Today, the United Nations' International Fund for Agricultural Development (IFAD) and the Land Conservation Organization (OCT) - a prestigious Brazilian non-governmental organization working in southern Bahia state - unveiled the new CompensaAÇÃO (CompensACTION) project: Promotion of Payment for Environmental Services (PES) for deforestation-free supply chains in Brazil.
CompensAÇÃO will be a joint investment of US$4.9 million by IFAD and the Republic of Germany and will be implemented in the Atlantic Forest biome, one of the areas most threatened by deforestation in the world. It should be noted that nearly 88 per cent of the original forest cover has been lost, and 24 per cent of its native animal and plant species are at risk. Furthermore, poverty levels remain high. In 2021, a worrisome 46.5 per cent of Bahia's population was living in poverty, with 15.8 per cent in extreme poverty, the highest rates in the previous nine years.
The main objective of CompensAÇÃO is to create the conditions for promoting agroforestry transition in cocoa production areas. This process aims to increase resilience and economic benefits and at the same time mitigate forest degradation and deforestation in the Southern Bahia Cocoa Region (RCSB). Payment to producers for ecosystem services will take the form of materials for reforestation and cash compensation.
This project is part of a broader line of work funded by the German government through IFAD's enhanced Adaptation for Smallholder Agriculture Programme (ASAP+) being implemented in Lesotho, Ethiopia and Brazil.
"Promoting the food security and resilience of vulnerable people in rural areas is a shared objective of the Federal Republic of Germany and IFAD. We believe that the world's rural producers, and especially small-scale producers, deserve just compensation for all the services they provide. This will require incentive programmes and other measures. It is satisfying that Germany can participate in one of these initiatives," stated Bettina Cadenbach, Ambassador of Germany in Brazil.
The project will also seek to improve the living conditions of rural families, reduce their vulnerability and increase their resilience to climate change. A total of 1,600 families are expected to participate, 50 per cent of them smallholder farmers engaging in low‑productivity family farming. Moreover, at least 20 per cent will be quilombolas (traditional Afro-descendant communities) and 30 per cent, agrarian reform settlers. Of the total beneficiaries, 50 per cent will be women and 15 per cent young people.
The CompensAÇÃO project will be a pioneer in promoting the innovative PES mechanism and will yield valuable lessons for tailoring this model to the different environmental contexts of the portfolio of projects financed by IFAD. This initiative will introduce a comprehensive PES approach, incorporating monetary and non-monetary elements to ensure the continued existence of the forest that is still standing. This implies integrating best agroforestry practices into agricultural activities and enriching the diversity of forest species in existing cocoa areas.
Claus Reiner, IFAD Country Director for Brazil, stressed that CompensAÇÃO will cover the development and implementation of the PES system, intertwining ecological principles that conserve soil fertility and restore diverse ecosystem services. The activities, moreover, will be expanded to support municipal and regional PES policies, strengthening institutional agreements through participatory governance processes.
The new project will power sustainable economic, productive and climate development in Bahia through diversified and improved production processes tailored to the context of climate change and sustainable agrifood systems to boost the income of family farmers. "Monetary and non-monetary PES's are a smart combination of income that contributes to the improvement of food security and increased ecosystem services, in addition to mitigating climate change and facilitating climate resilience. Generating sustainable income reinforces families' incentive to continue pursuing these activities and conserving natural resources," noted Cintia Guzmán, IFAD Programme Officer for Brazil.
It should be noted that the launch was held during a technical mission of the IFAD Country Team to Brazil conducted from 9 to 11 April in Bahia, where introductory training was provided to the team in charge of this new project, as well as other key actors and partners.
IFAD in Brazil
Over the past decade, IFAD and the Government of Brazil, together with an extensive network of partners, have invested US$453 million in six projects in the country's northeastern region, providing support to 941,000 people. The new country project portfolio, currently in preparation, includes eight new projects that will benefit 2.1 million people.
Together with the counterpart resources from the governments and cofinanciers, IFAD's new investments in Brazil will exceed US$900 million - that is, approximately 4.4 billion Brazilian reais. More than 600,000 rural families will be reached through joint action with the state and federal governments to support sustainable and inclusive rural development. This is expected to double the number of rural families reached in the country.
