU soy consumption and Brazilian soy production,5 which risks creating divides rather than common goals for bilateral environmental governance of soy. The EU deforestation regulation may exacerbate such a divide unless implementation on the ground in Brazil is coordinated with local and national actors. Considerations of national sovereignty, also in environmental governance, is one of the reasons the US FOREST act proposes a different approach than the EU regulation. The act describes implementation of action plans to support countries and areas with high deforestation risks to reduce

 This view has been presented to the authors at several occasions in meetings with Brazilian agricultural organizations and political groups. 5

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that risk, thus emphasizing public bilateral collaboration rather than distant regulation through market actors. While the EU deforestation regulation communicates a clear message regarding the goal and the means, practical implementation must consider the possible divide in sustainability governance between producing and consuming regions. The mechanisms by which international and European companies will meet public and private market demands in the EU should target improvements in the enabling conditions of primary producers in Brazil. This includes better integration of financial institutions in responsible soy supply chains, including adoption of criteria for soy investments that follow commonly agreed definitions of responsible and conversion-free soy and financial mechanisms for investments in recuperations of marginal agricultural lands. It also includes landscape or jurisdictional approaches to responsible sourcing that build capacity among local stakeholders and are implemented in coordination with the stakeholders, including local authorities. As was witnessed during the soy moratorium and during the political administration in 2019–2022 in Brazil, the role of national and local authorities is key to environmental successes or failures in the agricultural environment nexus. While a decrease in independent and corporate standards may not be expected, it is important to work towards harmonized definitions and goals for responsible and conversion-free production and trade that are accepted and applied sector wide in order to reach critical leverage in the market. A harmonized approach also leads to simplified monitoring efforts, as it enables the development and maintenance of common databases and maps, as well as precompetitive tools for guidance for different stakeholders in the global supply chains. Data sharing is key to the transparency of supply chains and supply chain actors and will enable downstream actors to make informed choices of suppliers, going beyond the EU regulations, and create better incentives for suppliers to direct a larger share if not all of their business towards responsible soy. Though the change in political administration in Brazil in early 2023 may turn around the political rhetoric and institutional framework to shift the balance between economic exploitation of natural ecosystems and environmental protection to the benefit of the latter, strong incentives from the market are still required, not least in the case of voluntary actions – or inactions – by soy producers. The new EU regulations will be pre-competitive within the EU market, but producers and other operators in the supply chain in Brazil will have the choice to service other markets with fewer requirements and thus lower entry costs. To sustain a trade between Brazil and Europe of responsibly produced soy, incentives for Brazilian actors is needed, compatible with the costs of meeting environmental and social requirements by actors on the European market. However, premium incentives may not need to be substantial if effective enforcement of the Brazilian environmental legislation is in place across the soy-producing regions and supply chains, thus removing cost saving of non-compliance with legislation.

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3.7 Conclusion Soy producers in Brazil are facing the demands and requirements of a multitude of stakeholders inside and outside the soy supply chain to produce soy in responsible manners. Even though actors in the Brazilian soy sector have also participated in multi-stakeholder fora for responsible soy, the definitions and criteria in use in standards and private policies are largely rooted in the European market. This has created a divide between soy-producing and soy-consuming regions, which has been used politically domestically in Brazil. The Amazon Soy Moratorium, partly led by Brazilian stakeholders, was successful for more than a decade, despite being partially offset by leakages. Recent years of changed environmental political rhetoric have resulted in setbacks for the Amazon and in other biomes. Meanwhile, the impacts of the multitude of independent and corporate standards and zero-­ deforestation commitments have been limited across the biomes in Brazil, where soy continues to be among the main drivers of natural ecosystem conversion. The standards and commitments require implementation on the ground not only with clear economic incentives for compliance but also locally grounded capacity building. The proposed EU deforestation regulation may have a double role, as it can exacerbate the divide through top-down legislative requirements and at the same time drive international companies and European and Brazilian stakeholders to improve the shared responsibility required for the sustainable development of the soy sector – and for market access to the EU.

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Kusumaningtyas, R., & van Gelder, J.  W. (2019). Setting the bar for deforestation-free soy in Europe: A benchmark to assess the suitability of voluntary standard systems. Profundo. https:// www.profundo.nl/download/iucn1906 Lima, M., da Silva Junior, C. A., Rausch, L., Gibbs, H. K., & Johann, J. A. (2019). Demystifying sustainable soy in Brazil. Land Use Policy, 82, 349–352. Lipschutz, R.  D. (2004). Global environmental politics: Power, perspectives, and practice. CQ Press. Macedo, M. N., DeFries, R. S., Morton, D. C., Stickler, C. M., Galford, G. L., & Shimabukuro, Y. E. (2012). Decoupling of deforestation and soy production in the southern Amazon during the late 2000s. Proceedings of the National Academy of Sciences, 109(4), 1341–1346. Massoca, P.  E., Delaroche, M., & Lui, G. (2017). Lessons from the soy and beef moratoria in Brazil. Zero deforestation: A commitment to change (pp. 151–159). Tropenbos International. Motta, R., & Arancibia, F. (2015). Health experts challenge the safety of pesticides in Argentina and Brazil. In J. M. Chamberlain (Ed.), Medicine, risk, discourse and power (1st Edn., pp. 179–206). Routledge. Nepstad, L. S., Gerber, J. S., Hill, J. D., Dias, L. C. P., Costa, M. H., & West, P. C. (2019). Pathways for recent Cerrado soybean expansion: Extending the soy moratorium and implementing integrated crop livestock systems with soybeans. Environmental Research Letters, 14, 044029. NSC. (2021). Norwegian salmon sets higher standard for sustainable feed. Norwegian Seafood Council, Online article, 3(3), 2021. https://en.seafood.no/news-­and-­media/news-­archive/ norwegian-­salmon-­sets-­higher-­standard-­for-­sustainable-­feed/ Pendrill, F., Persson, U. M., Godar, J., Kastner, T., Moran, D., Schmidt, S., & Wood, R. (2019). Agricultural and forestry trade drives large share of tropical deforestation emissions. Global Environmental Change, 56, 1–10. Pendrill, F., Persson, U. M., Kastner, T., & Wood, R. (2022). Deforestation risk embodied in production and consumption of agricultural and forestry commodities 2005–2018 (1.1) (Data set). Zenodo. https://doi.org/10.5281/zenodo.5886600 ProTerra. (2022). ProTerra standard V4.1. ProTerra Foundation. https://www.proterrafoundation. org/wp-­content/uploads/2022/02/ProTerra-­Standard-­v4.1-­2022.pdf RTRS. (2022). RTRS management report 2021. Round Table on Responsible Soy Association. Sauer, S. (2018). Soy expansion into the agricultural frontiers of the Brazilian Amazon: The agribusi-­ ness economy and its social and environmental conflicts. Land Use Policy, 79, 326–338. Schilling-Vacaflor, A., Lenschow, A., Challies, E., Cott, B., & Newig, J. (2021). Contextualizing certification and auditing: Soy certification and access of local communities to land and water in Brazil. World Development, 140, 105281. Simons, L., & Nijhof, A. (2020). Changing the game: Sustainable market transformation strategies to understand and tackle the big and complex sustainability challenges of our generation (1st ed.). Routledge. Søndergaard, N., Dias de Sá, C., Jank, M. S., & Gilio, L. (2021). Decoupling soy and beef from illegal Amazon deforestation: Brazilian private sector initiative. In CEBRI, Insper, agro global. Brazilian Center for International Relations. https://www.insper.edu.br/wp-­content/ uploads/2021/03/Relatorio_CEBRI-­Insper_22mar.pdf Song, X.-P., Hansen, M. C., Potapov, P., Adussi, B., Pickering, J., Adami, M., Lima, A., Zalles, V., Stehman, S. V., Di Bella, C. M., Conde, M. C., Copati, E. J., Fernandes, L. B., Hernandez-­ Serna, A., Jantz, S.  M., Pickens, A.  H., Turubanova, S., & Tyukavina, A. (2021). Massive soybean expansion in South America since 2000 and implications for conservation. Nature Sustainability, 4, 784–792. Thives, T., Søndergaard, N., & Aoki Inoue, C. Y. (2022). Bringing states back into commodity-­ centric environmental governance: The telecoupled soy trade between Brazil and China. Third World Quarterly, 43, 2129. https://doi.org/10.1080/01436597.2022.2081144 Van der Ven, H., Rothacker, C., & Cashore, B. (2018). Do eco-labels prevent deforestation? Lessons from non-state market driven governance in the soy, palm oil, and cocoa sectors. Global Environmental Change, 52, 141–151.

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Vasconcelos, A. (2022). Latin America’s environmental policies in global perspective. Uncovering the deforestation and climate risks of Chinese and EU soy and beef imports from South America. The Wilson Center. Villoria, N., Garrett, R., Gollnow, F., & Carlson, K. (2022). Leakage does not fully offset soy supply-­chain efforts to reduce deforestation in Brazil. Nature Communications, 13, 5476. https://doi.org/10.1038/s41467-­022-­33213-­z Voora, V., Larrea, C., & Bermudez, S. (2020). Global market report: Soybeans. International Institute for Sustainable Development (ISSD). https://www.iisd.org/system/files/2020-­10/ssi-­ global-­market-­report-­soybean.pdf Walker, R. T., Defries, R., Vera-Diaz, M., Shimabukuro, Y., & Venturieri, S. (2009). The expansion of intensive agriculture and ranching in the Brazilian Amazon Amazonia and global change (Geophysical monograph series) (Vol. 186, pp. 61–81). American Geophysical Union. https:// doi.org/10.1029/2008GM000735

Chapter 4

Brazilian Agriculture and the International Political Economy of Climate Change Matias Alejandro Franchini, Eduardo Viola, and Julia S. Guivant

Abstract Greenhouse gas emissions from agriculture and land use in Brazil accounted for 72% of the total in 2020. Apart from this, the agricultural sector, particularly the agribusiness, with growing economic power and political influence over the last three decades, has been linked to the path of deforestation in the Amazon and the Cerrado, central to Brazilian identity and international perceptions of the country in terms of climate change. In this chapter, we analyze the heterogeneous trajectory of the agricultural sector as key to understanding the past, present, and future role of Brazil in the International Political Economy of Climate Change. The questions we seek to answer in this chapter are thus: What is the influence of different subsectors of Brazilian agriculture, mainly agribusiness, on the role of Brazil in the international political economy of climate change? Will the trajectory of the different sectors reduce or increase the level of climate commitment of Brazil? We answer these questions through the analysis of the agricultural subsectors’ positions on GHG emissions and climate policy responses of the national government in four historical periods, using the Climate Commitment Approach. In this regard, we look at three dimensions: technical modernization, political power, and relation to climate change.

M. A. Franchini (*) Universidad del Rosario, Bogotá, Colombia e-mail: [email protected] E. Viola Fundação Getúlio Vargas (FGV), São Paulo, SP, Brazil e-mail: [email protected] J. S. Guivant Universidade Federal de Santa Catarina (UFSC), Florianópolis, SC, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_4

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4.1 Introduction Climate change is one of the greatest governance challenges of our time, as it combines enormous complexity, high transition costs, potentially devastating but time-­ dispersed effects, the demand for cooperative action, and an incentive structure that makes cooperation difficult (Keohane, 2014; Ostrom, 2009; Prins et al., 2010). As a result, humanity has made little progress in its mitigation. We, therefore, face a critical situation, with only a few decades to act if we want to avoid the most negative effects of global warming. The agricultural sector is a major protagonist in this process, as greenhouse gas emissions (GHGs) from agriculture and land use (AFOLU) accounted for around 23% of the world total between 2007 and 2016 (IPCC, 2019). In the case of Brazil, the relevance of the sector is even greater, as AFOLU emissions in 2020 accounted for 72% (SEEG, 2022) of the national total: 45% related to land use change (mainly deforestation) and 27% related to agriculture. Emissions from the agricultural sector alone grew around 45% between 1990 and 2020 (from 390 MtCo2e. to 577 MtCo2e.). The trends of land use change have been erratic due to the oscillations of deforestation rates in the Amazon, but with a declining tendency between 2005 and 2012, and an increase with a visible acceleration since 2019 (INPE/MCTI, 2022). In the Cerrado savannah, deforestation declined dramatically in the second half of the 2000s. However, the data from 2021 shows that the total deforested area in that biome is the largest since 2015, with an increase of 8% compared to the 7905.16 km2 deforested in the previous 12 months (IPAM, 2022). Apart from its impact on GHG emissions, over the last three decades, the agricultural sector in Brazil has been growing in terms of economic power (proportion of GDP, investment, and exports) and political influence, granting it growing capabilities to impact politics and policies (Pompeia, 2021). This does not mean that the agricultural sector has been homogeneous. On the contrary, there are major differences in terms of structure, business behavior, and political positioning, conforming to two major sectors in contemporary Brazil: the agribusiness (ABS) and family agriculture (FA). Moreover, the ABS is composed of three subsectors and the FA of two (Table 4.1), as explained in the following pages. In this chapter, our focus relies primarily on the ABS. The agricultural sector has been linked to the path of deforestation, which has been central to Brazilian identity and international perceptions of the country in Table 4.1  Agriculture sector in Brazil Agriculture sector Agribusiness Conservative Globalist conservative Reformist

Family agriculture Subsistence Capitalized

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terms of climate change. On one hand, deforestation has been an outcome of Brazilian development since the sixteenth century. On the other hand, the conversion of the Amazon Forest has placed Brazil as a global environmental villain since the 1980s (with the exception of the period 2004–2011), generating several reactions from the international community, particularly the European Union (Viola & Franchini, 2018). Accordingly, the heterogeneous trajectory of the agricultural sector is crucial to understanding the past, present, and future role of Brazil in the International Political Economy of Climate Change (IPECC). This regards both emissions and political responses, that is, the trajectory of the agricultural sector in Brazil is central to assess the level of the country’s climate commitment. The questions we seek to answer in this chapter are: What is the influence of Brazilian different sectors of agriculture, particularly the agribusiness sector, over the role of Brazil in the international political economy of climate change? And, will the trajectory of the different sectors reduce or increase the level of climate commitment of Brazil? We answer the questions through the analysis of the agricultural sectors over Brazilian GHG emissions and climate policy responses of the national government in four historical periods, using the Climate Commitment Approach (Viola & Franchini, 2018). In this regard, we look at three dimensions: technical modernization of the agricultural sector, political power, and relation to climate change. Accordingly, the chapter is divided as follows. In the first part, we present our analytical framework: the difficulty of climate cooperation at the global scale, the role of agriculture in global emissions, and the role of climate commitment in dealing with the climate crisis. From the second to the fifth parts, we analyze the historical role of the agricultural sectors in Brazilian emissions and political positions divided into four periods: 1970–2003, 2004–2010, 2011–2018, and 2018–2022. We conclude with the analyses of future perspectives.

4.2 Analytical Framework The management of climate change issues requires the cooperation of a wide range of actors located at various levels and spheres of governance, from local to global and from public to private, to ensure effective, efficient, and equitable responses. The demand for cooperative action coexists with an incentive structure that makes cooperation difficult. This social dilemma (Ostrom, 2009) applies to almost every agent involved in the global governance of climate change. For nation states, the challenge is to combine mitigation actions with the demands for sovereignty, which are local and immediate (Franchini et al., 2017). For the agricultural sector, the challenge is to combine the volume of production and level of productivity with low GHG emissions. While establishing the relevance of considering the role of different actors to analyze the prospects for the governance of the climate crisis, the problem of how to analyze the role of these actors, i.e., how to assess whether they are drivers of

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aggravation or mitigation of the problem, remains to be solved. To this end, we turn to the Climate Commitment Approach (CCA), whose objective it is precisely to assess the degree to which a social actor assimilates and responds to the climate crisis as a central challenge for humanity (Viola & Franchini, 2018). Under this criterion, it is possible to classify the forces on a continuum that has, at one end, the conservative category, which are those unwilling to make the necessary efforts to stabilize the climate system, and at the other end, the reformist category, which are willing to do so. For the agricultural sector, the CCA analyzes three dimensions. The first one is the path of sectoral emissions. The second is the carbon footprint of the practices that are used: deforestation or carbon capture, use of fertilizers and agrochemical products, no-till farming, etc. The third is the impact of the sector on national policies regarding mitigation. In the case of Brazil, mainly forest protection. Accordingly, a reformist agricultural sector reduces emissions using low-carbon practices and influences the national government to adopt more stringent climate policies.

4.3 Period One: The Green Revolution in Brazil (1970–2003) Brazilian agriculture has historically been one of the drivers of deforestation in the country, beginning with the Atlantic Forest since the seventeenth century. More recently, emissions have originated from deforestation in the Araucanian Forest in the twentieth century, the Cerrado since the 1950s, and the Amazon Forest since the 1970s. The other important driver has been cutting trees and logging for construction and industrial development (Pádua, 2009). According to the prestigious Institute Carbon Brief (Evans, 2021) emissions from deforestation have been key to defining Brazil as the fourth largest country driver of global warming in the last two centuries, just behind the United States, China, and Russia. Until the 1970s, the Brazilian agribusiness sector was poorly developed. The country was an importer of key products, like wheat, corn, and poultry, and an exporter of a handful of products, such as coffee, cacao, and sugar, which have been competitive in the world economy since the nineteenth century (Pompeia, 2021). The vast majority of agricultural outputs had low productivity and were centered on the production of rice and beans, oriented toward the domestic market. However, the so-called Green Revolution, which began to take place in the mid-1970s, gaining momentum in the 1980s, accelerated the sector’s rate of internationalization in the following decades. A production, industrialization, logistics, and commercialization complex was then consolidated, with the central participation of the Brazilian Agricultural Research Corporation (EMBRAPA), which would preserve a very important role in the following modernization of ABS (Pompeia, 2021). Consequently, the Brazilian ABS has become one of the most competitive in the world and made the country one of the largest exporters of agricultural products. However, this has also resulted in significant social-ecological impacts, due to monoculture and the intensive and out-of-control use of pesticides, herbicides, and

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fertilizers. In 1975, the “Proálcool” program began, an interesting example of ABS focused on ethanol production, which led to increased production and efficiency to meet the massive government program of substituting gasoline for alcohol during the oil price crisis of that decade. The program continued through the 1980s until it was partially abandoned in the 1990s due to a supply crisis and a loss of consumer confidence (Viola et al., 2013). Also in the 1970s, some expansion of cattle ranching was developing in the Cerrado Biome, the new agricultural frontier of the country, although the meat quality was low, from a sanitary point of view. In the 1980s, a capitalized agroindustry developed in the South, centered on the production of poultry  – chicken and turkey  – and pork meat, which included complex systems of refrigeration and distribution, but also resulted in significant levels of pollution in the regional rivers and soils (Guivant & Miranda, 1999). The end of the regulatory stocks of the National Corporation of Agricultural Supply (CONAB) also played a very important role because it opened the market to competition. The “Southern States” were central to the modernization of agriculture and the consolidation of a newfound food system. In the three states – Paraná, Santa Catarina, and Rio Grande do Sul – agricultural production was dominated by family farming based on waves of European immigration from the end of the nineteenth century until World War II.  This region was responsible for most of the emblematic products of the new urban diet. The dynamism of these markets in the 1960s and 1970s opened the prospect of integration into the modernization process of the family farming sector in the South. The importance of the technified small farmer achieved greater diffusion in the 1990s based on analyses that identified the prevalence of predominantly family farming in major industrialized countries (Abramovay, 1992; Guivant, 2003; Veiga, 1991). Family farming acquired a new importance in the new “quality” markets, in organics (David & Guivant, 2020), and in activities related to agro- and ecotourism (Guivant et al., 2010). Likely the single most relevant component of the capitalist revolution in Brazilian agriculture was the massive expansion of soy cultures since the late 1980s, following a global trend. The structural liberal reforms of the period  – particularly the 1994 Plano Real – provided the macroeconomic stability and access to foreign capital and markets that the sector needed to expand. By the mid-1990s, the transition from traditional latifundio to capitalist agribusiness was all but complete. Progressively, the sector decreased its reliance on subsidized loans from the public sector and began to finance itself through private banks, although the offer of abundant credit, with low interest rates, by the Banco do Brasil’s “Plano Safra” continues to be very important until the present time (Pompeia, 2021). Around this time, another major development was evident, as the expansion of cattle ranching in the Amazon Region became a major driver of deforestation. Historically, this has been the most vulnerable issue within the Brazilian environmental agenda and is subject to international criticism and pressure (Viola & Franchini, 2018). This period is also characterized by the growing political power of the ABS, after decades of decreasing influence amid the industrialization process that began in the 1930s. Since the 1970s and roughly until the Plano Real, the main

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goal of the sector was to secure access to subsidized loans, which in a context of high inflation, was clearly a privilege. Credit amnesties and moratoria were also central to the sector’s agenda, which has usually been successful and continued until today. A major milestone in the construction of the sector’s political power was during the process of constitutional reform that took place in 1987–1988. Indeed, fearing the possibility of radical agrarian reform, the sector articulated to avoid that scenario and was ultimately successful (Pompeia, 2021). In terms of climate change, there has been no major clash between the expansion and modernization of Brazilian ABS and the emergent climate agenda in the international system, symbolized by the approval of the UNFCCC at the Rio Conference, in 1992. This was in part due to Brazil’s position in the international politics of climate change: the absence of any mitigation responsibilities for developing economies. Another reason is that the ABS was not perceived as a major driver of deforestation1 in the Amazon until the 1990s, since it was the national government that promoted the colonization of the biomes (Cerrado and Amazonia) and rewarded deforesters with land property formalization until the late 1980s (Viola, 2002). Although it is true that the 1988 Constitution established the basis for environmental protection – reinforced by a major reform of the Forest Code in 1996 that increased up to 80% the portion of land that must be protected in private properties in the Amazon  – the lack of enforcement of the rule prevented major conflicts around it (Viola & Franchini, 2018). The notion that the ABS was a central driver of deforestation, and that it therefore should be halted, would only become rooted in the environmental discourse in the 1990s. It is, therefore, difficult to say whether the sector was reformist or conservative, since mitigation was not yet an international issue in this period.

