A Cheaper, Simpler Pathway to Large-Scale Agricultural Sustainability? Daniel Nepstad, PhD Executive Director & Senior Scientist

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1 A Cheaper, Simpler Pathway to Large-Scale Agricultural Sustainability? Daniel Nepstad, PhD Executive Director & Senior Scientist Foz do Iguaçu, March 19, 2014

2 Price Index by Individual Commodities Food Price Increases: Here to Stay? Demand > Supply Sep-93 Mar-94 Sep-94 Mar-95 Sep-95 Mar-96 Sep-96 Mar-97 Sep-97 Mar-98 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Aggregate Food Commodity Price Index Maize (corn) Palm oil Soybeans Rice Crude Oil (petroleum) Food Commodity Price Index

3 Most of the increase in food production in the next 20 years will take place in the tropics and subtropics, led by Latin America

4 Connections between Climate Change, Deforestation, and Food Production Climate Change Extreme Weather Events GHG s GHG s Extreme Weather Events Crop Expansion Loss of Tropical Forests Forest Conversion Nepstad et al. 2013a Phil Trans Roy Society; 2013b Carbon Mgt

5 Annual Deforestation (thousands km2) Amazon Production: Cattle Herd Size (millions heads) and soy production (millions of tons) Deforestation in the Brazilian Amazon: A 70% Decline Desmatamento Anual Linha de base (revisada) Rebanho Bovino (milhões de cabeças) Produção de Soja (milhões de t) Cattle Herd year Average Deforestation ( ) Soy

6 CO2 Emissions Reductions and Associated Financial Transactions: Deforestation in the Brazilian Amazon and European Union ETS Source: Nepstad, Boyd, et al Phil Trans Roy Soc

7 Brazil s national transition to lowdeforestation rural development is within reach Intensification of beef production is opening up land for crop expansion Forthcoming: Earth Innovation and AgroIcone report on Brazil s transition to Zero deforestation, high production

8 Sustainable Agriculture= Food Security Environmental Conservation Climate Change Mitigation Poverty Alleviation

9 How are we doing? Sustainable supply chain initiatives are having a hard time achieving market transformation High cost of farm-by-farm, mill-by-mill certification Low demand for certified production Ambitious company commitments to sustainable sourcing are difficult to meet

10 How are we doing? Likelihood of a near-term global climate treaty with teeth and finance at scale is low Binding commitments within UNFCCC postponed to 2020 REDD+ has advanced far, but lacking financial mechanism

11 How are we doing? Domestic policy support for transition to sustainable agriculture limited Low political will Low institutional capacity

12 Fragmentation: a profusion of initiatives, each with its own vocabulary, processes and metrics Reserva Legal

13 Strengths and Weaknesses Sustainable Supply Chains International Finance (REDD+) Domestic Policy/Financ e Private Sector Engagement High Low High Achieving large-scale impacts? Benefits to sustainable farmers?? Varied Low Low Low Nepstad et al Carbon Management

14 Can we link the three approaches? A jurisdictional or territorial performance approach Nepstad et al Carbon Management

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17 Key Elements of a Territorial Performance System Consensus on step-wise pathway to large-scale sustainability Incentives to support this transition at farm level Monitoring platform for measuring and reporting progress Pilots for testing and refining

18 Potential Advantages Simpler Cheaper Embeds sustainability in public policy Less dependent on reputational risk Potential for large-scale impact

19 Possible Consensus on Incremental Pathway to Zero Net Deforestation in Brazilian Amazon

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21 Deforestation (2013) Frontier: reduction > 80% below average Consolidated / Remote 20 km2/ year RR AP PA AM MA AC 1 > 80% Reduction reduction below average <80% since average 2/year < 20 km km2 per year 80%km2 reduction below avg OR > 20 km2/year >< 20 per year Non-Amazon Biome TO RO MT

22 Forced Labor Incidences ( ) RR AP AM PA MA AC mun AmzBiom RO slavelabor TOTALESCRAVO MT TO

23 Integrating Processes: Compliance with Forest Code & Deforestation Fonte: R. Nussbaum, ProForest

24 The Brazilian Territorial Performance Process APROSOJA ABIOVE ADM BUNGE CARGILL AMAGGI ABIEC JBS MARFRIG MINERVA BR FOODS IDH EMBRAPA UERJ SEMA IMC PMV MIN. DA FAZENDA DOW MONSANTO SYNGENTA UNILEVER MARS NORWAY PROFOREST SOLIDARIDAD ALIANÇA DA TERRA IPAM FOREST TRENDS NWF EII WWF TNC ICV ISA EDF BV RIO SANTANDER RABOBANK WORLD BANK CERT ID CONTROL UNION GTPS GRSB RTRS GTS AGRO.ICONE IGEAGRO

25 Conclusions: Latin America critical to food security, climate change mitigation, conservation Potential to align incentives and regulations in support of transition to large-scale sustainability developed through bottom-up consensus Could strengthen existing initiatives