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RR RUEHAST RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL RUEHTM
RUEHTRO
DE RUEHBR #1460/01 3491518
ZNR UUUUU ZZH
R 151515Z DEC 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0122
INFO ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHNY/AMEMBASSY OSLO 0001
RUEHRG/AMCONSUL RECIFE
RUEHRI/AMCONSUL RIO DE JANEIRO
RUEHSO/AMCONSUL SAO PAULO

UNCLAS SECTION 01 OF 03 BRASILIA 001460 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: SENV EAID KGHG EAGR EFIN NO BR
SUBJECT: BRAZIL: AMAZON FUND AND OTHER FUNDS TO PROTECT THE 
ENVIRONMENT - MAKING REAL PROGRESS 
 
REF: 08 BRASILIA 1159 
 
(U) THIS CABLE IS SENSITIVE BUT UNCLASSIFIED AND NOT FOR INTERNET 
DISTRIBUTION. 
 
 
 
¶1.  (SBU) SUMMARY.  The Amazon Fund created in August 2008 and 
funded by a US$1 billion pledge from Norway has just announced its 
first block of approved projects to help monitor and reduce 
deforestation in Brazil's Amazon region.  Brazil also has now 
passed a law that will establish a National Climate Change Fund, 
which Environment Minister Carlos Minc says will be funded with up 
to Reals 1 billion (nearly US$600 million) per year from 10 percent 
of the proceeds of oil production.  Further, Minister Minc 
announced that he wants to create a Cerrado Fund to finance forest 
conservation projects in Brazil's vast savannah region.  END 
SUMMARY. 
 
 
 
AMAZON FUND 
 
 
 
¶2.  (SBU) While in Oslo to receive the Nobel Peace Prize, President 
Obama took time to praise the Amazon Fund (or "Fundo Amazonia") as 
a model for addressing deforestation.  The Amazon Fund deserves 
attention because it is one of the world's first large-scale and 
best financed REDD (reducing emissions from deforestation and 
forest degradation) mechanisms.  The Amazon Fund was created by 
presidential decree in August 2008 (REFTEL A).  It is the 
Government of Brazil's (GOB) preferred mechanism for channeling 
international financial support to reduce deforestation.  The GOB 
particularly likes that (1) Brazilians - and not the donors - 
decide how to use the funds within certain guidelines spelled out 
in the decree establishing the fund, and (2) the emissions 
reductions resulting from the funded projects cannot be used as 
credits or offsets by the donors.  To make the fund more attractive 
to donors, the GOB agreed to only make disbursements if the rate of 
Amazon deforestation is lower than a base line (for now it is 
compared with a high initial base line figure). 
 
 
 
¶3.  (SBU) In September 2008, Norway announced that it would give up 
to US$1 billion through 2015.  Norwegian Charge Inge Nordang tells 
Post that Norway is pleased with the progress made so far by the 
fund.  Consequently, he said that Norway has allocated 700 million 
Norwegian Krone (about US$ 110 million for 2009), and 750 million 
Norwegian Krone (about US$ 125 million) for 2010 and 2011.  After 
2011, Norway will need to make new budget allocations.  No other 
country has made a contribution to the fund, however, German Charge 
Hermann Sausen says that Germany is looking at making a 
contribution of 18 million Euros in 2010 and possibly similar 
additional contributions in later years.  In addition, Germany 
plans on providing four million Euros to help develop Brazil's 
capacity at the national, state and local levels to handle these 
funds. 
 
 
 
¶4.  (SBU) The Amazon Fund has now entered the operational phase. 
On December 9, the fund's manager, National Bank of Social and 
Economic Development (BNDES), announced that it had approved the 
first group of projects.  BNDES plans to distribute over the next 
three years a total of Reals 70.3 million (about US$ 40 million) to 
the following five projects: 
 
 
 
- The State of Amazonas (which is about the size of Alaska and 
contains nearly half of the Amazon Forest in Brazil) operates the 
Sustainable Amazonas Foundation ("Fundacao Amazonas Sustentavel"), 
which will receive Reals 19.2 million (about US$11 million) from 
the Amazon Fund to support a near doubling of the Forest Support 
Program ("Programa Bolsa Floresta").  That state-level program 
provides funds to local communities and small monthly allotments to 
families living in the forests in Amazonas State to preserve the 
forest and to develop sustainable economic alternatives to 
deforestation. 
 
