Ending Deforestation in the Amazon Can Grow Brazil’s GDP — But That’s Not the Only Reason to Do It

In the Brazilian Amazon, economic growth has often gone hand-in-hand with exploiting the rainforest.

The region’s economy, and Brazil as a whole, rely heavily on farming, mining and other resource-intensive activities that deplete the Amazon. It’s why many people see deforestation as a necessary and inevitable part of growing the country’s economy and providing for its people.

But protecting the Amazon doesn’t have to mean shrinking Brazil’s GDP or turning back the clock on development.

New research from WRI Brasil and New Climate Economy shows that Brazil can halt deforestation in the Amazon while continuing to grow its economy across all major sectors, from agriculture and livestock production to clean energy and the bioeconomy. Compared with “business as usual,” this deforestation-free, cleaner and more equitable model would increase the Brazilian Amazon's GDP by at least BRL 40 billion ($8.2 billion) per year by 2050. And it would create thousands more sustainable jobs for local and Indigenous people who depend on the forest for their livelihoods.

With the financial toll of climate change on the rise, the cost to build this future should be far less than the cost of inaction. And its benefits would flow throughout the country — making the Amazon a catalyst to decarbonize the entire Brazilian economy.

Here’s how it can be done.

Business as Usual in the Amazon Cannot Continue

The Amazon’s current economic system is not sustainable. Nearly one-quarter of the forest in Brazil has already been lost to agricultural expansion and livestock production, mining and other economic activities. In 2021 alone, greenhouse gas emissions from land use and agriculture in the Amazon accounted for 67% of Brazil’s total emissions in those sectors.

If emissions and deforestation trends of the last decade continue, the Brazilian Amazon will lose another 59 million hectares (an area larger than France) by 2050. And it will produce greenhouse gas emissions 5 times higher than Brazil’s limit to meet global climate goals.

At this pace, the entire forest could soon reach its “tipping point,” turning the Amazon from a net carbon sink into a source of carbon emissions, transforming the forest into a savannah, fueling global warming and disrupting rainfall across South America. (Many areas of the forest have already reached this point.) This would make it impossible for the world to limit global temperature rise to 1.5 degrees C (2.7 degrees F) and avoid the most devastating impacts of climate change.

And it’s not just about the climate; the current system is unsustainable for Brazil’s people, too.

In many cases, resource exploitation in the Amazon does not translate to economic benefits for local and Indigenous people who depend on the forest for their livelihoods. Despite so much deforestation, the wealth is not shared locally; the Amazon region is among the poorest and most underserved areas in Brazil. The region currently imports more from the rest of the country than it exports, creating a trade deficit of BRL 114 billion ($23.4 billion). And over 83% of Amazon deforestation is driven by demand from other parts of Brazil and foreign trade. Deforestation also threatens biodiversity and critical ecosystem services which support not only local livelihoods but also the health, food, water security and economic activities of millions throughout Latin America.    

What Could a New, Low-Carbon Economy Bring to the Amazon and the Planet?

The Amazon urgently needs a new economic model that is more just and more sustainable. In a recent report, New Economy for the Brazilian Amazon, WRI Brasil and New Climate Economy partnered with leading research institutions in the country to create a roadmap for a climate-friendly, prosperous future in the region. Carried out over two years, the research modeled how the Legal Amazon’s economy would grow across all major sectors in deforestation-free, low-carbon scenarios compared to a business-as-usual scenario.

The analysis shows that by shifting existing working and degraded lands to sustainable agriculture and livestock production; restoring degraded lands; investing in the bioeconomy and forest restoration; and leveraging low-carbon technologies, including in energy and transportation, Brazil can improve its current pace of economic growth and create thousands of new jobs without any further deforestation. This “new economy” model can deliver larger and more equitable growth than the current carbon-intensive economy, benefitting both Indigenous and local communities in the Amazon region and Brazil as a whole.

Economic and job growth benefits

If the Brazilian Amazon pursues a full-scale low-carbon economic transition, the region’s GDP could grow by an additional BRL 40 billion ($8.2 billion) per year by 2050 compared to business as usual. This increase would primarily come from more efficient land use and energy production, a larger bioeconomy, and investments in sustainable agriculture and livestock practices which can increase production.