4.4 Period Two: From Indifference to Moderation: The Climate Agenda Impacts the ABS (2004–2010) In this period, major changes in terms of climate policy took place, particularly regarding deforestation control in the Amazon since the arrival of Marina Silva to the Ministry of the Environment in 2003 (Viola et al., 2013). Accordingly, the climate/environmental agenda would directly affect the path and interests of the ABS, which accepted some legal restrictions to the expansion of the agricultural frontier in the Amazon. Moreover, a modern and more environmentally concerned sector of the ABS emerged in this period.  During the 1980s and 1990s, deforestation had a cycle with four phases: first, the logging of high-­ value trees producing severe forest degradation; second, the burning of the remaining forest (the most destructive phase of the cycle); third, the establishment of cattle on open land (cattle ranching with very low productivity); and two possibilities for a fourth phase: abandonment of the land with natural forest growth (although less carbon and biodiversity intensive than in the past) or a switch to more intensive cattle ranching or annual soybean crops. 1

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In terms of technical development, the Brazilian ABS continued its path of modernization and capitalization. New environmental productive methods began to be diffused, particularly no-till farming, which, on one hand, reduces emissions compared to tillage practices, but is still intensive in the use of herbicides and nitrogen fertilizers, which increase the emission of nitrous oxide. Moreover, the use of fertilizers has been very high in Brazilian agriculture (particularly in the Cerrado savannah) because of the low concentration of micro-nutrients compared with the United States and Argentina (Viola & Mendes, 2022). In the second part of the 2000s, the ABS experienced a major expansion, due to the growing demand for food commodities from China and the Middle East, which Brazil was in a perfect position to satisfy. Accordingly, Brazilian meatpackers – like JBS and Marfrig – became global, expanding their markets and opening many meat processing plants outside the country, supported by the policy of national champions developed in Lula’s government, with major impacts on the environmental commitment of large parts of the sector. One major characteristic of this period has been the significant growth of genetically modified organisms (GMO) crops in the country – as also experienced in the United States and Argentina. This had major impacts on both the development of the ABS and its environmental effects. Accordingly, in 2019, Brazil became the largest producer of soybeans in the world, while China now is the largest single consumer and importer, as well as the world’s fourth largest producer (USDA, 2019). The passing of the Biosafety Law in 2005 was central to this process. Indeed, the bill was approved after a long period of debate and polarization between two main coalitions, pro and against GMOs – both very heterogeneous. The pro-GMO sector can be considered to have won the “war,” and the polarization was concentrated in a few debates within the National Technical Commission on Biosafety (CTNbio) placard (Fonseca & Guivant, 2019). The expansion of transgenic varieties has resulted in many environmental problems (conversion of large areas of great conservation importance, including forests and savannas; use of burning to clear forests; soil erosion, intensive use of agrochemicals) and social conflicts (marginalization of small producers, changing land ownership patterns, and labor rights infringements) (Zanoni & Ferment, 2011). Another specific controversy has developed around glyphosate, a broad-spectrum herbicide that in higher plants destroys the ability to synthesize three essential amino acids, and is the world’s top seller. Its use has accelerated with transgenic crops such as Monsanto’s Roundup Ready soybeans, genetically modified to increase their resistance to glyphosate. In soy cultivation in Brazil alone, herbicide use went from 142,000 tons in 2005 to 226,000 tons in 2009 (an increase of 60%) (Marques et al., 2021; Carneiro, 2017; Dias et al., 2019). However, within the international debate around transgenic soy, significant divergences have emerged among soy producers on environmental issues. Together with other economic and environmental actors (e.g., WWF), the Amaggi group has promoted the creation of the Round Table of Responsible Soy (RTRS). Among its core principles are the reduction of carbon emissions and the control of soy production from areas that have been deforested (Guivant, 2020). In 2011, the first 85,000 tons of RTRS-certified soy produced by Grupo Maggi were exported to the

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Sustainable Soy Initiative (IDS), a group of Dutch food, retail, and food companies, and Nevedi (representing the Dutch animal feed industry). The latter two associations, like several others that are part of the RTRS, have stated that their goal is to achieve 100% responsible soy imports into the Netherlands within a few years.2 The Mato Grosso Association of Soybean and Corn Producers (APROSOJA) decided not to participate in the RTRS and started another program, Soja Plus, together with the Brazilian Association of Vegetable Oil Industries (ABIOVE), Senar/MT and the Social Cotton Institute (IAS). The Amaggi group, on the other hand, emphatically supports the RTRS and has a governance committee to improve sustainability practices (e.g., discouraging extensive cattle raising for causing deforestation and boycotting slaughterhouses that raise cattle in illegally deforested areas). The conflict exposes strategic differences between the major soy producers in the country, which undoubtedly influence the socio-environmental conditions of this production, as well as the sector’s alliances and demands. For example, APROSOJA demands the end of the Soy Moratorium, an environmental pact signed in 2006 between soy producers, international traders, international and national NGOs, European retailers, Banco do Brasil, and the Ministry of the Environment to guarantee that soy traded was not related to the destruction of the Amazon. In this process, the driving force were the international players due to their strong leverage on the Brazilian exporters. Moreover, at the time, the European/Japanese markets were more important than others. Soybeans produced in deforested regions of the Amazon cannot be bought after July 22, 2008, the reference date of the Forest Code. Annual estimates starting in 2006 have shown positive results (INPE/MCTI, 2022). In recent years, environmental organizations have proposed a similar measure to protect the Cerrado, the region where agribusiness is expanding most over native vegetation, especially in the so-called Matopiba region – Cerrado portions of the states of Maranhão, Tocantins, Piauí, and Bahia – the main deforestation frontier. In terms of political power, the ascendance of the sector in Brazilian politics continued to grow along with its economic importance and price bonanza generated by the commodities super boom. It is very important to consider that the ABS also benefits from low taxation in comparison with industry and services. Some proposals for creating certain taxes for agricultural exports existed in the Workers Party, but they remained peripheral. As an ideal type heuristic tool, we can classify the sectors of agribusiness according to the combination between business behavior (whether the sector has internalized environmental restrictions or not) and political behavior (whether the sector supports or opposes deforestation control in the Amazon), each dimension having two poles: conservative and reformist. This combination gives us four types of ABS: 1. Conservative/conservative: This sector has conservative business behavior (no internalization of environmental restrictions) and conservative political behavior (opposing any control of deforestation in the Amazon). This sector concentrates its products mostly on the domestic market.  https://responsiblesoy.org/members?lang=en. Consulted in 18/09/22.

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2. Reformist/conservative: This sector internalizes some environmental protection in its business practices and politically opposes any control of deforestation in the Amazon. This sector concentrates its production mainly within international markets. 3. Conservative/reformist: This sector does not internalize environmental protection in its business practices, but politically supports control of deforestation in the Amazon, because it does not consider deforestation as related to its interests. This sector concentrates its production mainly in the domestic market. 4. Reformist/reformist: This sector internalizes environmental protection and supports deforestation control in the Amazon and the Cerrado and is by far the most internationalized sector, with significant exports to all markets and particularly for the most demanding ones in terms of sustainability. To simplify the complexity of the classification, we can regroup the ideal types in three positions: (a) The Reformist, comprising the fourth group, which is technologically advanced and has internalized environmental protection. (b) The Globalist-conservative, encompassing the second group, which is technologically advanced but with no internalization of environmental protection. (c) The Conservative, comprising the first and third groups, which do not internalize neither the most sophisticated technology nor environmental protection. There is no precise study on the relative weight of each group in this period, but according to some evidence, we can hypothesize a predominance of the conservative, the Globalist-conservative in second place, and the reformist being the smallest. Despite the differences, the ruralist agenda has aggregated the interests of all agribusiness sectors: strong defense of private property rights, presence of the state repressing criminal activities, and subsidies for agriculture. The invasion of private lands carried out by diverse organized groups, particularly the Landless Peasants Movement (MST) – an ally of the Worker’s Party (WP) government – generated increased revindication for more security that was progressively perceived as being unmet. Consequently, the distance between the ABS and the WP grew, a fact that would be central to understanding both the impeachment of President Rousseff in 2016 and the election of President Bolsonaro in 2018 (Pereira & Viola, 2021, 2022). As already mentioned, climate change became a relevant part of the political agenda in this period, differently from the previous one. The core of this development was the policy of deforestation control in the Amazon, the Program for Control of Deforestation in the Amazon (PPCDAM) carried on by the Ministry of the Environment with the support of other branches of the national government  – including the Federal Police  – and some Amazon states and municipalities. The PPCDAM was extremely successful, bringing down deforestation rates in the Amazon from around 28,000  km2 in 2004 to 7500  in 2009 (see Fig.  4.1). This achievement enabled the Lula administration to claim global leadership in climate and environmental issues (Viola et al., 2013). Another highly successful initiative

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Fig. 4.1  Deforestation rates in the Amazon; 1990–2022, in km2. (Own elaboration based on INPE/ MCTI, 2022) (Note: 2022 data is an official estimate; definitive data will be released in the first half of 2023)

was the program for the control of deforestation in the Cerrado savannah, which reduced deforestation by 65% between 2004 and 2010 (Pereira & Viola, 2021). For the first time, this development put the ABS agenda in direct opposition to climate change policies, since the expansion of the agricultural frontier in the Amazon was severely limited by governmental action based on environmental concerns. Indeed, also for the first time in Brazilian history, there was an effective policy that restricted the expansion of the agricultural frontier. The sector was not able to react, taken by surprise by the consistency of the policies to repress the expansion of illegal activities (in general and cattle raising in particular) in the Amazon. Moreover, part of the ABS embraced the forest protection discourse, worried about eventual global market restrictions on its products based on environmental issues. A major example of this development was the Soy Moratorium, as mentioned before. A similar scheme was created around meat exports, although less rigorous and effective. The government also established positive incentives, particularly the Low Carbon Agriculture Plan (Plano ABC), which created a credit line to finance environmentally friendly practices in the sector. During the formation of the Brazilian position for the UNFCCC Conference of the Parties in Copenhagen (Cop 15  in 2009) the reformist sector of ABS gained significant influence. This was translated into the position of the Ministry of Agriculture, which in turn supported the Ministry of Environment in opposition to the Ministry of Foreign Affairs and the Ministry of Science and Technology, which had a conservative position (Viola et al., 2013). Nonetheless, a major part of the ABS was upset with the new status quo in the Amazon and Cerrado and began to build a unified discourse against it. The National Confederation of Agriculture (CNA) was central in this process, which would play out very effectively in the next period.

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LULUCF

2,000 1,500 1,000 500 0

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Fig. 4.2  Emissions from agriculture and LULUCF; 1990–2020, in Million Mt. CO2eq. (Own elaboration based on SEEG, 2022)

In this period (2004–2010), the Reformists and Globalist Conservative sectors transitioned from a conservative position in the first half of the 2000s, due to its impact over deforestation, to a more moderate actor in the second half. This transition was primarily externally driven, that is, imposed on the sector by national policies to control deforestation which forced it to adopt a more rational behavior. Another driver of moderation was the globalization of many Brazilian firms, which feared that high rates of deforestation might jeopardize the access to the more environmentally concerned markets of the West, particularly Europe, Japan, and the United States. However, this driver tended to subdue by the end of the decade, as new markets with laxer environmental rules – such as China and the Middle East – were becoming dominant for Brazilian exports. In more structural terms, the power of the less modern sector of the ABS, which had been profoundly affected by the stringent policies around the expansion of the agricultural frontier, was now growing.

4.5 Period Three: The Victory of the Conservatives (2011–2018) In this period, the conservative and the Globalist-conservative were able to regroup and successfully challenge the climate policies that were limiting the expansion of the agricultural frontier. At the same time, international norms to restrict food exports based on climate concerns proved to be less relevant than previously expected, particularly after the failure of the climate bill in the US Senate3 (Viola &  The Waxman-Markey Bill (American Clean Energy and Security Act), which established a framework for mitigation efforts in the United States, passed the House of Representatives in June 2009 but never got to the Senate given the closed opposition of the Republican Party. 3

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Franchini, 2018). Accordingly, the Reformist sector of the ABS accommodated its interests with the Conservatives. The modernization and capitalization of the ABS continued in this period, as well as the growing importance of non-Western markets in sectorial exports. As Brazilian fiscal and external balances deteriorated throughout the period, the capacity of the ABS to generate foreign currency and fiscal revenue increased its influence in Brazilian society (Pompeia, 2021). Related to the preceding, the most relevant outcome of this period was likely the expansion of the political power of the ABS, expressed in the enlargement of the Rural Caucus in the Federal Congress (the so-called Bancada Ruralista) both in the 2010 and 2014 elections (Rochedo et al., 2018), formed by Conservative and Globalist-conservatives, with practically no presence of the Reformists. This development was the result of years of political work conducted by the ABS political leadership, particularly the CNA – the National Confederation of Agriculture  – which was able to create a relatively unified discourse among the diverse factions of the sector (Viola et al., 2013). Accordingly, the Rural Caucus was able to successfully pressure for the erosion of the system that prevented the expansion of the agricultural frontier in the Amazon and the Cerrado in the previous decade, meaning that the ABS and the climate agenda entered an era of contradiction. The first major expression of this conservative reaction of the ABS was the reform of the Forest Code in Congress in 2012, which degraded the rules protecting the Amazon Forest and included an amnesty for previous illegal deforesters (Viola et  al., 2013). Despite this negative effect, the Reform also introduced some positive dimensions, particularly the creation of the Rural Environmental Registration (Cadastro Ambiental Rural) with the goal of mapping deforestation. This period also marks the definitive ascendance of the sector over the Presidency, as President Dilma Rousseff handed over the Ministry of Agriculture to the CNA. Moreover, Dilma did almost nothing to avoid the illegal expansion of agriculture, including budget cuts in the Ministry of the Environment and a dwindling action of the Federal Police and the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA). As a consequence, a major part of the Brazilian environmental movement, which had supported the Workers Party government since 2003, abandoned the coalition (Viola et al., 2013). Deforestation rates in the Amazon began to rise again in 2013 (see Fig.  4.1). However, the forest protection infrastructure continued to consolidate in other biomes, such as the Cerrado, the ecosystems of Southern Brazil, and the Atlantic Forest. Even though some interests of the agricultural sector were supported by the Rousseff administration, the Bancada Ruralista was a central actor in her impeachment and the transition to Michel Temer’s tenure, as the rural security agenda and the chaotic economic performance based on ineffective state intervention put the Workers Party and the ABS definitively at odds (Rochedo et al., 2018). Those same items were at the core of the massive support that the ABS gave to Jair Bolsonaro in the 2018 election. Bolsonaro sided with the BR in the revindication of more private arms to fight insecurity in rural areas, the need for a more liberal economic agenda,

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and the idea that environmental regulations are an obstacle to economic development in general, and to the ABS in particular (Franchini et al., 2020). Most of the ABS has continuously been a strong supporter of Bolsonaro, except for the reformist sector, which systematically has criticized the President’s negligent approach to deforestation in the Amazon. The majority of family farming is sympathetic to the Workers’ Party. It is worth highlighting at this point that among family farming, two subsectors can be identified. One is subsistence family farming, which is low or very low capital intensive, from a technological point of view. Although it has shown a relative improvement in the use of animal and mechanical traction since the 2000s, a very high percentage above 30% still works exclusively using the hoe as a plowing instrument of land (Guanziroli et al., 2019), mainly in the Northeast and Northern regions. Most small properties have not followed the technological development observed in large rural properties in recent decades (Schneider, 2016). Another sector exists in areas considered “capitalized” or modernized in the South and Center-South, plus those in the new agricultural frontiers and in areas that until recently were considered traditional (Heredia et al., 2010). Organic agriculture, among family farming, can be included in both subsectors, but mainly in the second, with a significant implementation of certification systems. In this period, Brazilian ABS continued its economic and political expansion. At the same time, the conservative sub-sectors were able to react to the climate policy development of the previous period and successfully degrade the rules governing deforestation control, particularly in the Amazon. This movement was supported by the national government, in which the presence of ruralismo also grew, following the increasing presence of the sector in the National Congress.

4.6 Period Four: Reformist Changes in the ABS (2019–2022) This period is characterized by two internal dislocations among the agricultural sectors: parts of the Globalist Conservative moved to the Reformists, perceiving the growing weight of the climate agenda in the international arena; and part of the Conservative moved toward the Globalist-conservative because of big opportunities for investing in technology derived from the expansion of foreign markets and high prices. The major international driver of the growth of the Reformists is the strong position taken by the World Economic Forum in favor of the Paris Agreement and of promoting fast decarbonization of the global economy. The Reformists, which had been politically silent during the Dilma and Temer administrations, became progressively vocal with the increasing burning and deforestation in the Amazon and Cerrado and the European criticism of the environmental policy of the Bolsonaro administration. Indeed, the peak of Bolsonaro’s conservative displays in relation to the Amazon were the infamous August/September 2019 burnings (Brandalise, 2019). At first, the presidency denied the scale of the problem, then attributed the spread of the fire to the dry season, and then blamed environmental NGOs for the situation. Brazil

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came under criticism from other governments for its reluctance to take action to protect these global commons (Walt, 2019), returning to the position of climate villain that it had occupied in the late 1980s, mid-1990s, and mid-2000s. Particularly vocal in this critique was French President Emmanuel Macron, who went so far as to suggest the need for an international status for the Amazon in the face of Brazilian neglect. The Reformist and many Globalist-conservatives became very concerned with eventual restrictions on Brazilian products based on environmental concerns, particularly carbon intensity. For instance, meat products directed to the Western markets are monitored to guarantee that they do not come from deforestation areas, while those directed to the domestic markets are not. Moreover, part of the export-­ oriented cattle ranching industry has incorporated virtuous mitigation practices, such as the integration of agriculture, silviculture, and cattle raising. The Reformist and the organic family agriculture are at odds with Bolsonaro’s climate and environmental policies, although parts of the first still support him based on the rural security agenda and to avoid the return of a Workers Party government. Despite the rise of the reformist development, this period is also characterized by a degradation of deforestation control mechanisms in the Amazon and mounting evidence that global warming is increasingly affecting the Amazon, the Cerrado, and the most pristine of Brazilian ecosystems: the Pantanal. Indeed, significant changes have been taking place in the soybean supply chain as of 2019, with growing global concerns for climate change and deforestation in Brazil reaching the highest levels since 2006. Brazilian, German and American researchers, in a paper published in 2020 (Rajão et al., 2020) in Science magazine under the title “Rotten apples of Brazilian agribusiness,” pointed out that about 10% of soybean properties in the Amazon and Cerrado deforested in a potentially illegal way, disregarding the minimum reserve percentages imposed by the 2008 Forest Code. While in 2006, 30% of the expansion occurred in forested areas in the Amazon, with the Soy Moratorium, this figure decreased. The Cerrado in particular is thus under increasing threat from a huge boom in global demand for soy since this biome accounts for about 60% of Brazil’s total soy production, about 20 times the amount cultivated in the Amazon. Loss of biodiversity, labor rights violations, and soil and water contamination are also observed (INPE/MCTI, 2018). A recent study prepared by Trase Earth, Imaflora, and ICV (Vasconcelos et al., 2020) pointed out that in Brazil’s largest soy-producing state, Mato Grosso, 27% of all deforestation observed between 2012 and 2017 occurred on soy farms. The study showed that 80% of illegal deforestation on soybean farms occurred on 400 properties, which represents only 2% of the total number of soybean farms in the state. For the most part, these farms are large rural properties (73%). It is also estimated that more than 80% of the soy produced on farms where illegal deforestation occurred has been exported to global markets – 46% to China and 14% to the European Union. As the global preservation of forests and the prevention of their degradation are some of today’s greatest sustainability challenges, and as soy production is the second largest cause of deforestation in Brazil after cattle raising, a wide variety of actors are engaged in demanding an end to deforestation in soy-producing areas. In

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Brazil, beef causes six times more deforestation than soybeans (Vasconcelos et al., 2020). The meatpacking sector has been under strong pressure from shareholders and NGOs to act. Yet, there are significant problems to fully tracing indirect suppliers in the beef value chain that may produce in deforested areas. Traceability of cattle origin, the fragmentation, and the long integration of the cattle supply chain in Brazil generate significant challenges for tracing systems. Some initiatives are ongoing, with JBS and Marfrig being the most advanced on the issue. Still, companies lack clear GHG reduction targets (Brazilian Coalition’s Beef Traceability Taskforce, 2020). International reactions in the face of increased deforestation in the Amazon include 251 global investors with $17.7 trillion in assets who have issued a demand that companies meet their commitments to avoid deforestation in commodity supply chains or they could risk losing access to international markets. In December 2019, 87 UK companies and asset managers called for an extension of the Amazon Soy Moratorium, while in June 2020, 29 state-owned financial institutions responsible for more than $4 trillion in assets expressed their grave concern about increasing systemic risks (Jolly & Ambrose, 2019). The widespread international reactions to the fires of 2019 have alerted companies and investors to manage the various reputational, operational, legal and regulatory risks. These pressures impact food producers, retailers, investors, and commodity traders to reassess their supply chains to combat deforestation and achieve environmental goals. This period is somewhat ambiguous. On one hand, deforestation rates in the Amazon have been expanding at levels not seen since the early 2000s, stimulated by the anti-environmental pro-development discourse and actions of the Bolsonaro administration, including deep cuts in the MMA budget and the partial dismantling of the federal environmental bureaucracy (Viola & Franchini, 2022). On the other hand, within the ABS, there has been a dislocation to a less conservative position, affected by both domestic and international developments. However, most of the sector still supports Bolsonaro.

