Amazon Deforestation Damage and Recovery in Numbers
1. Damage per Acre: One hectare of Amazon deforestation causes an estimated $55,000 in damage to the global economy.
2. Aggregate Damage: Preventing Amazon deforestation would stop damages of $110 billion to the global economy each year given that 2 million hectares were deforested in 2020 alone.
3. Cost Efficiency: It costs an estimated $1.33 to avoid 1 ton of CO2 emissions from Amazon deforestation, making it perhaps the most cost efficient strategy available to mitigate climate change. How is this calculated? According to a study by the Woods Hole Research Institute, Amazon deforestation could be prevented and carbon emissions could be avoided at a cost of $1.33/ton of CO2 (6 billion tons avoided at cost of $8 billion). In contrast, emission reductions from renewable fuel subsidies cost $100/ton and weatherization assistance programs cost $350/ton according to a Harvard study.
4. Tipping Point: Deforestation has pushed the Amazon to a tipping point and positive feedback loops will soon cause catastrophic drought and diebacks killing off most of the forest, releasing gigatons of carbon into the air, and making it impossible to achieve the Paris climate goals. Dieback of 50% of the Amazon, or 263 million hectares, could release 131.5 gigatons of carbon, equivalent to 30 years of CO2 emissions from the US. The process has already started, but can be prevented. The dry season in regions of the forest is already a month longer than it was historically. For the process to reverse reforestation is urgent.
5. Widespread Economic Collapse: According to NASA, the Amazon is the center of the global water cycle. Destruction of the ecosystem will disrupt global rain patterns and could catalyze widespread economic collapse. Nearly 70% of South America’s GDP depends on rain patterns that propagate from the Amazon forest as does much of the United States, including California which could lose 50% of its precipitation due to Amazon deforestation. The negative impacts on other continents would be wide reaching as well, though difficult to calculate with current climate models.
4. Criminal Challenge: An estimated 90% of Amazon deforestation is illegal.
5. Pandemic Prevention Budgets: A new study recommends spending $9.6 billion per year to prevent deforestation globally citing the estimate that 2 novel virus per year leap from animals to humans and that the COVID19 pandemic catalyzed nearly $2.6 trillion in economic losses. Home to 54% of remaining tropical forest, the Amazon fraction of the total budget would be $6.1 billion.
6. Impact Returns on Investment: If concerned parties spend $6.1 billion per year on Amazon deforestation prevention and avoid a corresponding $275 billion in damages to the global economy, they will see an 4476% return on their investment per year.
Profitable Recovery Opportunity
7. Profitable Reforestation: Over 53 million hectares of the Brazilian Amazon have been deforested and are now home to cattle pasture and soy production. According to this study, these monocultures earn farmers an estimated $19.25 billion per year. Conversion to agroforestry could earn $174.9 billion a year and much more if commercially tied to the sequestration of gigatons of carbon. Despite these impressive numbers only $2.6 billion has been mobilized globally over the past 5 years for tropical forest-related investing. The need and opportunity for new investors is huge.
8. Startup Rush: Forest conservation and monitoring companies can become highly profitable by tapping into the meteoric rise of global carbon markets which grew 20% to reach $272 billion in 2020. Premium forest carbon credit providers, carbon accounting services, tree planting ventures, acoustic chainsaw alert companies, biodiversity tech assessment prize schemes, and many other startups are rushing into the space and could become future unicorns.
9. Future Carbon Financing: Sufficient resources should be available for numerous future forest development-and-protection entrepreneurs given that global climate finance reached $612 billion in 2017. Moreover, there is $52 trillion in organized capital, today, that wants to invest in climate stability for tomorrow. According to one report, the Paris climate agreement opened the doors for $23 trillion in climate investing by 2030 in emerging markets alone. The new Task Force on Climate-related Financial Disclosures along with the Task Force on Nature-related Financial Disclosures are designing frameworks for new mandatory reporting laws that will require banks and other companies to develop and deliver new climate risk mitigation strategies. All will want to support Amazon conservation. Despite these possibilities the Brazilian carbon market is currently paralyzed though much will change with the election in 2022. Finally, simple reforestation of the Brazilian Amazon could sequester an estimated 35 billion metric tons of carbon and generate nearly $3 trillion in revenue given EU carbon prices today. Calculation: 70 million hectares * 500 tonnes of CO2/hectare (average above ground biomass) * $80 USD (EU carbon dioxide price in November 2021) = $2.8 trillion USD.