The shift would also create 312,000 additional jobs in the Legal Amazon region alone. And many workers would transition from deforestation-related activities to more sustainable sectors such as the bioeconomy and restoration, which could add 833,000 jobs throughout Brazil’s economy by 2050.

The Brazilian Amazon has strong financial, informational and material flows with the rest of Brazil, and the benefits of this new approach would reach the entire country through investments in inter-regional trade. Decarbonization would require harmonization of standards, processes and products across the country, with the Amazon — as the most attractive region for impact and green investors — being the catalyst for these changes.

Climate and environmental benefits

By ending deforestation, decarbonizing the Amazon’s economy and expanding forest restoration, Brazil can boost the forest’s carbon storage potential by almost 20% and avoid its impending tipping point. These shifts would decrease the Amazon’s greenhouse gas emissions by 94% and the country’s emissions by almost 80% compared to current trajectories, helping put Brazil — and the world — back on track to meet Paris Agreement targets and avert the worst impacts of climate change yet to come.

Protecting the Brazilian Amazon also safeguards a critical and irreplicable ecosystem. The Amazon houses the most extensive and biodiverse forest in the world, the largest freshwater reservoir and the most important climate-regulating forest block on the planet. The region’s people and economy depend on the health of this ecosystem: for example, 96% of the agricultural area in Brazil relies exclusively on rainwater irrigation. These rains are regulated by the forest itself and rainfall is proven to decrease as the forest loses tree cover. Maintaining the standing forest’s health will preserve these regional ecosystem services, for which there are no economically viable substitutes on such a large scale.

4 Critical Shifts for a Sustainable Economy in the Amazon

This transition will require major changes throughout Brazil’s economy. Eliminating deforestation in the Amazon is the first and most urgent step, but it won’t be enough on its own. The region must also expand the bioeconomy, shift to low-carbon agriculture, and decarbonize its energy mix among other actions.

Brazil must ensure that this transition is just and equitable for local and Indigenous populations. Indigenous people are the main protectors of the forests in the Amazon, guarding millennial knowledge about food resources and pharmaceuticals and helping maintain essential ecosystem services for the entire economy — especially climate regulation and rainfall irrigation. Across all sectors, Indigenous and traditional communities’ rights must be protected, their contributions to making this forest-based economy viable must be recognized, and the benefits of the new economy must be fairly distributed.

1. Expand the bioeconomy and forest restoration

As Brazil works to end deforestation in the Amazon, it should increase investment in reforestation and the bioeconomy to produce goods more sustainably and create new jobs in the region that are based on the standing forest.

The bioeconomy model recognizes that it is possible to leverage natural resources and produce consumer goods while maintaining biological, cultural and social diversity. It aims to grow the local economy while keeping forests healthy and rivers flowing. It also seeks to ensure the fair distribution of benefits to people and communities that hold traditional knowledge on which current and yet-untapped products depend.

An immense variety of local goods could contribute to the Brazilian Amazon’s bioeconomy — such as acai fruit, cocoa, nuts, honey and rubber — of which only 13 were analyzed in this study. Investing in even this small share of potential products could grow GDP from the Amazon’s bioeconomy to at least BRL 38.5 billion ($8 billion) per year by 2050.

Scaling Brazil’s bioeconomy will require replicating and expanding productive arrangements that already exist within the Amazon, which national and subnational governments must promote through financing and incentives. The private sector also needs to increase its capacity for innovation and become a driver of the new economy, especially the bioeconomy, with new financial arrangements that can support the expansion of forest-friendly goods.

2. Transform agricultural and livestock production  

Agriculture is the most carbon-intensive sector of the Brazilian Amazon's economy. Transforming this sector is key to ending deforestation and reducing economywide emissions, and will require a multi-pronged approach to increase productivity and GDP without expanding land use. Strategies include:

• Increasing land use efficiency through measures such as recovering degraded pastures and expanding integrated systems. Examples include agroforestry, which combines native trees with commercial crops to reduce soil erosion and improve ecosystem health, and integrated crop-livestock-forestry.