BRASILIA 00001460  002 OF 003 
 
 
- IMAZON (the "Amazon Institute of People and the Environment" or 
"Instituto de Homem e Meio Ambiente da Amazonia") will receive 
Reals 9.7 million (nearly US$6 million) to help in monitoring 
deforestation and support land title registration in the State of 
Para, which is where much of the deforestation is occurring. 
IMAZON is a USAID partner.  It has gained a well-deserved 
reputation for excellent analysis of satellite imagery to detect 
and monitor deforestation. 
 
 
 
- The Nature Conservancy-Brazil (TNC Brasil), also a USAID partner, 
will get Reals 16 million (about US$9 million) for use in 12 
municipalities with some of the highest rates of deforestation in 
the States of Para and Mato Grosso.  The money will support land 
title registration efforts and also promote efforts to ensure that 
wood, soy and cattle from illegally cleared land do not enter the 
market. 
 
 
 
- The Green Gold Institute ("Instituto Ouro Verde") plans to 
promote the recovery of 1.2 million hectares of degraded areas and 
support sustainable family farming in six municipalities.  The fund 
will provide it with Reals $5.4 million (about US$3 million). 
 
 
 
- FUNBIO (the Brazilian Fund for Biodiversity) will use the Reals 
20 million (about US$12 million) from the Amazon Fund to support 
the creation of 13.5 million hectares of conservation units in the 
Amazon, and supporting the consolidation of 32 million hectares of 
existing conservation units.  NOTE:  The GOB intends to use FUNBIO 
to implement a US$ 20 million Tropical Forest Conservation Act 
(TFCA) program if the terms of an agreement can be worked out with 
the USG.  END NOTE. 
 
 
 
¶5.  (SBU) While generally satisfied with the Amazon Fund, Norway 
does emphasize one particular change it would like to see.  Norway 
is increasing the pressure on the GOB to accept projects for 
monitoring and control of deforestation in other biomes in Brazil 
and in other tropical forest countries.  The Amazon Fund's decree 
specifically provides that up to 20 percent of its resources can be 
used for other biomes and countries.  Norway wants to see the fund 
support such projects, said Charge Nordang. 
 
 
 
NATIONAL FUND FOR CLIMATE CHANGE 
 
 
 
¶6.  (SBU) The GOB is in the process of creating a National Fund for 
Climate Change, financed from expected oil revenues.  It would use 
the money for actions to mitigate emissions and for measures to 
adapt to climate change throughout Brazil, not just in the Amazon 
biome or in forests.  On December 9, President Luis Inacio Lula da 
Silva signed the National Climate Change Policy law, which included 
a provision to create the fund.  Environment Minister Minc said he 
expected this new fund to annually receive between Reals 800 
million and 1 billion (about US$ 470 to 600 million), which would 
come from up to 10 percent of oil revenues.  While the creation of 
the National Fund for Climate Change has been approved, much 
remains to be done to bring it to life.  Most importantly, the 
funding levels and mechanisms are still in question.  The internal 
debate over the use of the expected revenues from exploiting the 
vast off shore reserves is only heating up.  It is not clear how 
much, if any, of those revenues will flow into this new fund. 
 
 
 
CERRADO FUND 
 
 
 
¶7.  (SBU) On Decmeber 3, Environment Minister Minc told the press 
that the GOB planned to replicate the Amazon Fund with a similar 
fund for the central-western savannah region called the Cerrado. 
 
BRASILIA 00001460  003 OF 003 
 
 
This new Cerrado Fund would combat deforestation in the Cerrado and 
also help preserve biodiversity.  Reducing deforestation in the 
Cerrado has taken on greater importance for the GOB because it is 
Brazil's second biggest mitigation action, after reducing 
deforestation in the Amazon region.  The GOB has set a goal of 
lowering the rate of deforestation in the Cerrado by 40 percent by 
2020, which it calculates will save about 104 million tons of CO2 
per year. 
 
 
 
COMMENT 
 
 
 
¶8.  (SBU) Brazil with its Amazon Fund is beginning to implement 
large scale REDD projects.  The lessons learned from this 
experience should prove useful to managing the expected large 
infusions of international financing for REDD projects in Brazil 
and elsewhere coming out of Copenhagen.  Further, the capacity 
being developed at all levels - national, state and local - in 
handling REDD projects in Brazil will be beneficial to funding from 
the United States in the future, whether through USAID, TFCA, or 
forest offsets related to a cap-and-trade arrangement.  It is good 
sign of growing maturity and independence that the GOB is 
contemplating using some of the substantial oil revenues it expects 
to receive from exploiting its massive offshore oil reserves to 
address climate change through the new National Climate Change 
Fund.  Finally, a Cerrado Fund could assist the GOB in trying to 
meet one of its largest mitigation action proposed at Copenhagen. 
END COMMENT. 
 
 
 
KUBISKE 
KUBISKE