4.7 Perspectives and Final Considerations Led by agribusiness, the Brazilian agricultural sector has been expanding, capitalizing, modernizing, and globalizing in the last four decades, without suffering major crises, even when the national economy did. At the same time, the sector has also been able to articulate, gain political power, and influence the policy agenda to pursue its interests. This is likely to continue in the foreseeable future. Returning to our research questions, the influence of the different sectors of agriculture, mainly agribusiness, over the role of Brazil in the international political economy of climate change has been mixed, but mostly negative. Firstly, the sector in general terms has been a major driver of deforestation, particularly in the Amazon and the Cerrado biomes. The only partial exception to this rule has been the period between 2004 and 2011, in which the policies to control deforestation limited the

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illegal expansion of the agricultural frontier. However, it is also relevant to highlight that the Reformist/conservative and Reformist/reformist sub-sectors do not rely on deforestation to expand their activities. Second, in terms of GHG emissions and wider socio-environmental metrics, while the modernization of the sector has increased productivity and reduced carbon emissions, the irrational use of GMOs, fertilizers, and pesticides has had negative impacts on nitrous oxide emissions, soil erosion, marginalization of small producers, and human and ecosystem health. Finally, in terms of political standing, the sector has used its growing political power to limit forest protection and advance a very loose governance structure over the use of fertilizers, GMOs, and pesticides, particularly in the fourth period we have considered. Moreover, during this same period, most of the ABS (except reformists) became a massive supporter of Jair Bolsonaro, who carried on the most anti-environmental climate agenda in modern Brazil (Franchini et al., 2020). Regarding the future, that is, whether the trajectory of the different sectors will reduce or increase the level of climate commitment of Brazil, the global preservation of forests and the prevention of their degradation are some of the greatest global sustainability challenges. A wide variety of actors are engaged in demanding an end to deforestation in areas where soy and beef are produced, since soy production is the second largest cause of deforestation in Brazil after cattle ranching, as shown in the previous sections. Moreover, global commodity markets tend to incorporate sustainability concerns, however heterogeneously – China being clearly more ambiguous regarding the issue than the Western markets. Consequently, a major shift to low-carbon agriculture at the global level that might empower the existent reformist players in Brazilian ABS is not likely to happen in the short term. However, gradual change will likely occur, such as the strategies of carbon neutrality for 2040 announced in 2021–2022 by major firms. The path of domestic climate politics will be significantly impacted in the Lula government to start in January 2023: there is a chance for a more accelerated expansion of the low-carbon agribusiness and small-scale family farming (both organic and conventional). In any case, Brazilian agriculture has the potential to become a powerhouse in terms of low-carbon processes based on moderate and rational use of nitrogen fertilizers; the management and rotation of pastures; the integration of livestock, crops, and forests; the expansion of organic farming; and the creation of an agricultural bond market associated with decarbonization. Indeed, Brazil has a major potential for carbon sequestration in agriculture – mainly from both largeand small-scale reforestation and afforestation – and could benefit from the incipient global carbon market designed by the Paris Agreement. For this to happen, two conditions need to be met: first, the fast eradication of deforestation; second, the creation of a regulated and efficient domestic carbon market.

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Chapter 5

Brazilian Agriculture and the Global Environmental Agenda Rodrigo Carvalho de Abreu Lima and Fernanda Kesrouani Lemos

Abstract  Deforestation, biodiversity loss, and climate change are challenges faced worldwide, characterizing an environmental crisis. Nonetheless, hunger and poverty have deepened due to the Covid-19 pandemic. Agriculture is mostly seen as a villain in the environmental debate. However, the sector could also be part of the solution to this situation. In that sense, Brazilian agriculture is at the center of the environmental multilateral agenda by providing sustainable solutions to mitigate the crisis while working on preservation, mitigating GHG emissions and improving food security around the world. This chapter brings a Brazilian perspective on how its agriculture holds straight ties to the environmental agenda. Food systems are in constant improvement to face climate, biodiversity, and food insecurity at the national and global levels, to contribute to common challenges. The enforcement of the Forest Code plays a crucial role in the legitimization of Brazilian agricultural production through transparency of land use, conservation, and restoration. Agricultural innovations in all types of systems are central to increasing productivity and reducing GHG emissions as the core of the country’s policy, the ABC + Plan towards a low-carbon and resilient agriculture aligned to boost the conservation of its biodiversity and use of natural resources.

5.1 Introduction Agriculture is at the center of the debates about sustainable development. Food production, as well as feed, biofuels, and biomass, relies on the use of natural resources and the adoption of multiple technologies and management practices. R. C. de Abreu Lima (*) Agroicone, Curitiba, PR, Brazil e-mail: [email protected] F. K. Lemos Insper, São Paulo, SP, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_5

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According to the United Nations Environment Programme (UNEP), the world faces a triple planetary crisis from an environmental perspective: climate change, pollution, and biodiversity loss. These three interconnected challenges can severely impact the ability of countries, companies and society to attain the Sustainable Development Goals (SDGs) from multiple perspectives. Additionally, the world’s population moves towards 8.5 billion in 2030, with this growth being concentrated in the least-developed countries (UN DESA, 2022). The Covid-19 pandemic has deepened the challenge towards ending hunger and widened the global problem to assure food security and nutrition for all. Moreover, the impacts of climate change and biodiversity loss pose a tremendous risk towards ending hunger and assuring food security (SDG2).1 The intensification of severe climate conditions, such as drought, changes in rainfall precipitation, and floods put food production at risk. The implementation of the Paris Agreement requires the adoption of mitigation and adaptation measures that contribute to limiting temperature increase to a maximum of 1.5 °C, and agriculture has an important role to play as part of the solution to this goal. Biodiversity loss, due to deforestation and forest degradation, for instance, is at the center of the challenges towards drastically reducing impacts on biological diversity. Prompt restoration as a solution to reverse biodiversity loss and fostering the benefits from ecosystem services is a global challenge and connects agricultural production worldwide. Brazilian agriculture is connected to those challenges and has an immense potential to contribute to different SDGs: ending hunger and poverty (SDG2 and SDG1), prompting sustainable production and consumption (SDG12), contributing to reducing GHG emissions and fostering adaptation (SDG13), and promoting contributions to biodiversity (SDG15). The interlinkages of agriculture with the SDGs require a cross-cutting approach, combining technology, innovations, jobs, health, quality of life, and peace as a central pillar of sustainable development. In this sense, the goal of this chapter is to present, from a Brazilian perspective, the global environmental agenda attached to agriculture and show how Brazil is intrinsically connected to this debate. The challenges to transform food systems, the relationship between agriculture and climate change, and the interlinkages with biodiversity are the center of the multilateral environmental agenda and will be presented as a way to discuss how Brazilian agriculture impacts and contributes to common global challenges. In line with this, the first section presents a historical evolution of the concept of sustainable development, and the Brazilian responses to turn agriculture into part of global challenges. The second section is dedicated to climate change and its link to Brazilian agriculture. The challenges to address climate impacts towards food security have created strong pressures to increase food production, and Brazil has an important role to play in this regard. The third section will discuss how biodiversity is at the center of the multilateral environmental agenda, and what is at stake when it comes to promoting conservation and sustainable use, having agriculture as a

 Sustainable Development Goal number 2 towards the end of hunger and food insecurity.

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fundamental player. Some reflections will be presented at the end, aimed at connecting Brazilian agriculture with the multilateral environmental agenda and the challenges to building effective solutions towards sustainable development.

5.2 The Global Environmental Agenda The concept of sustainable development has been in constant transformation. The first notion about a common responsibility for natural resources emerged in 1969, in the book The Limits to Growth, published by the Rome Club (Meadows & Rangers, 2013). It is considered the first multilateral agenda for sustainability. However, the expression “sustainable development” emerged only in the 1980s jointly with the World Commission on Environment and Development.2 In Our Common Future, first published by the Commission in 1987, the notion of nations’ welfare changes the economic perspective as the only way to guarantee good standards of human life. In this report “sustainable development” emerges as the alternative way to pure economic development as a path to redeem the abyss between developed and underdeveloped countries, “The development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland, 1987, p. 46). From the 1960s to the end of 1980s, the concept of sustainable development evolved as several intergovernmental programs and organizations emerged to support environmental agendas, such as the Intergovernmental Panel on Climate Change (IPCC) regarding climate change. But, in the 1990s, the environmental agenda was strengthened; Agenda 21 was approved in 1992 at the UN Conference about Environment and Development (Rio 92 or the Earth Summit), as well as several treaties and instruments to promote and foster sustainable development, such as the Convention on Biological Diversity (CBD), the United Nations Framework Convention on Climate Change (UNFCCC), Rio Declaration on Environment and Development, and the Declaration with Principles on Forests. After Rio 92, the relationship between the environment and development became imperative for sustainable development. Agenda 21 (UNCED, 1993) proposed a roadmap with socioeconomic dimensions, conservation, and management of natural resources. It involved several stakeholders and mobilized financial resources. In 2012, the Rio + 20 Conference approved the “The future we want” decision as a common multilateral view aimed at improving sustainable development for all. The conference resulted in more than 700 voluntary commitments and new partnerships for sustainable development. Moreover, the governments agreed to adopt policies for a green economy, work on a financial strategy for sustainable development, and

 It was created in 1983 in a meeting presided over by Gro Harlem Brundtland, former minister of Norway. 2

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strengthen the UNEP and several decisions on thematic areas, including food security. From Rio + 20 to 2015, the multilateral efforts to address what is sustainable development and how to put every country on a path to meet its goals evolved once more. The “Transforming our world: the 2030 Agenda for Sustainable Development” Resolution, approved by the UN General Assembly in 2015, is a landmark to guide and promote sustainable development from a common and ambitious perspective. The 17 Sustainable Development Goals (SDGs) are a roadmap to support the adoption. This global agenda holds close ties to Brazilian agriculture. Translating this connection to the 17 SGDs demands considering two other concepts of the Food and Agriculture Organization (FAO): 1. The four pillars of Food Security and Nutrition (FSN): availability, access, utilization, and stability (FAO & World Bank, 2020). 2. The five principles of Sustainable Food and Agriculture (SFA) (FAO, 2022): (i) increasing productivity, employment and value addition in food systems; (ii) protecting and enhancing natural resources; (iii) improving livelihoods and foster inclusive economic growth; (iv) enhancing the resilience of people, communities, and ecosystems; (v) adapting governance to new challenges. These references, jointly with the SDGs, make it possible to see how the agricultural industry could be part of the solutions for sustainable development due to its many interconnections to the other economic sectors looking to achieve its final goal – zero hunger and poverty (SDGs 1 and 2). Taking SDG 12 as a starting point for the analysis,3 ensuring sustainable patterns of production and consumption, the interconnections with the other SDGs can be summarized as follows: • SDG 1 – No poverty: As agriculture is a relevant source of income and the food systems’ development also implies developing cities (connected to rural development) and increasing income and employment from services and related industries. • SDG 2 – Zero hunger: Increasing productivity is directly related to the availability of food, even though hunger also is a matter of access, utilization and stability. Brazil can be considered a case study of poverty and hunger reduction between the 1970s and 2010s, aligned with the development of its sustainable agriculture that relies on innovation, policies, land use, and food access. • SDG 3 – Good health and well-being: Sustainable production and consumption also impact health issues, quality of life, and longevity. Utilization is a key pillar that has surpassed the availability and access to food. • SDG 7 – Affordable and clean energy: Brazilian agriculture is also a source of clean-energy solutions. Products like sugar cane, soybean, maize, bovines’ tallow, and eucalyptus biomass are co-products to produce biofuels, opening

 The first of the FSN’s four pillars is food availability and the SFA is linked to productivity and value added in food systems. 3

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•

•

• •

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a­ ffordable solutions for transportation and cleaner energy. Through this, agriculture could mitigate climate change while diversifying its energy matrix. SDG 8 – Decent work and economic growth: The agriculture boom in Brazil in the 1970s allowed employment and economic growth and for the country to be considered as one of the main sources of food worldwide. SDG 9 – Industry, innovation, and infrastructure: Brazilian agriculture is based on increasing innovation in production and processing processes. Embrapa plays a great role in innovation and standards development as well as the private sector aligned with public policies. SDG 10  – Reduced inequalities: The reduction of inequalities can be a result from reducing poverty and hunger and increasing decent work and economic growth considering country’s challenges. However, sharing innovations with other countries with similar climate and natural resources conditions should be considered as an important contribution, as the case of Embrapa cooperation with some African countries demonstrates. SDG 13  – Climate action: Agriculture is part of the solution towards climate change. Address climate risks is fundamentally relevant to allow adaptation and mitigation actions to achieve food security. Low-carbon agriculture in Brazil is an immense opportunity to foster innovation aimed at promoting resilient food systems. SDG 15  – Life on land: Conservation and recovery are keywords that guide Brazilian policy for sustainable development in agriculture considering that its innovations and processes are oriented to sustainable production and inclusion. SDG 17 – Partnerships for the goals: Establishing internal and external partnerships for development is key to sustainable agriculture and to fostering innovation.

The environmental agenda has evolved through time leading to a wide approach to sustainability and agriculture. Brazilian agriculture is part of the solution to address several SDGs towards sustainable livelihoods. Managing interconnected food systems and the challenges of facing climate change and biodiversity loss are critical to allow the achievement of the SDGs.

5.2.1 Food Systems Transition Aligned with the SDGs In 2021, jointly with the FAO, the UN coordinated the Food System Summit (UN FSS), to accelerate the efforts in the SDGs to transform food systems. The aim to accomplish poverty eradication and food security at a global level (SDGs 1 and 2) has become increasingly urgent as the Covid-19 pandemic has increased poverty, hunger, and inequality worldwide. FAO is pivotal to measuring the achievement of the SDGs and has SDG 2 as its core goal but considers its interconnections to several others. One of the challenging and critical issues to be addressed under SDGs 2 and 12 is food loss and waste. According to FAO, every year approximately 1.3 billion

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tons of food is lost or wasted, representing one-third of total food output.4 Addressing this key factor could save thousands of people worldwide. Meeting these goals and challenges also requires access to technologies, innovation, and social policies to allow access to food, public credit policies, and private funding, among other challenges that are underlying SDGs 1 and 2. The possibility to improve, adapt, transform, and connect different stakeholders, aimed at producing and consuming responsibly within the scope of SDG12, is enshrined in the food systems. The proposed approach was fostering action into five development pathways: (i) ensure safe and nutritious food access to all; (ii) change to sustainable standards of food consumption; (iii) foster production to be positive with nature; (iv) promote equitable ways of subsistence; (v) build resilience to vulnerabilities, chocks, and stresses. These pathways that guided the FSS make agriculture an important sector to promote sustainable development as economic growth, social inclusion, and protection of the environment while contributing to the 2030 Agenda. The proposed pathways induce nations to select game-changing solutions. This was a good approach as they are completely aligned with the SDGs implementation and incorporate the FAO references of FSN and the five principles of Sustainable Food and Agriculture (SFA) already mentioned. Given the interdependence between the action tracks and related initiatives, Brazil proposed key solutions aimed at contributing to a transition to food systems that considered:5 • • • • • • • • •

Continuous and inclusive scientific research and innovation. Develop multiple food systems approaches adapted to local circumstances. Foster food security, GHG emissions reduction, and resilient agriculture. Promote renewable energy within the food systems. Incentivize agrobiodiversity integration into the food systems. Ensure safe, healthy, and nutritious food for all. Promote healthy and nutritious diets. Reduce food waste and loss in the food system. Promote trade as an essential condition towards FSN.

5.2.2 Land Use and Brazilian Agriculture Land use and land use changes are relevant issues concerning food systems in Brazil. Deforestation is a subject that calls attention worldwide, especially considering that Brazil has around 66% of its territory covered with native vegetation,

 “In Europe, 29 million tons of dairy products are lost or wasted every year; 8% of fish caught globally is thrown back into the sea and in most cases, they are dead, dying or badly damaged; almost 45% of fruits and vegetables produced are wasted; over 20% of meat produced globally is lost or wasted” FAO. 5  Based on: https://www.gov.br/mre/pt-br/cupula-2021-sistemas-alimentares-dialogos/documentos/at5_synthesis_of_propositions_wave1.pdf 4

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ranging from the Amazon Forest, different types of savannah (Cerrado), Caatinga, natural pastures, and other types of vegetation. Deforestation must be viewed through its drivers, combining agriculture, mining, land grabbing, illegal logging, and other illegal activities.6 The interplay between conservation and production through policies is at the forefront of agriculture and livestock sustainability. Conservation policies based on the National System of Protected Areas (SNUC in its Portuguese acronym) represent 155 million hectares (Ministry of Environment, 2022). Added to that, indigenous lands represent 118 million hectares. Moreover, there are an estimated 185 million hectares of native vegetation protected on farms due to conservation requirements of the Forest Code7 (permanent preservation areas8 [APPs] and legal reserve areas9) and 103 million hectares of remaining vegetation in private lands not covered by specific conservation policies (Guidotti et  al., 2018). On the other hand, crop and planted forest areas comprise 66.32 million hectares of crops and around 180 million hectares of pasturelands, which respectively represent 7.8% and 21.2% of the Brazilian territory (Embrapa, 2018). Given the amount of available pastureland, the possibility to improve productivity through technological deployment, the availability of degraded areas to be recovered, and the challenge to promote restoration of native vegetation, land use for agriculture and livestock will likely be present in the coming decades. The target to restore 30 million hectares of degraded areas up to 2030 within the ABC+ Plan suggests that Brazilian agriculture has an enormous opportunity to thrive by recovering degraded areas and soil and increasing production without the need to explore native vegetation areas. Figure 5.1 represents land use in Brazil. Land use changes for agriculture in Brazil in coming years might come from four main sources: (i) restoration of degraded areas; (ii) intensification of pasture areas and changing technologies towards integrated systems that comprise crop-livestock and forest; (iii) pasture areas released to other agriculture activities; (iv) restoration of native vegetation facing the implementation of the Forest Code. The expansion of livestock and agriculture does not need to depend on deforestation, due to the integrated systems technology that allows increasing productivity in pasture lands. The land use changes taking place on pasture will be central to allow more efficient land use, considering productivity gaps. From 169 million hectares in 2015, it was estimated that in 2030, the pasture area would comprise 161 million hectares, releasing 17 million hectares of land for crops, planted forests, and  For more information regarding deforestation, please refer to Sect. 5.2.  The Native Vegetation Protection Law reflects a key policy instrument aiming to promote the restoration of natural vegetation, curb illegal deforestation, and regulate with a great degree of enforcement permitted conversion or legal deforestation. 8  Permanent preservation areas (APPs) – spaces to be preserved both in rural and urban areas and its criteria vary according to the width of the river and water bodies, steep slopes, hilltops, and mangroves. 9  Legal reserve areas (RL) – a native vegetation area of 80% in the Amazon (50% in some cases), 35% in Cerrado areas in the North, and 20% in other areas that must be kept in rural properties. 6 7

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Native vegetation on private properties Native vegetation on vacant properties

25.6% 8.0%

Indigenous Land Integral conservation unit Planted pastures Native pastures

13.2%

Agriculture Planted Forests

16.5%

Infrastructure and others 10.4% 13.8%

Fig. 5.1  Land use in Brazil (%). (Reproduced from Embrapa, 2018)

restoration under the Forest Code. However, the LAPIG data already reached 161 million hectares in 2021 (Lapig, 2022), suggesting that this accommodation process is advancing towards land use change. Nonetheless, deforestation in the Legal Amazon10 has been increasing above expectations in the last 5  years. The connection between the growth of soybean production and the increasing cattle herd was direct in the area, even though productivity should be the key driver (Fig. 5.2). However, sustained growth of both commodities can also be observed in times when deforestation was decreasing (2005–2012). Yet, the Brazilian voluntary goal of reducing deforestation in the Amazon (to 3900  km2) has not been achieved, and a renewed increase has been observed since 2012. In 2019 and 2021, the deforested area reached more than 10,000 km2. The lack of deforestation control, especially after 2018, drew attention around the world because domestic and international commitments were not accomplished. This occurrence points to opportunistic behavior and also harms legally compliant producers seeking to operate sustainably. Nonetheless, Brazil has increased agricultural productivity above other countries, doubling livestock productivity and multiplied crops’ productivity fourfold: Despite negative environmental claims of the Brazilian agriculture sector, which mainly involves deforestation and land degradation, the sector has contributed to reducing the pressure on natural resources over the past decades. Over the last 25  years, production has grown by around 90%, but thanks to technological innovations introduced – and increasingly taking into account environmental restrictions – the incorporation of new land was

 Area that comprehends the Amazon biome, 20% of the Cerrado Biome and part of Pantanal. It holds 5.217.423 km2 or 61% of Brazilian territory. It includes 9 states of Brazil: Acre, Amazonas, Amapá, Maranhão, Mato Grosso, Pará, Roraima, Rondônia, and Tocantins. 10

5  Brazilian Agriculture and the Global Environmental Agenda Annual Deforestation (thousand km2) Cattle Herd (million animals)

Annual Deforestation (thousand km2)

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Cale Herd

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Soybean Producon

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Production in the Legal Amazon (million metric tons or million animals)

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Fig. 5.2  Brazil: deforestation, soy, and cattle herd in the Legal Amazon. (Elaborated by the authors based on PRODES/INPE and PPM-PAM/IBGE, 2021) only 32%. This trend should be accentuated by the diffusion of climate smart agriculture (CSA) technologies and practices (Arias et al., 2017, p. 20).