• Mainstreaming low-emission agriculture practices. These can include no-till farming to reduce soil erosion, crop rotation to increase soil health, use of low-carbon machinery and biological nitrogen fixation.

• Expanding easy access to credit and technical assistance for smallholders and family farmers to support them in implementing more sustainable, productive practices and help reduce rural inequality.

These investments would lead to lower susceptibility to water stress, increased soil fertility, and higher agricultural and livestock productivity on existing agricultural land, reducing the need to convert new forest to farmland. Farmers would see higher yields and incomes while keeping the rainforest intact.

3. Decarbonize energy and transportation

Investing in the transition to low-carbon energy and infrastructure will be crucial to reducing Brazil’s emissions, meeting climate goals and decarbonizing other sectors of the economy. The main energy source for this transition will be solar power, which, in the new economy scenario, could meet 55% of electricity demand in the region by 2050. To avoid further deforestation, renewable energy projects must use innovative solutions that leverage already degraded or altered lands rather than clearing additional forest for installations. Two primary solutions include floating solar power systems above existing hydroelectric dams or installing them on degraded pastures close to transmission structures.

Brazil must also decarbonize the region’s transportation sector. This can be done by 2050 through electrifying transportation and replacing fossil fuels with second and third generation biofuels (which do not rely on edible plants as their feedstock, reducing strain on food systems). In the new economy scenario, the Brazilian Amazon’s energy demands from passenger and freight road transport, water transport and aviation can be met with 54% biofuels, 40% renewable electric power, and only 6% fossil fuels. Waterway transport with hybrid fossil fuel-electric engines — favored on the Amazon’s extensive river network — can absorb 20% of current road freight transport, reducing the need to clear forest area for new roads.

To support the shift to clean transportation, Brazil’s government can eliminate fossil fuel subsidies or promote cross-subsidies from fossil fuels to renewable energy, with an emphasis on solar energy and second-generation biofuels.

4. Align finance with climate-friendly development

Building a low-carbon economy in the Amazon would require investments totaling 1.8% of national GDP per year, compared to 1% per year to maintain these sectors in the business-as-usual scenario. Of the additional BRL 2.56 trillion ($533 billion) required for the low-carbon transition, the largest share (about 17%) would be allocated to agriculture and livestock, with additional funds flowing to expanding the bioeconomy and forest restoration, updating the energy matrix and building supportive infrastructure.

While substantial, the cost to decarbonize the Amazon should ultimately be far less than the cost of inaction. Using the Swiss Re Institute’s calculations — which estimate the financial toll of climate change on countries’ GDP — the cost of doing nothing in Brazil could be twice as high as the investment required to finance the transition.

Fortunately, there are many cases where funds for these projects already exist. For example, fossil fuel subsidies in Brazil have amounted to almost $222 billion over the last decade. Ending fossil fuel subsidies and redirecting those funds toward low-carbon energy and transportation could account for 60% of the investment needed to meet the energy goals of the new economy scenario.

Agricultural sector initiatives could largely be financed by reallocating funds from Plano Safra, the Brazilian government’s agriculture and livestock program, toward low-carbon activities. Currently, only 3% of investments from Plano Safra in the Brazilian Amazon are earmarked for low-emission agriculture and livestock production. If its total annual loan volume were redirected to such programs, it could cover 40% of the total investment needed in this sector.

Policymakers would need to establish clear legal definitions and frameworks to define green investing requirements and ensure emissions reductions and biodiversity preservation. Both the public and private sector need clear milestones for implementing bioeconomy-related plans and programs, again with an emphasis on protecting the standing forest, preserving biodiversity, and protecting local and indigenous communities and their knowledge.

To learn more, download the full report in Portuguese here or see the executive summary in English here. 

^{The “Brazilian Amazon” refers to the region officially called the “Legal Amazon,” which encompasses the entire Amazon biome in Brazil and the adjacent Cerrado region that expands over nine states. The New Economy for the Brazilian Amazon adopts the boundaries of the Legal Amazon as its study area.}