Integrated Ecological Economic Modeling of Ecosystem Services from Brazil's Amazon Rainforest By Rosimeiry Portela At Conservation International Washington, DC July, 2005

Introduction The Amazon tropical rain forest: Largest tract of tropical forest on Earth with half of the species of the world. Vegetation: Regional pattern of precipitation and radiation and and regulation of GHGs. Plant animal interactions and nutrient cycling. UC Davis

Legal Amazon, Brazil

“To try to understand the structure and function of …(the Amazon) is comparable to composing a mosaic picture. gustavofonseca Sioli, H. 1984

RUMBA: Integrating functions of the ecosystem to human economy and social interactions… …with the main focus on the contribution of the ecosystem goods and functions to human economy and welfare.

RUMBA: Scenarios Baseline: Historical trends; Scenario 1: Increased investment in BC with region’s own financial resources; Scenario 2: Increased investment in BC with region’s and external financial resources; Scenario 3: Increased investment in NC with region’s own financial resources; Scenario 4: Increased investment in NC with region’s and external financial resources.

Research Results: Annual Deforestation Rates Baseline and Alternative Scenarios

Research Results: Annual Deforestation Rates Year 2050 Scenario 1: 27 thousand km 2 yr -1 Scenario 2: 29 thousand km 2 yr -1 Scenario 3: 22 thousand km 2 yr -1 Scenario 4: 25 thousand km 2 yr -1 Forest is cleared at a faster rate under scenarios of increased development. 2050: Baseline: 26 thousand km 2 yr -1

Research Results: Annual Deforestation Rates Deforested areas under scenarios of increased development are higher than those of conservation and Baseline Deforestation in Scenario in Relation Baseline (2100) Scenario 1: -73 thousand km 2 Scenario 1: -73 thousand km 2 Scenario 2: -171 thousand km 2 Scenario 2: -171 thousand km 2 Scenario 3: +205 thousand km 2 Scenario 3: +205 thousand km 2 Scenario 4: +45 thousand km 2 Scenario 4: +45 thousand km 2

Research Results: Land Cover/Land Use Composition Baseline Scenario Strong trend in land conversion from forest to other land uses; 1975: 96% forest cover 2100: 26% forest cover Land Use Pasture: 40% Fallow: 24% Agriculture: 10%

Results: Climate Variables/Baseline Scenario Precipitation: 23% reduction Evapotranspiration: 26%reduction Temperature: 11% increase Forest Carbon Balance: Decreasing Uptake and Increasing Emissions

Results: Ecosystem Services Variables Removal of forest cover leads to increasing losses of ecosystem services: +70% by 2100 Higher losses observed in scenarios of increased development Monetary valuation: Increasing prices per unit of service

Results: Average Values of Ecosystem Services

Results: Monetary Valuation of Ecosystem Services Value of ecosystem services is estimated at about 5 times the GRP

Results: Capital Variables/Baseline Scenario POPULATION GROWTH (1E6 People) BASELINE SCENARIO SCENARIO SCENARIO SCENARIO

Results: Capital Variables/All Scenarios BUILT CAPITAL 1E6 US$ (2001) KNOWLEDGE SOCIAL NETWORK SNI BASELINE55515, SCENARIO 1 23, SCENARIO 2 26, SCENARIO 3 7, SCENARIO 4 8,2581,

Results: Capital Variables/Capita All Scenarios BC/CAPITA 1E3 US$ (2001)/Person KNOW/CAPITA SNI/CAPITASNI/Person BASELINE SCENARIO SCENARIO SCENARIO SCENARIO

Results: Economic Variables GRP

Results: Welfare/All Scenarios

Results: Compensation for Avoided Deforestation Gains to the regional economy from forest conversion against losses associated with emissions Scenario 3 ( ) Forest spared from deforestation : 210 thousand km 2 Avoided Emissions: 3.0 Pg C Foregone economic growth: US$ 1.7 Trillion Amazon Deforestation: Amazon Deforestation: 0.3 Pg C yr -1 Kyoto Target: Kyoto Target: 0.5 Pg C yr -1

Results: Single Compensation for Avoided Emission

Results: Continuous Compensation for Avoided Emission

Discussion: Main Findings  Increasing land use change in the Brazilian Amazon incurs significant losses without this being adequately offset by increasing monetary income or welfare of people of the region.  In the absence of significant incentives from global beneficiaries for any one ecosystem service or a combination of incentives addressing several ecosystem services, rational uses at the local level lead to sub optimal uses from the global perspective.

Discussion: Alternatives Effective Comand and Control Regulations Efficient Market-Based Instruments: Carbon-offsetting trading Conservation Concession Timber Certification Fair Trade Secure Property Rights Tradeable Development Rights International Grants Resources Global Forestry Agreements

Overall Conclusions Deforestation proceeds at high rates in the Brazilian Amazon The region suffers significant climate changes and losses of forest services as a result of forest removal Increasing regional economic growth is not translated into increasing monetary income and welfare Protection of forest will require a concerted long-term effort

Model Limitations and Caveats RUMBA: A unified metamodel Use of average parameters; Assumptions to model processes that are poorly understood; Linearly homogeneous production functions; Sensitivity of production limits of biosphere to climate variables; Sensitivity of economic production to climate variables and decreasing stocks of natural capital; A economic distribution function.

‘What we are doing to the forest of the world is but a mirror reflection of what we are doing to ourselves and one another’. —Mahatma Ghandi