The private sector, consumers, NGOs, and sectorial associations have been taking action towards enforcing the Forest Code and an environmental pathway to sustainable agriculture in Brazil, joining forces to promote CSA11 with the effective implementation of conservation and restoration in rural areas. Illegal deforestation in rural areas is subjected to management under the Rural Environmental Registry (CAR) of the Forest Code, passing through a validation process governed by the state’s Environmental Secretaries. The validation system of the Brazilian Forest Service is supporting states in the process of analyzing the CAR information presented by farmers, and this is one of the fundamentally important

 “Climate-Smart Agriculture (CSA) is an approach to help the people who manage agricultural systems respond effectively to climate change. The CSA approach pursues the triple objectives of sustainably increasing productivity and incomes, adapting to climate change, and reducing greenhouse gas emissions where possible. This does not imply that every practice applied in every location should produce “triple wins.” Rather, the CSA approach seeks to reduce trade-offs and promote synergies by taking these objectives into consideration to inform decisions from the local to the global scales and over short and long-time horizons, to derive locally acceptable solutions”. 11

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processes to define the total area of native vegetation already conserved and the area to be restored.12

5.3 Agriculture and Climate Change Agriculture is intrinsically related to climate change due to the impact it suffers from the increase in extreme weather, the prevalence of droughts or changes in rainfall patterns, and the appearance of pests, putting food security at risk while functioning as a source of GHGs emissions. Direct emissions from agriculture accounted for about 11.6% of global GHG emissions in 2019, and land use, land use change, and forestry emissions (LULUCF)13 accounted for 3.3% of global emissions (ClimateWatch Data, 2022).14 The challenge of reducing emissions and allowing agricultural systems to adapt is an underlying condition to cope with the need to increase food production by around 40 to 50% by 2050 (FAO, 2018). The growing population in underdeveloped countries is the main concern to tackle food security and nutrition (SDGs 1 and 2). The ability to increase food production aligned with climate change challenges is critical to managing the challenge along with reducing food loss and waste. According to the OECD-FAO Agricultural Outlook 2022–2031, GHG emissions from agriculture are projected to grow by 6% over the next decade, especially considering livestock production. Yet, this growth will be lower than production outputs, suggesting a decline in the carbon intensity of agriculture over the next decade. As highlighted in the outlook: Yield improvements together with a declining share of ruminant production in total agricultural output will contribute to this outcome. Most of the projected increase in direct GHG emissions are expected to occur in middle and low-income countries in Asia and the Pacific and in Sub-Saharan Africa due to the higher output growth in production systems that are emission intensive (OECD-FAO, 2022).

To reach zero hunger by 2030, the OECD-FAO Agricultural Outlook 2022–2031 estimates the need to increase the global crop yield with 24% and a 31% increase in animal productivity with a tangible reduction of 6% of emissions in agriculture. This implies more than doubling the growth that the world is currently set to achieve in absence of additional measures. Increasing productivity relies on several factors, such as innovation and technology deployment, recovery of degraded areas, slowing or curbing deforestation, implementing forest restoration, stimulating the efficient use of all inputs as integrated pest management, the use of bio inputs as a trigger to reduce the use of  For more information regarding the CAR validation, please refer to: https://www.gov.br/agricultura/pt-br/assuntos/servico-florestal-brasileiro/boletim-informativo-car/BoletimCAR_SET11.pdf 13  Agriculture and LULUCF combined emissions are referred to as agriculture, forestry, and other land se (AFOLU). 14  The authors considered agriculture and LULUCF as separate sectors. The IPCC also considers agriculture, forests, and other land use – AFOLU as an approach. 12

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fertilizers and pesticides, farm management practices, new crop varieties and breeds, as well as digital innovations. Innovation is a trigger to foster sustainable agriculture aligned with climate-smart approaches that are feasible for the different agricultural systems on a case-by-case basis. Addressing the impacts of climate change on agricultural production is a central part of the Paris Agreement. The rationale of the nationally determined contributions (NDCs) presented by the Paris Agreement Parties was to present key actions aiming to reduce emissions and foster adaptation as a trigger to keep global temperature increases at a maximum of 1.5  °C.  Up to September 2022, 141 NDCs consider agriculture as a key area of action to improve mitigation and adaptation, which is fundamentally important to safeguard food production and nutrition security (UNFCCC, 2022a). Food production and nutrition security, agriculture, livestock and pastoralism, and fisheries are key areas when it comes to adaptation components comprised in the Parties’ NDCs. Which strategies, actions, and policies the Parties will adopt to implement climate-­smart agriculture will play a fundamental role in the ability to reach zero hunger and resilient agriculture from a multilateral perspective. According to FAO, it is critical to promote resilience in food chains, which is broader than considering only the production on farms. Climate change actions towards safeguarding food security must involve food supply chains from the field to the plate, comprising farmers and the industry but also involving supermarkets, refrigeration chains, e-commerce, jobs, and other links that will be essential to transform agri-food systems (FAO, 2021). Rather than solely expecting Parties to adopt strategies to push forward their agricultural components of the NDCs, it is important to consider how the UNFCCC supports the debates around agriculture and climate change, which is a key part of the agenda.

5.3.1 The Koronivia Joint Work on Agriculture At COP23, in 2017, Parties of the UNFCCC agreed to the establishment of the Koronivia Joint Work on Agriculture (KJWA) as a process to jointly address issues related to agriculture, and taking into consideration the vulnerabilities of agriculture to climate change and approaches to addressing food security (UNFCCC, 2018). Since 2018, Parties have used the Koronivia roadmap as a formal process under the UNFCCC to improve and advance common views about the challenges to foster win-win solutions towards reducing GHGs emissions in agriculture and improving adaptation. Parties and other stakeholders were invited to send submissions and foster an in-depth debate during the workshops. The key Koronivia outcomes area are summarized as follows (UNFCCC, 2019a, b, 2021a, b): • “Improve climate finance to support the adoption of adaptation and mitigations actions, including through the involvement of the Green Climate Fund (GCF) and other constituted bodies of the UNFCCC.”

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• “Recognize the importance of the continued involvement of scientific and technical knowledge to transform the agriculture sector.” • “There are various tools for assessing and monitoring adaptation and its co-­ benefits, while new tools could be developed for country-specific circumstances.” • “Sharing best practices among countries and other stakeholders.” • “Issues relating to soil carbon, soil health, and soil fertility as well as sustainable soil and integrated water management are context-specific and, taking into account countries’ circumstances, should be dealt with in a holistic and inclusive manner to realize the full potential of increased productivity in contributing to food security, adaptation and adaptation co-benefits as well as enhancing carbon sinks.” • “Soil and nutrient management practices and the optimal use of nutrients, including organic fertilizer and enhanced manure management, lie at the core of climate-­resilient, sustainable food production systems and can contribute to global food security.” • “Livestock management systems are very vulnerable to the impacts of climate change, and sustainably managed livestock systems have high adaptive capacity and resilience to climate change while playing broad roles in safeguarding food and nutrition security, livelihoods, sustainability, nutrient cycling and carbon management.” • “Improve sustainable production and animal health, aiming to reduce GHG in the livestock sector while enhancing sinks on pasture and grazing lands, can contribute to achieving long-term climate objectives, considering different systems and national circumstances.” • “Socioeconomic and food security dimensions are critical when dealing with climate change in agriculture and food systems.” • “Safeguard food security and ending hunger by designing sustainable and climate-­ resilient agricultural systems further recognizing the importance of long-term investments in agriculture is critically important to address socioeconomic and food security dimensions.” In September 2020, Parties started to discuss future topics and views regarding the progress made. In 2021, due to the Covid-19 pandemic, Parties discussed sustainable land and water management and strategies and modalities to scale up implementation. The views regarding how to move forward with the agriculture and climate change debate at the UNFCCC deserve attention, given that there are 141 NDC in the Paris Agreement considering agriculture as a key sector (UNFCCC, 2022a). The interlinkages of climate change, agriculture, and food security as intrinsic challenges became explicit during the 2022 meeting. Adaptation as a set of tools, technologies, and practices to support every producing system, according to countries’ realities and needs is a fundamental challenge to be addressed. Improving livestock management systems, restoring degraded areas, increasing productivity, promoting technologies that will enhance soil carbon sequestration, and fostering

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rural assistance and technology deployment are critical measures to be promoted. To do that, it is necessary to connect climate finance, especially for least-developed and developing countries, as a manner to increase win-win actions towards agriculture, climate change, and food security. At COP27, Parties finally agreed to continue the work for at least 4 more years, establishing the Sharm el-Sheikh joint work on the implementation of climate action on agriculture and food security, aimed at advancing the interconnection of views on how to address, promote, and foster transformations towards resilient agriculture. This work should deliver a range of multiple benefits, where adaptation, adaptation co-benefits, and mitigation will be part of climate action according to Parties’ realities and needs (UNFCCC, 2022b). Moreover, the decision recognizes that it is crucial to enhance coherence, synergies, coordination, communication, and interaction between Parties, the Financial Mechanism, the Adaptation Fund, the Least Developed Countries Fund, and the Special Climate Change Fund as a manner to address issues related to agriculture and food security. To allow Parties to present and connect strategies, policies, and actions, it was agreed to create a Sharm el-­ Sheikh online portal which will be managed through the Secretariat of the UNFCCC. It has become evident that it is necessary to foster technology and innovation, capacity building, and finance to support Parties to implement actions on agriculture. There is no single approach to address the interlinkages between climate change and agriculture. Rather, there are various approaches that can be used towards strengthening agriculture aimed at reducing the impacts of global warming, enhancing productivity, and improving adaptation measures. In 2021, the Initiative “Agriculture Innovation Mission for Climate” (AIM, 2022) was created by the United States and the United Arab Emirates as a manner to bridge the gaps on how innovation can foster win-win solutions towards producing more food and building upon resilience and mitigation of agriculture worldwide. The AIM for Climate Initiative comprises more than 30 countries and almost 200 stakeholders aimed at pushing climate-smart agriculture as a solution to transforming food systems based on innovation. It focuses on increasing and accelerating investment in, and/or other support for, climate-smart agricultural innovation based on scientific breakthroughs via basic agricultural research through the national-level government and academic research institutions, cooperation between research centers, institutions, and laboratory networks and other actions. The rationale of innovation as a trigger to foster agriculture production, adaptation, and GHGs intensity reduction is a precondition to achieving SDG2 and contributes to SDG13 assuming that agriculture is part of the solution to climate change. How countries and other stakeholders will develop strategies and put forward concrete actions in this regard is fundamentally important to allow a global response to food security threatened by climate change impacts.

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5.4 Brazilian Strategies Towards Promoting Resilient and Low-Carbon Agriculture Brazil has always been an important player in the climate change agenda. Between 2008 and 2009, when the negotiations aimed at a new and ambitious multilateral agreement comprising all countries in the adoption of mitigation and adaptation actions, Brazil was involved in climate policy building. In December 2009, after COP15  in Copenhagen, the National Policy on Climate Change (Law n. 12.187, 2010) was approved with the aim to organize the country’s actions and policies towards the nationally appropriate mitigation actions, Parties to the UNFCCC presented voluntary commitments. Brazil adopted a voluntary target based on emissions reductions from 36% to 38.9% up to 2020 based on the projected emissions. During 2010 and 2011, the Ministry of Agriculture engaged in a process to create a sectoral policy as a manner to organize and promote low-carbon agriculture as part of the Brazilian goals towards 2020. In 2011, the Low-Carbon Agriculture Plan, hereinafter ABC Plan (Ministry of Agriculture, 2011)15 was approved, combining a set of technologies that allow to reduce GHG emissions, increase productivity, improve management practices, and foster adaptation such as no-till, crop-­livestock-­ forest integration (CLFi) systems, biological nitrogen fixation, recovery of degraded pastures, planted forests, and manure treatment. The adoption of the technologies since 2011 enabled investment in technologies that are extremely helpful to improve agricultural production. The ABC Plan created an important policy to improve and foster sustainable agriculture, incentivizing the approval of low-carbon agricultural plans by states. Up to 2019, 2768 municipalities adopted the ABC Plan technologies, in coordination with the state’s management groups (Lima et al., 2020). The ABC Plan is funded by the Low-Carbon Agriculture Program: a specific credit line attached to the agricultural policy. Between the crop seasons 2011/2012 up to 2021/2022, the ABC Program contracts reached R$ 23.98 billion, according to the Brazilian Central Bank. According to the Ministry of Agriculture, the implementation of the ABC Plan technologies comprised 52 million hectares between 2010 and 2018, resulting in reduction of 170 million tons of CO2eq (Manzatto et al., 2020). Data from the Rede iLPF estimate that there are 17 million hectares of integrated systems using CLFi. These systems support the diversification of production in the same area, and the recovery and maintenance of soil fertility, promoting adaptation and animal welfare due to the integration of forest areas along with pasture, among other benefits (Polidoro et al., 2020). In 2015, at its intended nationally determined contribution submitted to the UNFCCC, Brazil proposed, among other actions, to improve the ABC Plan. (Federative Republic of Brazil, 2005). During 2021, the Ministry of Agriculture promoted a public consultation aimed at receiving proposals for a new phase of the low-carbon agriculture policy and approved the Sectoral Plan for Adaptation to Climate Change and Low-Carbon Emissions in Agriculture 2020–2030, hereinafter 15

 Please refer to Chaps. 14 and 17 for more details regarding the ABC Plan and its technologies.

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called ABC+ Plan (Ministry of Agriculture, 2021). The plan comprises a set of technologies that will aim to reach 72.6 million hectares up to 2030, achieving 1 billion tons of CO2 eq of emissions reduction.16 The ABC+ Plan is part of Brazilian strategies to support agriculture given the extreme weather and climate impacts. It is, therefore, the key agricultural policy under Brazil’s contributions to the Paris Agreement (Agroicone & INPUT, 2021). During the Food Systems Summit, held in 2021, Brazil proposed to support the development of multiple food system approaches adapted to local circumstances with a view to achieving food security, reducing GHG emissions, and fostering resilient agriculture as a national pathway to sustainable food systems (Summit Dialogues, 2021). At COP26, in Glasgow, Brazil presented the ABC+ Plan as a strategy to support innovation aimed at promoting adaptation and mitigation within agriculture. The states are reviewing their policies aimed at approving local ABC+ Plans, which will guide the implementation process according to states’ priorities and challenges. The ABC+ foresees the interaction with states, banks, the private sector, and academia among other stakeholders, as a manner to foster the implementation of low-carbon agriculture and incentivize adaptation. It is possible to sustain that the ABC+ Plan is the Brazilian strategy of how agriculture will contribute to achieving the 50% emissions reduction up to 2030 and climate neutrality up to 2050.

5.5 Agriculture and Biodiversity 5.5.1 Biodiversity at the Core of the Multilateral Environmental Agenda The Global Assessment Report on Biodiversity and Ecosystem Services (IPEBS, 2019), published by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), in 2019, emphasized the need to drastically reduce biodiversity loss and restore biological diversity as key conditions to human well-being and a healthy planet. Land and sea change, direct exploitation of biodiversity, climate change, pollution, and invasive alien species are critical causes of biodiversity loss. The challenges to putting biodiversity on a path to recovery is a key multilateral goal towards balancing conservation, sustainable use and fostering access to genetic resources, traditional knowledge, and benefit sharing. In 2018, the Convention on Biological Diversity (CBD) Parties agreed on a preparatory process for the development of the post-2020 global biodiversity framework (UNCBD, 2018) aimed at putting forward an ambitious set of biodiversity targets. The negotiations for a Global Biodiversity Framework (GBF) aimed at engaging countries and stakeholders to present actions that will allow tackling biodiversity loss, land degradation and desertification, ocean degradation, pollution, 16

 Ordinance n° 471, 10 August 2022, Ministry of Agriculture.

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species extinction, and several other biodiversity-related impacts that affect societies in different manners. The process of the GBF supported the dissemination of efforts to enhance biodiversity conservation, promote sustainable use, and improve access to genetic resources and benefit sharing as a manner to achieve win-win-win benefits. The vision of the GBF foresees that “By 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people” (UNCBD, 2022). The GBF inserts biodiversity in the multilateral agenda, involving not only the CBD Parties but the private sector and society as key stakeholders that need to cooperate and adopt measures aimed at contributing to 22 biodiversity targets. When it comes to sustainable use of natural resources, Brazilian agriculture can play an extremely important role in contributing to the GBF, by restoring degraded areas and forests, conserving native vegetation, promoting the rational use of inputs and avoiding pollution, and adopting low-carbon agriculture in producing systems, among other actions. How countries and the private sector will effectively implement biodiversity targets is at the core of the effective implementation of the GBF, especially when it comes to sustainable use of biodiversity and access to genetic resources and benefit sharing. How countries will integrate the private sector to monitor, report, and contribute to the implementation of the biodiversity targets will be fundamentally important to the ambition of the targets. The next section contextualizes some indicators related to the connection of agriculture to biodiversity and details how the sector can play an important role towards the GBF implementation.

5.5.2 Conservation and Sustainable Use of Biodiversity The GBF intrinsically connects conservation and sustainable use of biodiversity as a common challenge. Agriculture is, therefore, inherently involved in the adoption of practices that can generate positive and/or negative biodiversity outcomes. Deforestation, soil degradation, water use, sources of pollution, inputs use, impacts on pollination, the spread of invasive alien species, and loss of genetic resources are some of the critical issues that need to be addressed to improve production aligned with biodiversity. From a conservation perspective, the establishment of a target to conserve ecologically representative areas is a key goal when it comes to improving biodiversity worldwide. The establishment of corridors and connectivity strategies and the adoption of area-based conservation measures according to the distinct realities and policies of each country are critical to enhancing conservation. In line with this target, the restoration of native vegetation will play a fundamentally important role to support biodiversity and climate benefits. Brazil has an important role to play at the GBF as a country that contributes to global food security. From a conservation perspective, the existence of native vegetation along with productive areas, based on the Forest Code regulation, allows Brazilian agriculture to enhance conservation

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and production as a manner to promote win-win outcomes between biodiversity and climate change. The legal reserve areas and the permanent preservation areas inside farms contribute to biodiversity conservation and can enhance ecological corridors and connectivity areas, support soil and water conservation, pollination services, work as carbon sinks, and in some cases support the sustainable management of native vegetation, especially for smallholders. The compliance process for the Forest Code based on the CAR as the legal instrument that will provide information about the rural area and environmental conservation requirements will support biodiversity along with agricultural production.17 Moreover, the goal to restore native vegetation for Forest Code compliance, or as a manner to create economic restoration or even develop restoration towards generating carbon credits will contribute to restoring areas as biodiversity and climate positive goals. Targets for sustainable use of biological diversity are also important to the successful implementation of the GBF. Any agricultural system should adopt technologies and practices that would support biodiversity indicators, in line with the Sustainable Development Goals. Promoting the sustainable use of agricultural lands is at the core of the biodiversity agenda and Brazil has a strong role to play given its diverse agriculture. Curbing deforestation is at the center of avoiding biodiversity loss, and transparency regarding land use is a critical issue to be addressed. Expanding agricultural production on pasture areas and on degraded agricultural land is an immense opportunity for Brazil. Between 2010 and 2018, 26.8 million hectares of pastures were restored (Santos et al., 2022). The ABC+ Plan aims to promote 30 million hectares of degraded areas restoration up to 2030 as a way to transform degraded areas into productive ones. This is a strategy to increase agricultural production and foster sustainable use of biodiversity. Moreover, it also helps to improve production with no need to convert new areas, which is a key driver of biodiversity loss. The adoption of good agricultural practices and technologies, such as those comprised by the ABC+ Plan, allows to increase productivity, reduce GHG emissions, and promote resilience for different agricultural systems. Considering the implementation of the Forest Code and the adoption of low-carbon technologies, the ABC+ Plan is based on an integrated landscape approach as a manner to incentivize sustainable agriculture. In this scenario, the possibility to crop up to three harvests in the same area is an extremely important characteristic of Brazilian agriculture when it comes to increasing the outputs of production in the same area for a single period. The multi-crop approach of Brazilian agriculture allows for reducing the need for additional land, promotes soil fertility, and improves productivity. In addition, crops have also become more productive. While grain production grew 406% between 1980 and 2020, the planted area increased by only 64% (CONAB, 2021).

 For information regarding the Forest Code and it’s compliance process, please refer to https:// www.gov.br/agricultura/pt-br/assuntos/servico-florestal-brasileiro 17

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In 2020, the Ministry of Agriculture approved the National Bioinputs Program (Decree n. 10.375, 2020), aimed at encouraging the adoption of sustainable practices in the use of technologies, products, and processes for the manufacture of agricultural inputs. Bioinputs are a broad category of products such as inoculants, plant growth promoters, biofertilizers, products for plant and animal nutrition, biological pesticides, and herbal products, among others, that can contribute to enhancing innovation for agricultural systems. Only in 2020, 96 new biological products were registered in Brazil, which has 433 biological products registered since 1991 (CropLife Brazil, 2021). The use of inputs and fertilizers is another subject that should be carefully addressed when it comes to avoiding pollution and potential adverse impacts on biodiversity. Tropical climate conditions in Brazil require the use of inputs as crop protection tools. Considering the total volume of inputs used in 2018, for instance, Brazil ranked third, behind China and the United States. Considering that the second crop is significant- 34,6% (CONAB, 2022), Brazil ranks at the 25th place in the consumption of inputs per hectare according to FAO data (FAOSTAT, 2022). Several indicators exist that can be used to measure and monitor the adoption of technologies and practices that can contribute to the sustainable use of biodiversity or, conversely, generate impacts that will harm biodiversity. The integration of the private sector as a key player in the implementation of the GBF is fundamentally important to enhance a production and conservation approach.

5.6 Conclusions The climate and biodiversity crises highlighted by UNEP are at the center of the environmental multilateral agenda. The implementation of the Paris Agreement and the Global Biodiversity Framework up to 2030 and 2050 will be critical to driving effective changes that are needed to achieve sustainable development according to the SDGs. Beyond the environmental crisis, the current food crisis impacts almost 1 billion people according to the United Nations, which requires a tremendous effort to improve sustainable production, reduce food loss, and enhance food access through a myriad of policies and actions at the global level. Brazilian agriculture is at the center of the solutions to the climate, biodiversity, and food crisis. There is no single and simple solution to build sustainable development; rather, it is vital to combine solutions according to different national realities, possibilities, and challenges. The implementation of the Forest Code plays an extremely important role to provide transparency of land use for agriculture production, combining conservation and restoration of native vegetation in rural areas. The adoption of innovation – at all systems and scales of production – plays a critical role to permit not only adaptation at regional and local levels but also to reducing GHG emissions intensity and fostering productivity. This is at the core of the ABC+ Plan, which is the Brazilian approach to low-carbon agriculture. Moreover, the integration of sustainable use practices, technologies, and management at all

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production systems, along with the conservation required by the Forest Code, presents a huge opportunity to contribute to biodiversity and reduce impacts on the use of natural resources. The possibility to transform food systems walks hand in hand with innovation in all production systems, adapted to different national realities and needs, considering climate change impacts and the role of ecosystem services. Brazilian agriculture is at the center of the multilateral environmental agenda and can become part of the solutions towards improving resilience, reducing GHG emissions, disseminating technology, and innovation as key tools towards building sustainable development from the SDGs perspective. Food security and nutrition can be reconciled with environmental challenges, and Brazilian agriculture offers solutions towards finding mutual supportiveness between these global challenges.

References Agriculture Innovation Mission for Climate. (2022). About aim for climate. Retrieved September 21, 2022, from https://www.aimforclimate.org/#about-­aim-­for-­climate Agroicone & INPUT. (2021, September 10). ABC+ como estratégia da agropecuária no Acordo de Paris: Propostas para a consulta pública ABC+. Retrieved September 21, 2022, from https:// www.agroicone.com.br/wp-­content/uploads/2021/10/Nota-­Técnica-­ABC-­como-­estratégia-­no-­ Acordo-­de-­Paris.pdf Arias, D., Vieira, P.  A., Contini, E., Farinelli, B., & Morris, M. (2017). Agriculture productivity growth in Brazil: Recent trends and future prospects. World Bank. http://openknowledge. worldbank.org/handle/10986/32202 Brazilian Institute of Geography and Statistics – IBGE. Agricultural Census 2017. Available at: https://sidra.ibge.gov.br/pesquisa/censoagropecuario/censo-­agropecuario-­2017. Accessed on Sep 25, 2021. Brundtland, G. (1987). Report of the World Commission on Environment and Development: Our Common Future. United Nations General Assembly document A/42/427. Climate Watch. (2022). Climate watch data. Retrieved September 10, 2022, from https://www. climatewatchdata.org Companhia Nacional de Abastecimento [CONAB]. (2021). Safras. Retrieved October 10, 2021, from https://www.conab.gov.br/info-­agro/safras/serie-­historica-­das-­safras Companhia Nacional de Abastecimento [CONAB]. (2022). Safras 21/22. Retrieved December 1, 2022, from https://www.conab.gov.br/info-­agro/safras/graos CropLife Brazil. (2021). Atlas of Brazilian Agribusiness: A sustainable journey, from https:// croplifebrasil.org/publicacoes/atlas-­of-­brazilian-­agribusiness-­a-­sustainable-­journey/ Decree n. 10.375 of National Program of Bio-inputs and Strategic Council on National Program of Bio-inputs. (2020). https://www.in.gov.br/en/web/dou/-­/ decreto-­n-­10.375-­de-­26-­de-­maio-­de-­2020-­258706480 Empresa Brasileira de Pesquisa Agropecuária. (2018). Síntese: Ocupação e Uso das Terras no Brasil. https://www.embrapa.br/car/sintese Federative Republic of Brazil. (2005). Intended Nationally Determined Contribution: Towards achieving the objective of the United Nations Framework Convention on Climate Change. Retrieved September 21, 2022, from https://www4.unfccc.int/sites/submissions/INDC/ Published%20Documents/Brazil/1/BRAZIL%20iNDC%20english%20FINAL.pdf Food and Agriculture Organization of United Nations. (2018). The future of food and agriculture 2018: Alternative pathways to 2050. FAO.

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Food and Agriculture Organization of United Nations. (2021, November 1). Koronivia Joint Work on Agriculture: An important piece of the puzzle at COP26. Retrieved September 10, 2022, from https://www.fao.org/climate-­change/news/detail/en/c/1448707/ Food and Agriculture Organization of United Nations. (2022). FAOSTAT: Pesticides use. Retrieved September 21, 2022, from http://www.fao.org/faostat/en/#data/RP Food and Agriculture Organization of United Nations & The World Bank. (2020). Inter-Agency Social Protection Assessment (ISPA) tool on Food Security and Nutrition. https://doi. org/10.4060/cb1564en Food and Agriculture Organization of United Nations, International Fund for Agricultural Development, United Nations International Children’s Emergency Fund, World Food Programme, & World Health Organization. (2022). The State of Food Security and Nutrition in the World 2022: Repurposing food and agricultural policies to make healthy diets more affordable. https://doi.org/10.4060/cc0639en Guidotti, V., Freitas, F., Sparovek, G., Pinto, L., Hamurama, C., Carvalho, T., & Cerigoni, F. (2018). Números detalhados do novo código florestal e suas implicações para os PRAs. Imaflora. https://www.socioambiental.org/sites/blog.socioambiental.org/files/nsa/arquivos/ codigo_florestal_imaflora.pdf Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. (2019). Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services. IPBES. https://doi. org/10.5281/zenodo.3831673 Laboratório de Processamento de Imagens e Geoprocessamento. (2022). Land use in Brazil. Retrieved September 10, 2022, from https://mpas.lapig.eisa.ufg.br Law n. 12.187 of National Policy about Climate Change. (2010). http://www.planalto.gov.br/ ccivil_03/_ato2007-­2010/2009/lei/l12187.htm Lima, R., Harfuch, L., & Palauro, G. (2020, October). Plano ABC: Evidências do período 2010–2020 e propostas para uma nova fase 2021–2030. Agroicone. Retrieved September 10, 2022, from https://www.agroicone.com.br/wp-­content/uploads/2020/10/Agroicone-­Estudo-­ Plano-­ABC-­2020.pdf Manzatto, C., Araujo, L., Assad, E., Sampaio, F., Sotta, E., Vicente, L., Pereira, S., Loebmann, D., & Vicente, A. (2020). Mitigação das emissões de gases de efeitos estufa pela adoção das tecnologias do Plano ABC: estimativas parciais. EMBRAPA. https://ainfo.cnptia.embrapa.br/ digital/bitstream/item/215371/1/Manzatto-­emissoes-­gases-­2020.pdf Meadows, D. H., & Randers, J. (2013). Limits to growth. Chelsea Green Publishing. Ministry of Agriculture. (2011). ABC plan. Retrieved September 10, 2022, from https://www.gov. br/agricultura/pt-­br/assuntos/sustentabilidade/plano-­abc Ministry of Agriculture. (2021). Plano Setorial para Adaptação à Mudança do Clima e Baixa Emissão de Carbono na Agropecuária 2020–2030: Plano Operacional. MAPA. Ministry of Environment. (2022). Sistema Nacional de Unidades de Conservação da Natureza (SNUC). Retrieved April 20, 2022 from https://www.gov.br/mma/pt-­br/assuntos/ areasprotegidasecoturismo/sistema-­nacional-­de-­unidades-­de-­conservacao-­da-­natureza-­snuc Organisation for Economic Co-operation and Development, Food and Agriculture Organization of the United Nations. (2022). OECD-FAO agricultural outlook 2022–2031. OECD Publishing. https://doi.org/10.1787/f1b0b29c-­en Polidoro, J. C., Freitas, P. L, Hernani, L. C, Anjos, L. H. C., Rodrigues, R. A. R, Cesário, F. V., Andrade, A. G, & Ribeiro, J. L. (2020, April 21). The impact of plans, policies, practices and technologies based on the principles of conservation agriculture in the control of soil erosion in Brazil. Authorea. https://doi.org/10.22541/au.158750264.42640167 Santos, C. O. D., Mesquita, V. V., Parente, L. L., Pinto, A. D. S., & Ferreira, L. G., Jr. (2022). Assessing the wall-to-wall spatial and qualitative dynamics of the Brazilian pasturelands 2010–2018, based on the analysis of the Landsat data archive. Remote Sensing, 14(4), 1024. https://doi.org/10.3390/rs14041024

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Summit Dialogues. (2021). Brazil National Pathways. Retrieved September 22, 2022, from https:// summitdialogues.org/wp-­content/uploads/2021/09/National-­Pathways-­BRAZIL.pdf United Nations Conference on Environment and Development. (1993). Agenda 21: Programme of action for sustainable development, Rio Declaration on Environment and Development, statement of forest principles. Retrieved September 22, 2022, from https://sustainabledevelopment. un.org/content/documents/Agenda21.pdf United Nations Convention on Biological Diversity. (2018). Decision adopted by the conference of the parties to the convention on biological diversity. UN-CBD. Retrieved September 22, 2022, from https://www.cbd.int/doc/decisions/cop-­14/cop-­14-­dec-­34-­en.pdf United Nations Convention on Biological Diversity. (2022). Post-2020 Global Biodiversity Framework: Draft recommendation submitted by the Co-Chairs. Retrieved September 22, 2022, from https://www.cbd.int/doc/c/079d/0d26/91af171843b6d4e9bee25086/wg2020-­04-­ l-­02-­annex-­en.pdf United Nations Department of Economic and Social Affairs, Population Division. (2022). World population prospects 2022: Summary of results. UN DESA. United Nations Framework Convention on Climate Change. (2018). Report of the Conference of the Parties on its twenty-third session: Decision 4/CP23. Retrieved September 11, 2022, from https://unfccc.int/sites/default/files/resource/docs/2017/cop23/eng/11a01.pdf United Nations Framework Convention on Climate Change. (2019a). Koronivia Joint Work On Agriculture: Draft conclusions proposed by the Chairs – SB/2019/L.2. Retrieved September 22, 2022, from https://unfccc.int/sites/default/files/resource/SB2019_L.02E.pdf United Nations Framework Convention on Climate Change. (2019b). Koronivia Joint Work On Agriculture: Draft conclusions proposed by the Chairs – SB/2019/L.5. Retrieved September 22, 2022, from https://unfccc.int/sites/default/files/resource/sb2019_L05E.pdf United Nations Framework Convention on Climate Change. (2021a). Koronivia Joint Work On Agriculture: Draft conclusions proposed by the Chairs – SB/2021/L.1. Retrieved September 22, 2022, from https://unfccc.int/sites/default/files/resource/sb2021_L01_E.pdf United Nations Framework Convention on Climate Change. (2021b). Nationally determined contributions under the Paris Agreement. Retrieved September 10, 2022, from https://unfccc.int/ sites/default/files/resource/cma2021_08r01_E.pdf United Nations Framework Convention on Climate Change. (2022a). Nationally determined contributions under the Paris Agreement. Retrieved October 26, 2022, from https://unfccc.int/ documents/619180#:~:text=Open-­,Download,-­English%20only%20PDF United Nations Framework Convention on Climate Change. (2022b). Joint work on implementation of climate action on agriculture and food security. Retrieved November 18, 2022, from https://unfccc.int/documents/624317#:~:text=PDF%200.11%20MB-­,English,-­PDF%20 0.11%20MB

Chapter 6

Carbon Markets and the Financing of Forestry, Agricultural, and Livestock Activities Ronaldo Seroa da Motta

Abstract  Brazil has an NDC committed to a 50% GHG reduction by 2030 in relation to its 2005 level and has announced its net zero target by 2050. Such a decarbonization pathway is very much dependent on confronting illegal deforestation and reducing emissions from crop and livestock activities. In recent years, there has been increasing demand for carbon credits for forestry activities and agriculture. It is also well recognized that the country’s competitive advantages in nature climate solutions could benefit from international carbon trading. But carbon trade is an instrument and not a policy per se. Therefore, the opportunities related to Brazil’s competitive advantage in decarbonization activities in land use activities will require a great deal of enterprise between public and private sectors and, above all, a sound climate regulatory framework with powerful incentives and participative governance. This chapter reviews these challenges and opportunities and how the country’s climate policies may benefit from international carbon markets.

6.1 Introduction There is a remarkably high expectation that carbon markets will play an increasingly significant role in financing decarbonization activities. And in fact, the said participation has taken place in energy substitution and efficiency during the past decade, both as an object of trade in regulated carbon markets and carbon credits. In recent years, there has been increasing demand for credits for forestry activities and, to a lesser extent, for agriculture. These opportunities, however, still face climate integrity risks, which the agents of these markets are slowly seeking to equate. This text will discuss the evolution of these carbon markets and how they demand land use-related activities. These opportunities are crucial to Brazil’s decarbonization trajectories, as forestry, farming, and livestock activities related to land use accounted for approximately 72% of the country’s greenhouse gas (GHG) R. S. da Motta (*) Universidade do Estado do Rio de Janeiro (UERJ), Rio de Janeiro, RJ, Brazil © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_6

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emissions in 2020. Nearly 27% come from the agricultural and livestock sector, whereas 45% come from deforestation. Although emissions from the agricultural sector have grown only 3% since 2018, emissions resulting from deforestation have risen nearly 30% (SEEG, 2022). However, in line with the Paris Agreement of the Climate Convention, Brazil’s NDC has committed to a 50% GHG reduction by 2030 in relation to its 2005 level; Brazil is also a signatory of the Global Methane Pledge, announced at the COP26, and aims at reducing its overall methane emissions by 30% by 2030, compared with 2020 levels,1 in relation to which mitigation from crop and pasture activities will play a crucial role. Moreover, the country has announced its net zero target for 2050. Such a decarbonization pathway can only be achieved by ending illegal deforestation and reducing emissions from crop and livestock activities. Although in 2018 Brazil managed to reduce its deforestation rate by approximately 73% in relation to 2004, native vegetation loss has more than doubled since that year.2 The country’s success in lowering deforestation has been based on control instruments, such as inspection, punishment, and supply-chain intervention, and experts advocate for the adoption of different economic instruments (Assunção et al., 2015; Hargrave & Kis-Katos, 2013; Nepstad et al., 2014; Segrafredo & Seroa da Motta, 2012). For mitigation in crop and pasture activities, Brazil has set up a very ambitious rural credit program to promote low-carbon practices; however, the program has experienced barriers regarding its budget allocation and deployment efforts. Many initiatives have been undertaken to provide economic incentives to generate added value to forestry environmental services, such as trade in environmental goods and services yielded by conservation efforts, which causes local income and supports the bioeconomy. Nonetheless, evidence indicates that sustainable income provided by intact forests is highly spatially differentiated, and only some areas have the potential to offer the same economic yields through sustainable extraction as low-productivity agricultural and livestock activities.3 The existing technological challenges to harnessing the potential of the bioeconomy are even more significant, given that the industrial and energy sectors are more likely to reap benefits when processed products from these sectors are more able to add value. Scaling up changes towards sustainable agriculture requires leaving behind well-known practices in favor of models that still involve different technological risks and uncertainties that lower the expected income of landowners. The question of how climate policies and their economic instruments can assist the promotion of new land use activity paradigms become recurrent. Several experiences already offer guidance on how to answer it, which will be the main aim of this chapter.

 At the United Nations Framework Convention for Climate Change Conference, in November 2021 (COP26), over 100 countries committed to reducing their methane emissions by 30% by 2030, compared to 2020. 2  Based on data from PRODES/INPE (2022). 3  See, for example, Strand et al. (2018). 1

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This chapter discusses how climate policies and their carbon pricing and financing instruments can support low-carbon agriculture and create economic incentives for deforestation reduction. For this purpose, we begin by discussing the options for carbon pricing as a jurisdictional and corporate climate policy instrument analyzing the different loci of the GHG emissions trading system. Then, we address how these markets can adopt nature-based solutions, pinpointing the regulatory and technical barriers to convert them into tradable carbon credits. Finally, we assess the world’s potential and Brazil’s competitive advantages in carbon trading with forest management and sustainable agricultural activities. The closing section presents a range of policy-related recommendations.

6.2 Carbon Pricing as an Instrument for Jurisdictional and Corporate Climate Policies The Sixth Report from the Intergovernmental Panel for Climate Change, group 1 (IPCC, 2021) states the need to move towards net zero greenhouse gas emissions to reach the goal of a 1.5–2.0-degree temperature increase from pre-industrial levels. This pathway is possible through renewable energy and negative emissions, including emissions capture, with particular emphasis on nature-based solutions (NBS). Above these levels, extreme weather events are likely to intensify, and rainfall patterns will become disrupted, with droughts and floods occurring much more frequently. The IPCC (2021) shows that, apart from putting large urban populations at risk, these disasters could lead to future pandemics and threaten infrastructure and the supply of vital services and transportation systems, besides significantly affecting agriculture in water-scarce regions. It is important to note that these impacts could occur even before 2050. A recent report by Dasgupta (2021) on the biodiversity economy clearly underscores the importance of a considerable increase in the stock of natural capital, with particular emphasis on NBS. It stresses that these types of solutions, directly associated with the confrontation of climate change, might promote the protection and improved management and restoration of ecosystems, which may also result in climate mitigation linked to sustainable development. Brazil has competitive advantages in such a transition since it has the potential to deploy various cost-effective activities to mitigate greenhouse gas emissions related to land use associated with forest management and agriculture. Such advantages can benefit from carbon trading. Therefore, we will first analyze the different loci of the carbon market and how its structure and rules vary.

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6.2.1 Carbon Trading4 The emission-reduction goals within regional jurisdictional climate policies at national and sub-national levels,5 as well as the commitments made by countries that are signatories of international climate agreements and net zero corporate and individual targets, encourage the use of carbon pricing instruments to comply with their goals. The Kyoto Protocol of the Climate Convention, which was in force from 2008 to 2020,6 developed carbon market instruments for trading reductions or removals of emissions between signatory countries to reduce compliance costs. Notable examples are the Clean Development Mechanism, which allowed trade between countries with and without emission targets, and the Joint Implementation, which provided for trade only among countries with targets. Currently, there are similar instruments in Article 6 of the Paris Agreement, which had their regulation approved at the COP26, in Glasgow, in November 2021, whose implementation phase is currently under discussion. Article 6.2 creates the ITMOs (internationally transferred mitigation outcomes) for trading mitigation results, with direct contracts between countries. In this case, it is possible to trade mitigation outcomes agreed upon by parties without relying on carbon credits. Article 6.4 nonetheless establishes a mechanism based on carbon credits and regulated methodologies for transactions between public and private entities. Since all countries in the Paris Agreement have targets for their nationally determined contributions (NDCs), trade under Article 6 will require corresponding adjustments of the seller’s NDC equivalent to the number of mitigation outcomes sold to avoid double counting as buyers will use these outcomes to meet their NDCs.7 Since there is no direct connection between GHG emissions by international air/ maritime transportation and national emissions, the Climate Convention does not provide regulation on that matter. Thus, conventions of international bodies that oversee these modes of transportation have defined their climate policies. In the case of international civil aviation, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is already in force. It includes emission reduction goals for international airline routes, which can be met by air companies with carbon credits from accredited MRV (measurement, registration, and verification) methodologies provided that the country hosting the selling credit applies NDC corresponding adjustments. Apart from the mandatory regulation, some companies have undertaken voluntary net zero commitments with science-based targets aligned with the 1.5–2.0 °C

 See World Bank (2022) and Donofrio et al. (2022) for an extensive review of carbon trading.  Many jurisdictions adopt a clean development policy that is often called the Green Deal, containing a roadmap for a more sustainable economy, with policies and programs that aim to transform climate and environmental challenges into opportunities through a just and sustainable inclusive transition. 6  United Nations Framework Convention on Climate Change (UNFCCC). 7  See, for example, Seroa da Motta (2022) and Spalding-Fecher et al. (2021). 4 5

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of the Paris Agreement. These net zero commitments also make use of credit to offset their emissions. Many individuals have also demonstrated concern with reducing their carbon footprint, and there are several offset schemes with carbon credit purchases for that purpose. Emissions trading in regional, national, and subnational markets have also been created through an autonomous decision of a given jurisdiction. It has an aggregate target for a set of sectors, with a regulatory framework defining an allocation plan, the legal nature of permits, trading platforms and rules, emissions reporting, and transactions registration. This aggregate target is converted into emissions allowances that will be partially allocated free of charge to sectors exposed to international competitiveness and partially auctioned. Regulated sources can also trade these emission rights. Every year, regulated sources must match emissions with permits; in other words, they must present an amount equivalent to the reported emissions. Note that the regulation covers the installation or source of emissions, not the company, and only those that emit above a specific annual emission threshold. A company may thereby have one or more regulated sources, and others may have none, which means that compliance relates to sources of emission rather than to each company. Markets that have absolute emission limits are called cap-and-­ trade or emissions trading systems. Most jurisdictional systems allow offsetting a given proportion of the target with carbon credits generated from sources not regulated by the market. In most jurisdictions, there are limits on offset usage per regulated entity and sometimes also on the aggregate total. It is important to note that participants in regulated jurisdictional carbon markets have aggregate emission targets, and the regulated jurisdiction defines the rules and punishments related to their compliance. The Paris Agreement and international civil aviation define their targets per country and airline, respectively, whereas the international agreements to which they relate define rules for trading and punishments. On the other hand, the market establishes the structure of voluntary emissions traded by companies and individuals without any regulatory body  – as we shall discuss in the following sections. In all those market schemes, the climate integrity of carbon credits will be crucial for trade.

6.2.2 Carbon Credits8 As already mentioned, carbon credits are purchased to compensate for other activities. Examples are the voluntary market, civil aviation, through the market instruments within the Climate Convention, and as a substitute for a given level of an emission allowance, as done in some regulated markets. Carbon credits generated through projects adopting a change in technological applications or management practices that will reduce or remove greenhouse gasses in relation to the baseline,

 See World Bank (2020) for a review of these issues.

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representing the emissions trajectories if these projects had not been conducted. Such projects aim to support diverse low-carbon activities and can be developed by private and/or public entities. Certification entities are responsible for validating and verifying projects according to specific standards and adopting an MRV methodology. To ensure the climate integrity of projects, carbon credits should have: • Additionality: In line with this concept, reductions or removals would not have occurred if the trade in these credits had not taken place. • Permanence: Guaranteeing that the additional reductions or removals remain intact for a sufficient period to account for the carbon purchased by the buyer. Projects should also avert the following negative impacts: • Leakage: Referring to the unforeseen rise in emissions outside the boundaries of the project due to trade. • Double counting: When two different countries or companies account for identical GHG reductions and/or removals to comply with their climate goals, thereby reducing global mitigation efforts. Each activity and certification standard can provide distinct types of guarantees for these attributes related to climate integrity. In the voluntary market, the choice of activity and certification standard pertains to the project developer. In contrast, the buyer is free to decide which it prefers without regulatory bodies interfering in the process. Although the structure of the baseline system and the generation of credits is the same, within the instruments of Article 6.4 in the Paris Agreement, in international civil aviation, and, when accepted, in regulated jurisdictional markets, the regulator in these markets defines the types of activities that can be included and the accepted standards, either relying on their methodologies or in the form of crediting of already existing methodologies.

6.2.3 Nature-Based Solutions Nature-based solutions provide protection and better management and restoration of ecosystems linked to sustainable development goals (Griscom et  al., 2020; Seddon et al., 2020). Interest in nature-based solutions gained momentum with the emphasis given to them in the Intergovernmental Panel on Climate Change’s special report on land use (IPCC, 2019) as sources of negative emissions and potentially important means to reach the 1.5–2.0-degree trajectory. The Sixth Report of Working Group I (IPCC, 2021) recently reinforced this emphasis. Nature-based solutions, such as natural climate solutions (NCS), explicitly refer to actions to conserve and manage ecosystems and agriculture to harness their potential to store carbon, which mitigates GHG emissions. Therefore, NCSs include REED+ activities, such as forest management for conservation, restoration, afforestation, and reforestation. In agricultural landscapes, the application of NCS can be through soil and forestry

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with the management of trees and nutrients, as well as optimal grazing intensity.9 It is important to note that, in addition to climate benefits, NCS offer multiple environmental co-benefits for biodiversity protection, including social, economic, and cultural benefits for local communities. As analyzed below, Brazil enjoys both scale and competitive advantages in developing and deploying NCS, and there are funding opportunities to promote NCS from carbon trading.10

6.2.4 REDD+ Activities in Carbon Markets REDD+ activities can generate carbon credits by offering reductions or removals from a particular year and onward to be made available for specific projects. However, REDD+ project credits face climate integrity risks for trade as they are sensitive to the risks of additionality, (non)permanence, and leakage, particularly regarding those for conservation related to avoided deforestation. In addition to climate integrity risks, REDD+ projects may also face issues on social safeguards pertaining to the rights of indigenous peoples or other forest peoples, as they can participate in benefit-sharing and generate greater prior and informed engagement. Therefore, credits from restoration/reforestation projects must apply specific rules for MRV of the project’s outcomes in order to reduce those risks. While it is difficult for governments to restrict voluntary legal transactions between buyers and sellers to promote REDD+ projects, they may require standards to avoid low-quality forest credits, which could compromise social and environmental integrity. For example, national and subnational governments can encourage jurisdictional approaches with differentiated financing and credit through territorial management systems, the so-called REDD+ Jurisdictional (JREDD+) project approaches. A JREDD+ project relies on providers from a specific jurisdiction rather than on one single project, with revenues based on equitable benefit-sharing agreements. According to this jurisdictional approach, carbon credit project activities have their additionality nested within a jurisdictional forest reference level that would set a target for the jurisdiction. All participants within the JREDD+ project must meet it collectively. The larger the area covered by the jurisdiction, the lower the risk of leakage, which makes jurisdictional-scale deployment more effective over project-scale

 Griscom et al. (2020).  Incentives for REDD+ activities can also occur with results-based payments disbursed by a climate finance provider and destined to a beneficiary, following the achievement of a pre-agreed set of climate-related outcomes. Article 5 of the Paris Agreement encourages countries to act to implement and support, including through payments for results, policy approaches, and incentives for REDD+ activities. Brazil was a pioneer in such schemes, developing several pilot projects and the Amazon Fund, which received donations of over one billion American dollars. The Amazon Fund was discontinued in 2019 and replaced by the Floresta+ Program, which is smaller in budget and less effective in deployment. See Seroa da Motta (2020). 9

10

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interventions. Likewise, when acting across jurisdictions, the carbon stocks of the committed forests are less likely to be significantly reduced by a single windstorm or fire in a set of different projects. Furthermore, from a jurisdictional perspective, nesting projects can reduce the cost of MRV as a common baseline, with the adoption of verification procedures. The benefit-sharing design can include various social actors indirectly associated with the deforestation process. This includes executive governmental bodies with compensatory incentives for their contribution to reducing deforestation through inspection and/or targeted programs. Initiatives on a jurisdictional scale also provide stronger guarantees for the rights of indigenous peoples or other forest peoples, as they can participate in benefit-sharing and generate greater prior and informed engagement. However, regulating the jurisdictional approach and nesting requires developing jurisdictional capacity for climate and biodiversity governance, in addition to land management, to confront the trend of corporate buyers preferring to make transactions with individual project developers rather than engaging with governments. Such barriers explain various experiences with the approach related to payment for results, whereas there are limited cases with JREED+ carbon credits.11 Mainly due to those risks mentioned above, no jurisdictional REDD+ project has seen a price increase in its trade, even though its share in the voluntary markets has more than doubled, to reach 25%, in the period 2019–2021.12

6.2.5 NCS in Agriculture and Carbon Markets As mentioned, REDD+ activities include restoration and conservation activities in farming areas. In the agricultural sector, NCS based on sustainable practices can also mitigate GHG emissions through the efficient use of nitrogen fertilizers, no-till farming, planting cover crops, and strategies to improve the nutrition and health management of ruminant livestock.13 NCS in agriculture also faces climate integrity risks. Since some practices are cost-effective without carbon trading, assessing whether the farmer would not have carried them out anyway is always associated with controversies. The primary risk is in non-permanence since carbon storage capacity in soils is relatively volatile and subject to re-emission into the atmosphere if practices are changed or through a cascade of events affecting soil structure. Consequently, estimating baseline carbon stocks is technically complex and may show significant differences among methodological approaches. In addition, MRV techniques require rigorous and costly monitoring plans to measure carbon stock

 See, for example, Nepstad et al. (2022), Sticklet et al. (2018), and Moutinho and Guerra (2017).  See Donofrio et al. (2022). 13  See, for example, Miralles-Wilhelm (2021). 11 12

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changes that depend on the availability of advisory, technical, and upfront investment support.14 Despite its potential, uncertainties regarding mitigation capacity and MRV complexity and costs are some of the reasons why NCS from sustainable agriculture practices has been traded in very small volumes with low prices in the voluntary markets, particularly if compared to other NCS options, whose prices are highly volatile. In addition, most of those agriculture credits are traded in the jurisdiction-­ regulated market, such as the California and RGGI cap-and-trade in the USA and the Alberta Emission Offset System and Emission Reduction Fund, in Canada, which allows for carbon offsets to be used in the compliance requirements.

6.3 Cost-Effectiveness of NCS in the World and in Brazil The potential global supply of NCS from 79 countries has been analyzed by Griscom et al. (2020). The authors estimate that NCS can deliver 6.56 Gt CO2e/year between 2030 and 2050, with a marginal cost of less than US$ 100 per tCO2e. The greatest potential, reaching over 60%, involves some form of forest protection and management. Nutrient management and optimal grazing in agriculture showed the least potential, with a share below 5%. According to the authors, this is due to the high rates of tropical forest loss and the relatively low economic costs of avoiding such losses. Reforestation and forest management in agricultural areas, including nutrients and pastures, each represents nearly 20% of the potential. Indonesia, Brazil, the Democratic Republic of Congo, and India hold more than half (53%) of the tropical potential of NCS. Brazil alone represents approximately 20% of that global potential and nearly 63% of the country’s potential comes from conservation, plus 1% from natural forest management and 1% through wetlands conservation. Another 21% result from reforestation and almost 14% could be realized through agriculture and livestock management. Roe et al. (2021) suggests that, at US$ 100 per tCO2e, Brazil can mitigate 100% of total country emissions with land use NCS but with a less promising share of 5% from low-carbon crops and pasture. Such potential in forest conservation and reforestation can be used for achieving NDC targets but also to create a mitigation surplus to carbon trading. PMR (2019) estimates that achieving the goals established by the Brazilian NDC, in the period between 2020 and 2030, will require a significant potential from avoided deforestation of nearly 1 GtCO2e that can be achieved at a cost lower than US$ 7.0 per tCO2e,15 which marks a lower level of marginal cost for compliance with Brazil’s NDC. But PMR (2019) also estimates that nearly 75 Mha of forestland is in excess

 See, for example, Lokuge and Anders (2022), Iseman and Miralles-Wilhelm (2021), and Miralles-Wilhelm (2021). 15  Assuming an average exchange rate to US$$ of R$ 5 (five Brazilian reais). 14

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of the conservation area requirements of the Forest Code in rural properties16 that could emit at least 19 GtCO2e. Such a surplus of forestland areas can be legally deforested and, therefore, are eligible as an avoided deforestation activity to generate carbon credits. For properties with high land costs, due to their proximity to areas where crop production is expanding and there is a substantial risk of deforestation, the forestland opportunity cost can exceed US$ 200 per ton, far beyond current carbon prices. However, the authors estimate that, in other areas, a potential of nearly 5 GtCO2e could be avoided at a very low marginal cost of up to US$ 1 tCO2e. Competitive advantages also apply to NCS in crop and pasture activities. Based on studies analyzing the marginal abatement cost curve for the country, Brazil’s competitive advantage in NCS agriculture is still higher than REDD+ activities since estimates indicate such mitigation options always show negative costs.17 Recently the new version of the rural credit associated with low-carbon practices in crop and pasture activities in Brazil (“Plano ABC +”) aimed to take advantage of these NCS to achieve a reduction of GHG emissions of 1042.41 million Mg CO2eq by the year 2030.18 However, Brazil’s competitive advantage has not yet been converted into trade opportunities. In the voluntary markets, sales from Brazil were only 4.6 MtCO2e in 2020 and 3.1 MtCO2e in 2021. Although the country is one of the leading sellers, it is still underperforming, which is exemplified by the fact that a country such as Peru, has traded 7.7 and 23.5 MtCO2e, respectively.19 Sustainable agriculture NCS has not been developed as MRV costs are still high. Below we show that such advantages can be valuable trade opportunities, mainly due to the elevated expectations regarding volume and price increase during this decade in carbon trading. IETA (2019) estimates that trade under the instruments provided for in Article 6 of the Paris Agreement, with NDC corresponding adjustments, could reach US$167 billion and US$347 billion in 2030 and 2050, respectively, and that Brazil’s share with REDD+ activities would capture nearly 15% of the global market. Trove (2021) estimates that prices with NDC corresponding adjustments in 2030 will be between US$50 and US$100 tCO2e, with global revenues of US$65 to US$130 billion, while the average price without these adjustments would be between US$20 and US$50 tCo2e, with revenues from US$ 9 to 65 billion. Credits from REDD+ activities generated in Brazil could represent 50% of voluntary market demand by  It is the Legal Reserve (“Reserva Legal”).  See Centro Clima (2022), Brasil (2022), and Rathmann et al. (2017). 18  The Low Carbon Agriculture Plan Plus (Plano ABC +) is a revised version of the previous the 2010/2011 Agriculture and Livestock Plan provided for the creation of the “ABC Program (LowCarbon Agriculture Program),” a line of credit of around R$ 2 billion (around US$ 400 million) per year instituted by the Ministry of Agriculture, Livestock and Food Supply (MAPA). Although it offers a significant amount of financing resources, it is still a very minor part of the total public rural credit system and has not been able to offer higher subsidized rates that the other programs with no decarbonization aims. The resulting mitigation outcomes of the previous 2010/2011 version was 39–48% of the projected targets; therefore, additional incentives may be needed to accomplish the current goals; see Observatório ABC (2017). 19  See Donofrio et al. (2022). 16 17

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2030. Piris-Cabeza et al. (2016) point to a much larger surplus of the Brazilian NDC with corresponding adjustments, nearly 7 GtCO2e, with REDD+ activities in carbon markets generating revenues that could reach US$72 billion. However, decarbonization strategies and trajectories require a stable and credible regulatory environment that should encompass solid decisions regarding investments in low-carbon technologies and security for compensation and mitigation actions.

6.3.1 Carbon Market Initiatives in Brazil Recently, a series of legislative initiatives to establish carbon pricing mechanisms in Brazil have been under development. The process began with Bill 528, presented on 02/2021, aiming at regulating the Brazilian Emission Reduction Market (Port. MBRE), which already is provided for by the National Policy on Climate Change (Port. PNMC). With the support from the Brazilian Business Council for Sustainable Development (Port. CEBDS) and, subsequently, from other organizations, such as the National Confederation of Industry (Port. CNI) and representatives of civil society, a replacement text for PL 528 was drafted. It contains a series of recommendations that resulted from the substantial participation of businesses, civil society, academia, and other experts. These recommendations were first presented in the PMR (2020) – a study on carbon pricing options for Brazil first coordinated by the Ministry of Economy and later in CEBDS (2021). The recommendations propose carbon markets regulatory frameworks options for Brazil. The revised bill then establishes a national offset registry system for credit projects, called the National Registry System of Offsets (Port. SBRC), to promote the national supply of credits with climate, environmental, and social integrity to the various loci of the abovementioned carbon market. SBRC will only accept carbon-certified credits adhering to restricted certification and verification criteria and include restricted social and environmental safeguards. The owners of carbon-certified credits can join the SBRC if they comply with these regulated accreditation rules. As a carbon pricing mechanism, the bill also creates a Brazilian emissions trading system in the form of a regulated market with absolute targets, called the Brazilian System of Carbon Trading (Port. SBCE), in which national emission allowances allocation plans would translate sectoral targets to be regulated by a cap-and-trade program. After being approved by the Environment Commission of the House of Representatives, that project was the basis of a substitute Bill, no. 2148, sent to the Plenary Session of the House of Representatives. The PL 2148 kept the same registry and cap-and-trade systems. It also included a more comprehensive governance structure with important participatory mechanisms to accommodate regulated sectors, specialists, and civil society as a whole. However, it removed alternative land use-related agricultural and forestry activities and undertakings developed on rural properties from the scope of the cap-and-trade system regulation; on the other hand, it assured a minimum limit of 25% for the use of offsets by regulated sources from nonregulated sectors. This offset use level is much higher than the international

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average but justifiable due to the country’s emission profile, which is concentrated on land use, and the fact that precisely these emissions were excluded from such a market system. Although there are no experiences with regulated market systems for forestry and agricultural activities associated with land use change, its exclusion from the legal text will prevent more creative designs of the regulated market aimed at including these sectors, which are the country’s main greenhouse gas emitters. Despite the fast evolution of the legislative process in carbon trading regulation, the federal government decided to create a carbon market in Brazil through a presidential decree. The Decree 11,075 of May 2022, drafted by the Ministry of the Environment and the Ministry of Economy, also addressed the regulation of the Brazilian Emission Reduction Market (Port. MBRE) with a distinct approach where targets of mitigation sectoral plans could be met with carbon offsets and not based on cap-and-trade programs, as envisaged in PL 2148. Sectorial mitigation plans will be signed between the sectors and the federal executive branch based on proposals made by each sector within 1 year of the entry into force of the decree. Since both the MBRE and the sectoral plans are already instruments of the National Policy on Climate Change (PNMC), creating such a structure was legally possible through a decree. It then created the National System for the Reduction of Greenhouse Gas Emissions (Port. SINARE) that will serve as the basis for the MBRE for this purpose. SINARE will also work as a registry to promote the national supply of carbon credits to other markets besides the national ones in the same way planned for the SBRC in PL2,148. Regulated sectors will only be able to trade credits exceeding the baselines of their sectoral targets. However, the Decree does not specify how a sectoral target will be broken down into individual targets for those emitters within the sector and if they will apply to sources of emission or for the whole firms. Additionally, the Decree assumes the legal nature of a financial asset of the carbon credit itself without specifying its characteristics, which are different from those adopted by other standards, such as the Forest Code. It also creates other assets or records in the form of carbon footprints of products, processes, and activities; native vegetation carbon; carbon in the soil; blue carbon; and the carbon stock unit. It does not specify how they will participate in the system and obtain permission to register without the certification required for carbon credits. In addition to having more than one asset raising double counting problems, it compromises its climate additionality. Meeting mitigation targets requires long-term investment planning, and emission reduction trading requires using carbon credits to be a secure right to meet mandatory mitigation targets. Thus, the international literature on carbon trading presents examples in which rules subject to change by the executive branch do not offer legal certainty. It is essential to establish future regulations for a carbon market in the form of legislation rather than a decree. Therefore, the calculation rules for compliance and monitoring of each regulated entity will be the main challenge for SINARE as they will allow the baseline for the generation of credits by public and private entities covered by the regulation to be aligned with or nested with the baseline of the aggregate sectoral target. SINARE thereby appears to place the country in a unique pricing strategy, not only because of the insecure nature of the decree but

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also because of the technical limitations of the definitions and systemic and governance structure.20 Sectoral targets and rules for transferring rights over carbon credits within the scope of SINARE seem to lack the essential condition of legal and contractual guarantees to mobilize low-carbon investments effectively. Consequently, the country now has a weak framework for carbon trade competing with a distinct approach reflected in the bill PL2,148. The opportunities from Brazil’s competitive advantage in decarbonization activities in land use activities will require more than carbon pricing regulation. Therefore, Brazil needs to review its climate governance structure to pave the way for seizing the existing opportunities in the global carbon markets.

6.4 Conclusions and the Way Ahead The end of illegal deforestation and the continuous expansion of the supply and management of rural credit for low-carbon activities should be able to ensure the achievement of the Brazilian NDC by a certain margin. However, the country’s competitive advantage in the low-carbon economy needs to support the development of a more credible and participatory climate governance system, adjusted to its NDC and net zero commitments. Without controlling deforestation, climate finance opportunities will not yield results. Demonstrating this capacity and climate policy seriousness considerably increases the attraction of national and international resources, which could protect Brazilian biodiversity, contribute to the mitigation of greenhouse gas emissions, and promote the bioeconomy and low-carbon agriculture. The country has already accumulated extensive experience in results-based REDD+ payments, with a solid base of monitoring and environmental and social safeguards, so it can certainly increase the attraction of these resources considerably, particularly with the contribution of private companies. Brazil also has a well-­ developed generation of knowledge and technology in agriculture and a public rural credit system that can accommodate powerful incentives to agriculture NCS. Above all, the country has the capacity to generate mitigation surpluses over its NDC to accommodate for the application of corresponding adjustments needed to compete in the Article 6 carbon trade and even in the voluntary and CORSIA markets. But for that to occur, Brazil must create a system of concession of corresponding adjustments that do not compromise the fulfillment of its NDC and creates both technological bases and scalability for its mitigation trajectory. Furthermore, Brazil needs

 There are also jurisdictional systems based on carbon credit trade as, for example, in Alberta, Canada, in the Technology Innovation and Emissions Reduction Regulation. They work quite differently from the MBRE. There is a set of emission benchmarking that determines the emission allowance that a given regulated facility must meet though internal mitigation or through offsets and comply with on a yearly basis. And they regulated sources of emissions, rather than firms. Besides, sources and verification methodologies determined by the regulator are the ones that regulate the supply of offsets. See World Bank (2022). 20

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to provide legal and environmental guarantees for its carbon credits, as discussed before, by implementing a credible registry system. Brazil should also foster projects of REDD+ activities nested within a jurisdictional approach. In short, with sound climate policy and governance instruments, corresponding adjustments, and nested jurisdictional approaches, Brazil can significantly increase the contribution of non-budgetary resources from national and international sources from the carbon credit trade. In doing so, it could foster a carbon-neutral economy based on biodiversity protection and low-carbon agriculture with activities of high environmental and social integrity.

References Assunção, J., Gandour, C., & Rocha, R. (2015). Deforestation slowdown in the Brazilian Amazon: prices or policies? Environment and Development Economics, 20(6), 692–722. Centro Clima, Instituto Talanoa & Instituto Clima e Sociedade. (2022). Centro Clima Visões para o Brasil 2030, Clima e Desenvolvimento: documento de cenários e políticas climáticas. Rio de Janeiro. Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável – CEBDS. (2021). Proposta de Marco Regulatório para o Mercado de Carbono Brasileiro. Rio de Janeiro. Dasgupta, P. (2021). The economics of biodiversity: The Dasgupta review. HM Treasury. Donofrio, S., Maguire, P., Myers, K., Daley, C., & Lin, K. (2022). State of the voluntary carbon markets 2021, installment 1: Market in motion. Forest Trends. Griscom, B. W., et al. (2020). National mitigation potential from natural climate solutions in the tropics. Philosophical Transactions Royal Society, 375(2019), 0126. Hargrave, J.  E., & Kis-Katos, K. (2013). Economic causes of deforestation in the Brazilian Amazon: A panel data analysis for the 2000s environment resource. Economics, 54, 471. IETA. (2019). The economic potential of article 6 of the Paris agreement and implementation challenges. University of Maryland. IPCC. (2019). Climate and land: An IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems. Cambridge University Press. IPCC. (2021). Climate change 2021: The physical science basis. Contribution of working group i to the sixth assessment report of the intergovernmental panel on climate change. Cambridge University Press. Iseman, T., & Miralles-Wilhelm, F. (2021). Nature-based solutions in agriculture – The case and pathway for adoption. FAO and the Nature Conservancy. https://doi.org/10.4060/cb3141en Lokuge, N., & Anders, S. (2022). Carbon-credit systems in agriculture: a review of literature. In Technical paper volume 15. The School of Public Policy/University of Calgary. Miralles-Wilhelm, F. (2021). Nature-based solutions in agriculture  – Sustainable management and conservation of land, water, and biodiversity. FAO and The Nature Conservancy. https:// doi.org/10.4060/cb3140en Moutinho, P., & Guerra, R. (2017). Programa REDD para Early Movers, REM: abordagem de estoque e fluxo para a repartição de benefícios em programas de REDD: conceito e prática na implementação de REDD no Estado do Acre. Instituto de Pesquisa Ambiental da Amazônia – IPAM. Nepstad, D.  C., McGrath, D., Stickler, C., Alencar, A., Azevedo, A., Swette, B., Bezerra, T., DiGiano, M., Shimada, J., Seroa da Motta, R., Armijo, E., Castello, L., Brando, P., Hansen, M., Max McGrath-Horn, M. C., Carvalho, O., & Hess, L. (2014). Slowing Amazon deforestation

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through public policy and interventions in beef and soy supply chains. Science, 344(6188), 1118–1123. Nepstad, D., et  al. (2022). Financing the Brazilian Forest Agenda: The Potential Role of Jurisdictional REDD+. Earth Innovation Institute. Observatório do Clima. (2017). Impactos econômicos eambientais do Plano ABC. Observatório do Clima. Available at http://observatorioabc.com.br/wp-­content/uploads/2017/09/Relatorio5-­ Completo.pdf Piris-Cabezas, P., et  al. (2016). Cost-effective emissions reductions beyond Brazil’s international target: Estimation and valuation of Brazil’s potential climate asset. Environmental Defense Fund. PMR. (2019). Relatório da Quantificação do Potencial de Geração de Ativos de Carbono Através de Atividades Florestais. Projeto PMR Brasil. Ministério da Economia/Banco Mundial, Way Carbon. PMR. (2020). Projeto Partnership for Market Readiness Brasil. Ministério da Economia. https:// www.gov.br/fazenda/pt-­br/orgaos/spe/pmr-­brasil. Accessed 3 Dec 2020 Rathmann, R., Araujo, R. V., Da Cruz, R. R., & Mendonça, A. M. (2017). Trajetórias de Mitigação e Instrumentos de Políticas Públicas para Alcance das Metas Brasileiras no Acordo de Paris. Ministério da Ciência, Tecnologia, Inovações e Comunicações, ONU Meio Ambiente, Brasília. Roe, S., et al. (2021). Land-based measures to mitigate climate change: Potential and feasibility by country. Global Change Biology, 00, 1–34. Seddon, N., et al. (2020). Understanding the value and limits of nature-based solutions to climate change and other global challenges. Philosophical Transactions Royal Society, 375, 2019.0120. Available on https://doi.org/10.1098/rstb.2019.0120. Accessed 10 June 2021. SEEG. (2022). Greenhouse gas emission and removal estimating system. Available on https:// plataforma.seeg.eco.br/total_emission#. Accessed 29 July 2022. Segrafredo, L., & Seroa da Motta, R. (2012). Chapter 4, Bridging the emissions gap. In UNEP, 2012 emission gap report. UNEP. Seroa da Motta, R. (2020). Oportunidades e Barreiras no Financiamento de Soluções Baseadas na Natureza. Instituto Clima e Sociedade. Seroa da Motta, R. (2022). Regulamentação dos Instrumentos de Mercado do Acordo de Paris. Revista de Interesse Nacional, 56. Spalding-Fecher, R., et al. (2021). Designing governance structure and transactional documentation for mitigation outcome transactions under Article 6 of the Paris Agreement. Global Green Growth Institute. Stickler, C., Duchelle, A.  E., Nepstad, D., & Ardila, J.  P. (2018). Subnational jurisdictional approaches: Policy innovation and partnerships for change. In A. Angelsen, C. Martius, V. De Sy, A. E. Duchelle, A. M. Larson, & T. T. Pham (Eds.), Transforming REDD+: Lessons and new directions (pp. 145–159). CIFOR. Strand, J., Soares-Filho, B., Costa, M. H., Oliveira, U., Ribeiro, S. C., Pires, G. F., Oliveira, A., Rajão, R., May, P., van der Hoff, R., Siikamäki, J., Seroa da Motta, R., & Toman, M. (2018). Spatially explicit valuation of the Brazilian Amazon Forest’s Ecosystem Services. Nature Sustainability, 1, 657–664. Trove. (2021). Future demand, supply, and prices for voluntary carbon credits – Keeping the balance. Trove Research. World Bank. (2020). State and trends of carbon pricing 2020. World Bank. World Bank. (2022). State and trends of carbon pricing 2021. World Bank, Ecofys, and Vivid Economics.

Part II

Technical Challenges and Innovation

Chapter 7

Effects of Land Use Changes on Soil Biodiversity Conservation Mercedes M. C. Bustamante, Francisco J. Simões Calaça, Vinicius Tirelli Pompermaier, Maria Regina Silveira Sartori da Silva, and Rafaella Silveira

Abstract  Beyond the impact on aboveground biodiversity, the conversion of native vegetation for conventional agricultural and livestock production is associated with risks of soil degradation and biodiversity loss. While the input-intensive production models with the use of pesticides and fertilizers have paved the way for food production in areas hitherto viewed as unfit for agricultural purposes, the heavy reliance on such inputs has nonetheless imposed challenges in ensuring the conservation of soils and their biota. This chapter covers the changes in land use in Brazil, the relevance of soil biodiversity, and some of the consequences of input-intensive production models on bacterial, fungal, and faunal soil diversity. The contribution of land use changes and agriculture to climate change and biodiversity decline imposes new demands for sustainability challenges in agriculture and soil biodiversity conservation. In Brazil, land use planning and management at the landscape scale can provide solutions for reconciling biodiversity conservation and sustainable agriculture.

7.1 Introduction Land provides food, water, and other resources and is also fundamental to the world’s climate system. Globally, there has been an unprecedented change in land use in the last 60 years. As the global population has more than doubled, more land has been occupied for food production, animal feed, timber, and other natural resources, despite significant improvements in resource-use efficiencies.

M. M. C. Bustamante (*) · V. T. Pompermaier · M. R. S. S. da Silva · R. Silveira Universidade de Brasília, Brasília, DF, Brazil e-mail: [email protected]; [email protected] F. J. S. Calaça Mykocosmos – Mycology and Science Communication, Anápolis, GO, Brazil © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_7

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Brazil is considered a megadiverse country with six terrestrial biomes: Amazon, Atlantic Forest, Caatinga, Cerrado, Pampa, and Pantanal. However, monitoring data have been showing that these biomes have experienced significant changes in land cover and use in the last decades. Five major cover classes (forest, non-forest natural formation, farming, non-vegetated areas, and water) have been mapped in a reconstruction of the annual land use and land cover (LULC) information between 1985 and 2017 for Brazil, based on satellite images. The 33 years of LULC change data series reveals that Brazil lost 71 Mha of natural vegetation, mostly to cattle ranching and agriculture activities (Souza Jr. et al., 2020). Pasture expanded by 46% from 1985 to 2017 and agriculture by 172% (mostly replacing old pastureland). Land conversion and unsustainable intensification of agricultural practices affect biodiversity, soil quality, water resources, greenhouse gas emissions, and consequently climate regulation, and adaptive capacity. By 2017, the Brazilian biomes undergoing the most conversion of the original land cover were the Amazon (419 Mha, i.e., 49% of the country) and Cerrado (203 Mha, i.e., 23% of the country). However, the other biomes are also affected by historical (such as the Atlantic Forest) and current land use systems (Souza Jr. et al., 2020). The following sections cover the relevance of soil biodiversity and some of the consequences of input-intensive production models on bacterial, fungal, and faunal soil diversity. Considering that land use changes and agriculture to climate change and biodiversity decline imposes new demands for sustainability challenges in agriculture and soil biodiversity conservation, the concluding section discusses some aspects of land planning at the landscape level for reconciling biodiversity conservation and sustainable agriculture.

7.2 The Importance of Soil Biodiversity and the Impacts of Land Conversion and Agriculture Globally, the average abundance of native species in most major land-based habitats has fallen by at least 20%, mostly since 1900, and agricultural land clearing and deforestation are the greatest cause of extinction threats. However, the impacts of land conversion on soil biodiversity are less studied. Soil biodiversity reflects the variability among living organisms, including a myriad of microorganisms such as bacteria, fungi, protozoa, and nematodes and mesofauna (e.g., acari and springtails), as well as the more visible macrofauna (e.g., earthworms and termites). Plant roots can also be considered as soil organisms due to their symbiotic relationships and interactions with other soil components. Below-ground organisms interact with one another and with the various aboveground organisms in the ecosystems, forming a complex web of biological activity. Soil organisms contribute with a wide range of essential services to the sustainable function of all ecosystems. They act as the primary driving agents of nutrient cycling, regulating the dynamics of soil organic matter, soil carbon sequestration

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and greenhouse gas emission, modifying soil physical structure and water regimes, enhancing the amount and efficiency of nutrient acquisition by the vegetation, and improving plant health. These services are not only essential to the functioning of natural ecosystems but constitute an important resource for the sustainable management of agricultural systems. Habitat loss (or complete removal) through conversion to other uses and fragmentation (i.e., the disruption of a continuous habitat into numerous smaller patches) are the main processes arising from land use change, affecting biodiversity and consequently the provision of ecosystem services (Mitchell et al., 2015a, b). This occurs, basically, due to two fundamental mechanisms: (i) Reduction in the availability of resources (mainly food, shelter, and reproduction) for native habitat species, both locally (in the patch in which the species occurs) and in the landscape as a whole. (ii) Increase in isolation between patches of native habitat, making it difficult for species to move from one patch to another (Fahrig, 2003). Changes in land use also lead to the disappearance of endemic species and biotic homogenization, with consequent loss of ecological interactions and ecosystem functions and services and promoting the expansion of species that can be considered pests or disease vectors. Such changes tend to occur more rapidly after the loss of 60–70% of the original cover. Besides the conversion of native vegetation cover, high-input agriculture can generate impacts associated with management practices. Human and environmental contamination by pesticides is far from being a simple problem, much in part because of the diversity of determinants (social, economic, and cultural) that permeate it. The Brazilian pesticide market has experienced an expansion of 190%, while the global market expanded by 93% (Rigotto et al., 2014). Such expansion is associated with the increasing use of transgenic crops that demand higher consumption of herbicides, accountable for 45% of the volume used, followed by fungicides (14%), and insecticides (12%). In Brazil, approximately 620,000 tons of pesticides were used in 2019 (Nunes et al., 2021). Pesticides applied to agricultural crops eventually contaminate the other environments, being transported by rainfall runoff, rivers, and streams, and are associated with biotic and abiotic macroparticles. There are two main routes by which pesticides enter the soil: soil spraying during foliage treatment and washing of treated foliage (Otero et al., 2003) and release from pellets applied directly to the soil (Lopez-Perez et al., 2006). In Brazil, as elsewhere, organochlorine pesticides (POCs) have been used to control pests and thus improve crop yields during the 1970s. Included in this group are DDT, HCH, heptachlor, aldrin, dieldrin, and endrin, with DDT and HCH being the most widely employed. Although the use of both has been discontinued in the country since 1985,1 their persistence has left residual amounts in the soil in many areas

 The use of DDT is still allowed in public health programs, in the combat of etiological vectors (malaria and leishmaniasis) and agricultural emergencies. 1

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(Rodrigues, 1998; D’amato et al., 2002). Pesticides can affect soil and its biota by direct contact or indirectly, through volatilization, leaching, and dispersion (Andréa, 2010). The toxicity of a chemical depends on exposure time, organism susceptibility, concentration, characteristics of the chemical compound, and its combinations with environmental factors (Fent, 2004). Despite Brazil’s current position as the world’s largest consumer of pesticides, the side effects on the edaphic ecosystem have been little studied in relation to nontarget organisms. The pioneering publications on soil ecotoxicological testing using organisms from this environment in the country date back to the late twentieth and early twenty-first centuries (Niva et al., 2016) and the first guideline issued by the Brazilian Association of Technical Standards regarding soil ecotoxicological analyses came 20 years after the promulgation of the first standard test method for aquatic environments in the country. Besides the use of pesticides, the application of fertilizers changes the soil’s chemical environment with impacts on its biodiversity. In 2019, Brazil was the fourth largest global consumer of fertilizers.2 The consumption of nutrients by Brazilian agriculture has increased considerably. The country went from the world’s 25th consumer in 1961 to the seventh in the ranking in 1990. During the entire process of Brazilian agricultural expansion, the consumption of fertilizers was sustained by increased imports. Due to the low efficiency of nutrient use by cultivated plants, a significant fraction of the applied nutrients is lost in the soil-plant system, resulting in environmental pollution. Soil nutrient pollution is an important vector for the loss of biodiversity and ecosystem services related to agriculture. Toxic heavy metals in fertilizers affect living things through their accumulation and circulation in the food chain. Among the main environmental impacts associated with the use of fertilizers are the leaching of nitrates into groundwater, the emission of greenhouse gasses (nitrogen oxides), pollution of soil with toxic heavy metals, and surface runoff of nitrogen and phosphorus, which cause eutrophication in aquatic environments. The impacts of land conversion and disturbances and agricultural use on some of the major groups of soil biodiversity are still not extensively studied in Brazil, but research is currently suggesting major causes of concern.

7.2.1 Bacterial Diversity Soil systems represent complex compartments that harbor a vast bacterial diversity. It is estimated that only 1 g of soil can contain billions of microbial cells that interact with each other and with the biotic and abiotic elements of the soil and landscape (Elsas et  al., 2019). In fact, Schloter et  al. (2018) highlight that soils could be considered hotspots of microbial diversity on Earth, providing numerous biological services that the authors call “life support functions.” Bacteria maintain multiple

 (https://www.statista.com/statistics/1287852/global-consumption-fertilizer-by-country/)

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functions of terrestrial ecosystems. They affect the solubility and hence the availability of soil nutrients (Marschner et al., 2011), influencing plant metabolism and plant-microbe interactions (Miransari, 2013). In addition, they are responsible for the decomposition of organic matter (Ling et al., 2014), mineralization, and nutrient transfer between soil compartments (Manzoni et  al., 2012); biological control of pathogens (Ahemad & Kibret, 2014); production of growth-promoting substances; biological fixation of atmospheric nitrogen (Schimel & Schaeffer, 2012); and degradation of toxic substances (Tong et al., 2015). The large taxonomic and functional bacterial diversity in soils associated with the high physiological plasticity of bacteria makes it difficult to describe a single consistent environmental factor that justifies their distribution trend across the terrestrial biomes (Delgado-Baquerizo & Eldridge, 2019). Besides, factors such as altitude, latitude, and environmental temperature, typically related to plant and animal diversity, are not frequently applicable in microbial ecology studies (Fierer & Jackson, 2006). It is known that soil pH represents an important primary driver of bacteria composition, abundance, and diversity. Past and recent studies investigating changes in microbial community composition and diversity associated with different nutrient treatments (Wang et al., 2019) and soil parameters (Zhalnina et al., 2015) find that soil pH is the main driver of microbial community structure. Muneer et al. (2022) show that soil pH is the most important factor in explaining the differences in bacterial community composition in red soil. But, although pH closer to neutral is generally described as a facilitator for the establishment of bacterial groups, some studies investigating their effect on soil microbial diversity have shown the importance of evaluating this type of response at more specific taxonomic and/or phylogenetic levels. For example, at the phylum level, Acidobacteria is frequently found in high abundance in typically acidic soils of the different plant formations of the Brazilian Cerrado (Araujo et al., 2012, 2017; Rachid et al., 2013), but even inside this large group, some genera or species could respond differently to soil pH. In general, microbial community dynamics can also be dependent on microclimatic factors, such as water availability in different biomes (Supramaniam et al., 2016). Across Brazilian biomes soils, researchers have identified a large bacterial diversity (Araujo et al., 2021; Lacerda-Júnior et al., 2019; Pereira de Castro et al., 2016). In the Cerrado, for example, there is a predominance of Acidobacteria, Proteobacteria, and Actinobacteria, among others that present lower relative frequency (Araujo et al., 2012; Pereira de Castro et al., 2016; Souza et al., 2016). In this biome, precipitation seasonality is an important factor in bacterial abundance. Bacterial groups such as Planctomycetes, Verrucomicrobia, and Chloroflexi usually have their relative abundance reduced during the rainy season, while Proteobacteria tend to increase. These results could be influenced by changes in soil pH, water availability, and changes in microbial biomass in response to the rainy season (Pereira de Castro et al., 2016). In Brazilian biomes such as Cerrado (Bobul’ská et al., 2021; Rampelotto et al., 2013), Amazon (Melo et al., 2021; Merloti et al., 2022) and Atlantic Forest (Bizuti et  al., 2022), Pampas (Suleiman et  al., 2017), Pantanal, or Caatinga (de Pereira

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et al., 2022), land use and cover are important aspects related to bacterial diversity in soils. Several studies evaluating the impacts of the conversion of natural areas to agriculture or pasture on the microbial communities in soils alert to threatened community homogenization and loss of bacterial diversity by rapid and intensive land use changes (Merloti et al., 2022; Rampelotto et al., 2013). The associated impacts caused by the loss of bacterial diversity or shifts in the microbial community in soils can depict the concomitant loss of functional diversity and alterations in the life support functions mediated by soils through the microbial community (Schloter et al., 2018). In Cerrado, for example, conventional agricultural practices can promote shifts in microbial composition and diversity, favoring the overgrowth of Proteobacteria groups in those agricultural areas (Rampelotto et al., 2013; Souza et al., 2016). Shifts in the abundance of groups in the microbial community could reduce functionality with negative impacts on soil fertility and productivity (Delgado-Baquerizo et al., 2018) since bacterial groups in soils comprise a complex network with multiple and essential ecological functions. Despite the increasing number of studies contributing to the understanding of bacterial ecological functions, we still need to associate the diversity and the role played by bacteria in the soil. The continuous development of novel molecular tools has been promising for soil microbial ecology. Still, it presents a set of limitations that hamper a complete understanding of the ecological impact degree caused by shifts in microbial communities of soils by using a single technique (Baldrian, 2019). Integrating different approaches, such as metagenomics, metaproteomics, metatranscriptomics, and proteogenomics, could provide a more accurate understanding of soil biodiversity and microbial functionality (Biswas & Sarkar, 2018; Lahlali et al., 2021). However, using those tools to assess the role of soil microbiome involves significant challenges, including the standardization of methodologies (e.g., soil sampling, sample processing, and data analysis) in different biomes and costs. Research on soil microorganisms associated with crop species across Brazilian biomes results in increasing food production with sustainable soil use. For example, inoculants are products with living microorganisms capable of benefiting the development of different plant species (de Souza et al., 2019). A successful example in Brazil is the use of inoculants with Bradyrhizobium spp. strains in soybean. The inoculation supplies the crop demand on N, reducing N-fertilizers’ use (Hungria & Mendes, 2015). Soybean cropping without any N-fertilizer has generated an annual economy estimated at 20 billion dollars (Santos et al., 2019), reinforcing the importance of knowledge about the soil microbiome.

7.2.2 Fungal Diversity Soil represents the main fungal propagules reservoir in terrestrial environments, and this system is very important to the ecosystems functioning (Adhikari & Hartemink, 2016). Most of the known fungal groups can be found in soil, such as Ascomycota,

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Basidiomycota, Mucoromycota, and Glomeromycota, which are the most diverse taxa in terms of described species (Willis, 2018). These fungal phyla harbor different ecological groups such as saprophytic fungi (mainly rotting plant debris decomposers, dung fungi, and others), arbuscular and/or ectomycorrhizal fungi, and plant pathogenic fungi. The last two groups play a positive or negative key role in plant fitness and production, depending on the group. For example, arbuscular mycorrhizal fungi, members of phylum Glomeromycota that performs a symbiotic relationship with roots of more than 80% of land plants, can favor plant communities by enhancing limiting nutrients acquisition, water supply, and plant protection against pathogens and droughts and even enhancing ecosystem resilience to climate change (Martínez-­ García et al., 2017; Smith & Read, 2008; van der Heijden, 2010). On the other hand, soil can act as a significant reservoir of various plant pathogenic fungi, especially in crop soils, where cultivation conditions can favor the development of aggressive strains for most economically relevant plant crops (van Agtmaal et al., 2017). Phylogenetic analysis has demonstrated how tropical and nontropical soils are potentially a source of undescribed taxa in the fungi kingdom (Tedersoo et  al., 2017). The fungi kingdom is estimated to have between 2.2 to 3.8 million species, of which about 8% are known, that is, approximately 120,000 species (Hawksworth & Lücking, 2017; Willis, 2018). The gaps in knowledge are mainly due to the deficit in human resources trained to explore this diversity and the diversity of this ecologically diverse group with a large number of uncultured species that play key ecosystem roles in ecosystems (Bills et al., 2004; Tedersoo et al., 2014; Frąc et al., 2018). Until 2017, more than 2100 new species were described globally, among mycorrhizal, saprophytic, and plant pathogenic fungi, mainly due to the advance in the use of DNA-based techniques, which allow the evaluation of total soil DNA in the scan of this biodiversity (Tedersoo et al., 2017; Willis, 2018). However, considering the global scenario, where few researchers have access to these resources, much needs to be done, especially in less developed countries. Furthermore, looking at all the ecosystem functions performed by soil fungi (Adhikari & Hartemink, 2016; Bardgett & van der Putten, 2014; Frąc et al., 2018), it is important to highlight the unexplored potential of these organisms, whether in ecosystem services or in the investigation of biotechnological applications that can improve human quality of life (Hyde et al., 2019). Finally, it is also extremely important to investigate how global environmental changes and land use can influence the occurrence of the fungal community in soils, which would significantly affect their role in ecosystems (Martínez-García et al., 2017; Větrovský et al., 2019; Bennett & Classen, 2020). The impacts of changes in soil microbial community associated with land use conversion to agricultural systems have been evaluated in studies with different groups of microorganisms, such as fungi, bacteria, and archaea in some Brazilian ecosystems (Pereira et al., 2014; Pontes et al., 2017b, b; Lacerda-Júnior et al., 2019; Silva et al., 2019; Bobul’ská et al., 2021; Silveira et al., 2021). Since mycorrhizal symbiosis is associated with acquiring nutrients and water for the host plant, intensive soil cultivation and fertilizer application change the AMF composition, decreasing species richness (Pontes et al., 2017b). The higher AMF diversity in preserved

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areas points to the relevance of habitat heterogeneity in the composition of fungal species involved in the symbiosis in these areas in association with the benefits AMF provides to plant communities (Bonfim et al., 2013; Calaça & Bustamante, 2022; Marinho et al., 2019). Recent data have shown that even in areas not converted to agricultural use, the maintenance of fungal diversity is linked to different soils and plant formations in the Cerrado (Calaça & Bustamante, 2022) and Atlantic Forest (Duarte et  al., 2019). Arbuscular mycorrhizal fungi are also crucial in the restoration strategies of degraded natural areas (Bonfim et al., 2013; Matos et al., 2022). When we evaluate the diversity of these fungi in areas undergoing a transition to agroecological practices, which prioritize production with a more ecological focus within agroecosystems (Wezel et al., 2009), the benefits of AMF to the development of the plant community and the soil are remarkable. Consequently, less intensive production practices favor the development of fungi, increasing both richness and species diversity (Pontes et al., 2017a; Araujo et al., 2017; Prates-Júnior et al., 2019). Using these organisms associated with agroecological practices represents an excellent way of recovering areas under intense conversion, especially for conventional agriculture. The prospects for the use of AMF in ecological restoration have advanced in recent years, especially concerning studies that show the effect of these fungi on soil aggregation and establishment of mycorrhizal plants, which represent more than 80% of land plants (Kalamulla et al., 2022; Pagano et al., 2022; Smith & Read, 2008; Smith & Smith, 2012).

7.2.3 Soil Fauna Diversity Soils host about 50% of global animal biomass (Fierer et al., 2009), and most of the terrestrial animal biodiversity is associated with soil and litter3 as a habitat or food source (FAO et al., 2020). Soil or litter-dwelling invertebrates probably represent as much as a quarter of the described living species worldwide (exceeding two million in the IUCN Red List version 2021–3), most being insects and arachnids (Decaëns et  al., 2006). However, much of this diversity remains unknown or undescribed, especially among smaller organisms (Decaëns, 2010). Of the approximately 250,000 species of invertebrates estimated to inhabit Brazilian soils, a little over 94,000 have been described (although this number is outdated and overestimated since it accounts for some aboveground species), and only a few have their biology and ecology studied (Brown et al., 2015). This presents great challenges to describing or quantifying soil communities and soil food web structure. To make this diversity more manageable, soil fauna is traditionally broadly categorized based on body width (Swift et al., 1979) since it provides a clue of the microhabitats they occupy and is linked to how they experience and change the chemical and physical

 Litter (also leaf litter) is the dead plant material that has fallen from trees, shrubs, and other plants.

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Fig. 7.1  Number of known species of soil fauna groups with at least 50% of soil−/litter-associated species (based on data compiled by Potapov et al., 2022). The number of species is shown along with the soil fauna classification scheme based on body width (according Swift et al., 1979). In parentheses is shown the number of species known for Brazil according to data reported in the “Catálogo Taxonômico da Fauna do Brasil,” (http://fauna.jbrj.gov.br/) except for earthworms, which we obtained data from (Brown et al., 2013). acontains terrestrial and aquatic species; bincludes species that live on soil, litter, and aboveground. The bars below show some characteristics and roles of the soil animals that are usually associated with their size (Based on data compiled by Potapov 2022)

properties of their habitat. Furthermore, this classification works as a general functional descriptor of soil communities by indicating the major roles of soil organisms in belowground ecosystems (Fig. 7.1). Multitrophic interactions among functionally dissimilar soil organisms across size classes and trophic levels drive several ecosystem functions that result in ecosystem goods and services (Brussaard, 2012; Wurst et al., 2012). Soil carbon transformations and nutrient cycling, ruled by decomposers (bacteria and fungi), are regulated by microbial grazers (e.g., protozoa and nematodes) and boosted by litter transformers (e.g., detritivores such as Collembola, Isopoda, and Diplopoda), which

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together are responsible for delivering ecosystem services like pollutant attenuation and degradation and climate regulation (greenhouse gas exchange). Ecosystem engineers (especially ants, termites, and earthworms) are organisms that have profound impacts on soil chemical, physical, and structural properties, ensuring services of soil erosion control and water quality and supply while promoting biodiversity by provisioning habitats (Lavelle, 1997). Root herbivores and predators that span all size classes regulate biological populations and ensure pest and disease control, although some herbivores can cause huge economic losses in poorly managed agroecosystems. The fact is that most of these ecosystem functions are essential for the provision and maintenance of ecosystem goods, such as food, fiber, and biofuel production, which will only be guaranteed in the long term by more sustainable models (Kibblewhite et al., 2008). There is growing evidence that soil biodiversity promotes or is directly linked to ecosystem multifunctionality and is also essential for the maintenance of multiple ecosystem functions in agroecosystems (Jiao et al., 2022; Jing et al., 2015). This raises increasing concerns soil biodiversity is generally under pressure from threats such as deforestation and agricultural intensification (de Graaff et al., 2019; Tsiafouli et al., 2015). Global meta-analyses have shown a substantial reduction of local above and belowground animal biodiversity related to the conversion of natural to agricultural systems and their intensification (Newbold et al., 2015). In a recent global study, Graaff et  al. (2019) showed that synthetic N-fertilization and tillage negatively impact soil fauna; however, very few studies in Brazil were considered. Recently, Franco et al. (2019) showed in a meta-analysis that the conversion of primary forests to pasture and agriculture in the Amazon region negatively affects the richness, abundance, and biomass of soil macrofauna, although significantly only in pastures. Pastures predominate (57%) among the agricultural use classes mapped in Brazil, such as annual and perennial agriculture (24%), mosaics of agriculture and pasture (16%), and forestry (3%). Together, these agroecosystems occupy 31% of the national territory (MapBiomas, 2022). Decreases in soil fauna diversity due to forest conversion to pasture have also been reported in the Pantanal (Loyola et  al., 2006), Caatinga (Viana-Junior et  al., 2014), Cerrado, and Atlantic Forest biomes (Franco et al., 2016; Matos et al., 2020; Vanolli et al., 2021). Although this conversion may be considered more detrimental to soil macrofauna than savanna conversion for this purpose (Decaëns et al., 2004), long-term use of pastures does not fail to negatively affect the diversity and structure of epigeic arthropods in central Brazilian savannas. The decrease in habitat complexity imposed by this land use system especially impacts predator populations (e.g., spiders, pseudoscorpions, and predatory mites) (Pompermaier et al., 2020). Annual and more intensively managed crops can negatively affect soil fauna richness and diversity to the same or greater extent than pastures, although this effect can be mitigated by no-till and integrated cropping systems. Conservation systems, such as agroforestry, can positively affect soil fauna populations, which may favor the maintenance of soil biodiversity (Brown et al., 2015). However, we still lack more comprehensive meta-analyses to determine the magnitude of the effects of each of these agroecosystems on soil fauna. This is challenging because, although the number of studies has grown, they still

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cover few regions, have few analyses with soil micro and mesofauna, and have a low taxonomic resolution. These gaps make analytical generalizations and more adequate management recommendations for Brazilian agriculture difficult to get (Franco et al., 2019). To move forward, we will need to understand the gaps better and integrate research groups for the acquisition of standardized data that foster public databases.

7.3 Conclusions: Sustainability Challenges in Agriculture and Soil Biodiversity Conservation As presented in this chapter, changes in land use that result in the conversion and fragmentation of natural habitats are critical drivers of environmental degradation in Brazil, and their consequences on soil biodiversity are less understood than in relation to flora and fauna. Loss of vegetation cover is still observed in all Brazilian biomes but there is an imbalance in research efforts to understand the effects of loss and fragmentation of natural habitats on biodiversity, with most studies developed in the Amazon (42.7%), followed by the Atlantic Forest (19.2%) and Cerrado (18.7%), with relatively few works in Pampa, Pantanal, and Caatinga (Bustamante et al., 2019). Land conversion and management are also associated with increasing fire records in Brazil. Biomass burning plays a fundamental role in the climate system by influencing global and local ecosystem patterns and processes and the carbon cycle. Currently, the Amazon and the Cerrado have the highest numbers of fire events, associated mainly with the conversion of natural vegetation to pasture and agriculture. In particular, the Cerrado is singled out as a threatened biome due to deforestation and wildfires. In addition, climatic conditions are fundamental as a vector for the occurrence and spread of fire, and in the coming decades, an increase in the probability of extreme weather events, greater fire potential and longer fire seasons, is expected in Brazil (IPCC, 2021). Climate change is a challenge for the functioning of natural and managed ecosystems, and there are synergistic effects with land use changes. Projections indicate that Brazil will be affected by climate change, with an average temperature increase of 2° to 3  °C by 2070, affecting mainly the Center-West, North, and Northeast regions. A significant reduction in rainfall is also expected, with an increase in drought events, mainly in the eastern Amazon, the Cerrado, and the Caatinga. This decrease in rainfall may trigger “savannization” processes in the Amazon, desertification in the Caatinga and expansion of the Atlantic Forest toward the Pampa. Ecosystems’ responses to climate change are affected by the degree of loss and fragmentation of their native vegetation and the low coverage of the network of protected areas, which should hinder the movement of organisms in search of more suitable climatic conditions.

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Globally, the last three decades have seen a growing effort to counteract emissions from agriculture and deforestation with land-based measures to reduce carbon emissions and increase carbon sinks. These “land-based mitigation” or “natural climate solutions” (NCS) of which a large subset termed “nature-based solutions” (NbS) seeks to deliver multiple benefits for climate change mitigation and adaptation, enhancement of biodiversity, and improvements to human livelihoods. Climate change mitigation implies reducing land-based emissions by about 50% per decade (85% total decrease by 2050), and about a tenfold increase in carbon removals over two decades between 2030 and 2050 to make the land sector net zero emissions by 2040 and a net carbon sink by 2050. Considering Brazilian agriculture and land use dynamics, in the near term—the next 10 years—priority actions include the following: reduce the conversion of natural ecosystems, restore degraded carbon-rich ecosystems, improve forest management and agroforestry, enhance soil carbon sequestration on agricultural lands, and reduce fertilizer emissions. The governance model over the territory directly affects above and belowground biodiversity. Decisions, and the way they are made, determine the current and future state of the environment. In Brazil, collective and public land management accounts for 47% of the national territory, while private management covers the remaining 53% (Bustamante et al., 2019). About 50% of the Brazilian native vegetation cover is on private property, giving these remnants a highly relevant role in the conservation of biodiversity, the maintenance of biological connectivity in human-transformed landscapes, and the provision of ecosystem services for a considerable extension of the national territory. At the federal level, the Native Vegetation Protection Law and its main conservation instruments, the Legal Reserves and the Permanent Preservation Areas, protect these fragments.4 One of Brazil’s main challenges for the coming years is the alignment of development policies—especially agricultural policy—with the use and conservation of biodiversity. Integrating environmental and agricultural policies is fundamental to meeting the goals and conservation agreements signed internationally, as well as to preventing the disappearance of species (above and belowground) of ecological value with intrinsic potential for agriculture, industry, and biotechnology development. The development of a bioeconomy based on Brazilian biodiversity can represent a relevant alternative for conventional or predatory land uses. The restoration of native ecosystems has emerged as a promising strategy to mitigate and, in some cases, reverse the effects of environmental degradation. In Brazil, restoration programs began to spread mainly in the last two decades. However, despite regulatory advances and ambitious restoration goals, there are still difficulties to monitor the restoration progress in the country. In general, the more conserved landscapes are, maintaining native vegetation cover above a certain threshold, in a spatial arrangement that is not very isolated. The lower the intensity of use and disturbance of these native areas, the greater the

 See chapter “The Brazilian Forest Code: the challenges of legal implementation” for a comprehensive analysis of the Native Vegetation Protection Law and its main conservation instruments. 4

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biodiversity and, consequently, the provision of different ecosystem services that directly benefit human well-being. In this sense, it is necessary that land-use planning considers these processes that occur at the landscape level, in order to minimize the negative effects of human uses on the remaining native vegetation while making it possible to improve ecosystem services in productive areas.

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Chapter 8

The Brazilian Way of Farming: Potential and Challenges to Agricultural Decarbonization Camila Dias de Sá, Niels Søndergaard, Luís Gustavo Barioni, and Renato Cintra Camargo

Abstract  Mitigating GHG emissions through different low-carbon agricultural interventions has gained widespread attention, and Brazil can play an important role in this regard. For this, specific institutional and technical means should become increasingly context-sensitive, which is essential to provide precise standards and measures adapted to tropical agriculture. Nevertheless, any operational framework must be founded on strong science, rigorous adherence to the standards of integrity, and reliable MRV approaches. Carbon pricing could promote initiatives to support low-carbon agriculture in Brazil if it is appropriately founded on those principles. This chapter offers an overview of Brazilian agriculture’s engagement in carbon market mechanisms while highlighting the potential and issues related to legal framework, cultural and technical barriers, measurement, reporting, and verification difficulties, as well as coordination requirements. We conclude by presenting general recommendations.

C. D. de Sá (*) Insper, São Paulo, SP, Brazil e-mail: [email protected] N. Søndergaard Universidade de Brasília (UnB), Brasília, DF, Brazil e-mail: [email protected] L. G. Barioni Empresa Brasileira de Pesquisa Agropecuária (Embrapa), Embrapa Agricultura Digital, Campinas, SP, Brazil e-mail: [email protected] R. C. Camargo Escola Superior de Agricultura “Luiz de Queiroz” Universidade de São Paulo (ESALQ-USP), Piracicaba, SP, Brazil e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 N. Søndergaard et al. (eds.), Sustainability Challenges of Brazilian Agriculture, Environment & Policy 64, https://doi.org/10.1007/978-3-031-29853-0_8

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8.1 Introduction The promotion of the transition towards deep decarbonization of economies worldwide is urgently needed. In this respect, carbon pricing can play an important role in internalizing costs of greenhouse gas (GHG) emissions amongst the responsible economic agents fostering incentives towards mitigation initiatives. Brazilian GHG emissions related to land use change and agriculture account for around 75% of total domestic emissions. Agriculture is tightly interconnected with environmental risks related to land use change, water scarcity, phosphorus and nitrogen cycles, biosphere integrity, and climate change (Springmann et  al., 2018; Willett et  al., 2019). Moreover, expansion of the agricultural production of commodities such as beef, soybeans, and palm oil is often associated with processes of land use change with detrimental climate impacts (Henders et al., 2015; Pendrill et al., 2019). Thus, important contributions to the climate agenda could be made if proper incentives were created to encourage more sustainable practices. Efforts to mitigate the undesirable effects of agriculture on the global climate system have gained widespread attention, encompassing different interventions, ranging over sustainable intensification, agroforestry experimentation, precision fertilizer application, decoupling of food production from deforestation through increasing productivity, and other changes in the conventional modes of production and consumption. A transition in the direction of low-carbon agriculture can, thereby, become an essential force for change in global climate mitigation efforts. The dimension of area used to pastures, crops, and planted forests in Brazil – nearly 240  million hectares  – creates huge opportunities to conduct high-impact sector-­ wide decarbonization schemes. The potential of Brazilian agriculture to sequester carbon in soils comes from the possibility – existent in the tropics and subtropics – of increasing soil carbon inputs through improved productivity and the cultivation of up to three different crops throughout the year on low tillage. The management of different crops, including cover crops and crop-livestock production is, however, a great challenge due to the heterogeneity of soils and climates, and the huge variation between the most and less emissions-intensive modes of production in Brazil. This chapter provides an overview of the current state of the engagement of the Brazilian agricultural sector towards carbon pricing and market mechanisms and highlights the opportunities and challenges in terms of lowering sectoral emission levels. While carbon pricing is an important step to promote economic incentives in favour of low-carbon development (Edmonds et al., 2019; High-Level Commission on Carbon Prices, 2017; van den Bergh & Botzen, 2020), scholars have also cautioned about the risks of relying on market mechanisms, especially with respect to the integrity of emission reductions (Green, 2017; Ervine, 2018; Schneider & La Hoz Theuer, 2019; Schneider et al., 2019). In this sense, we aim to provide an outlook on existing efforts and the future potential to spur emission reductions through carbon pricing in the Brazilian agricultural sector. First, we present some key data on Brazil’s emission profile and its potential with specific regard to the opportunities and comparative advantages for the Brazilian

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agricultural sector to engage in the carbon markets. Then we describe and analyse some of the most important challenges in this regard, related to regulatory frameworks, cultural obstacles, measurement, reporting and verification challenges, and coordination needs. The conclusion sums up the results and presents some general recommendations.

8.2 Natural Climate Solutions: Brazil Within the Global Context Brazil’s dimension and natural resource endowments could provide certain comparative advantages for the country within the context of global carbon markets. The country’s course of action is globally relevant to either aggravate or mitigate the climate crisis. Farmers could thereby become part of the solution, as a huge potential exists either through the conservation of the native vegetation within farm boundaries or by the adoption of more climate smart and land-intensive production models, introducing practices that increase soil carbon stocks. Natural climate solutions (NCS)1 have attracted significant attention as a manner of reducing GHG emissions from ecosystems and harnessing their potential to store carbon (Seddon et al., 2020). In this context, tropical countries deserve attention, as they hold around 60% of the global NCS potential. Brazil accounts for at least 21% of the tropical NCS potential at “cost-effective” levels (