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the amazon fund

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president of the republic luiz inácio lula da silva vice-president of the republic josé alencar gomes da silva minister of the environment carlos minc executive secretary izabella teixeira brazilian forest service director-general antonio carlos hummel brazilian forest service s board of directors antonio carlos hummel claudia de barros e azevedo-ramos josé natalino m silva luiz carlos de miranda joels thais linhares juvenal production brazilian forest service s communications bureau design and layout development editora ser photography brazilian forest service archives edição brazilian forest service

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table of contents 1 introduction 4 2 objectives of the amazon fund 5 3 administration of the fund 6 3.1 guidance committee 6 3.2 technical committee 6 3.3 manager of the fund national bank of economic and social development 7 3.4 independent auditing 8 4 operational management 8 4.1 support to projects 8 4.2 reports and income statements 9 5 fund raising 10 5.1 fund-raising mechanism 11 5.1.1.estimates and perspectives of fund raising 11 5.1.2 donors 12 6 estimated reduction of emissions arising from deforestation 12 6.1 deforestation data in the brazilian legal amazon area 13 6.2 calculation method for the reduction of emissions from deforestation 17 the amazon fund

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introduction the amazon fund is a brazilian initiative to contribute with the reduction of emissions resulting from deforestation and forest degrading the main goal of the amazon fund is to gather funds to be used in projects to fight deforestation and foster conservation and sustainable use of the amazonian biome furthermore up to 20 of the amazon fund may be used to support the development of forest control and monitoring systems in other brazilian biomes and in other tropical countries the fund raising mechanism of the amazon fund is based on the results obtained with the reduction of emissions originating from deforestation in the brazilian portion of the amazon the data and the calculation methods for reduction of deforestation rates and avoided emissions are certified by a scientific committee the philosophy of the amazon fund is based on a brazilian proposal presented in the 12th conference of the parties cop of the united nations framework convention on climate change unfccc carried out in nairobi kenya in 2006 the amazon fund is a private fund managed by the national bank of economic and social development bndes in accor 4

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dance with guidelines and criteria established by a guidance committee composed of representatives of the federal and state governments ngos social movements indigenous tribes scientists and companies the amazon fund is an essential instrument to support the goals of the national plan on climate change on climate change especially as to the sustained reduction of deforestation rates and interruption of the loss of forest coverage by 2015 1 objectives of the amazon fund the main objective of the amazon fund is to reduce brazilian emissions from deforestation by fostering conservation and sustainable use in the amazonian biome in addition the amazon fund strengthens the command and control actions by implementing control and monitoring systems of deforestation in other brazilian biomes and in other tropical countries the fund will contribute to the achievement of the national plan on climate change targets especially target 4 reduction of 40 of the deforestation rate in the 2006-2009 period as compared to the average deforestation rate in the 1996-2005 period and a 30 reduction in the next two four-year periods the amazon fund 5

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2 administration of the fund the management of the amazon fund basically involves integration of the procedures and decisions of its three main agencies the guidance committee the technical committee and the manager of the fund 2.1 guidance committee the guidance committee of the amazon fund is responsible for the definition of strategic guidelines and criteria for allocation of the resources the committee is composed of representatives of the brazilian government and of the society including nine agencies of the federal government nine states of the brazilian legal amazon area and six representatives of the civil society in addition to proposing guidelines and monitoring the results achieved by the amazon fund the committee will be able to propose modifications to the fund s support lines in order to adjust them to the guidelines of the sustainable amazon plan-pas and of the action plan to prevent and control deforestation in the legal amazon area ppcdam 2.2 technical committee the technical committee of the amazon fund is composed of 6 six renowned specialists with acknowledged technical and 6

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scientific expertise assigned by the ministry of the environment from nominations by the brazilian forum on climate change the committee shall meet annually to ·verify and make sure the quantification methodology of the deforested areas prodes ensures a level of accuracy consistent along time and ·review and make sure the value of carbon biomass per area in tons per hectare considered for the purposes of computing avoided emissions is consistent and actually represents an unchallengeable minimum average value technical committee reports determine the values for reduced emissions per reference year and authorize bndes as manager of the amazon fund to carry out the corresponding mobilization of resources and issuance of certificates the whole set of values on the deforested area and the corresponding values in carbon provided to the technical committee as well as the resulting report are then made available on the internet 2.3 manager of the fund management of the amazon fund is a duty of the national bank of economic and social development bndes the amazon fund 7

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the bank adopts modern environmental and sustainable practices and upon having signed the statement by financial institutions on the environment and sustainable development in 1994 became a member of the united nations environment program ­ financial initiative unep-fi the bndes is also a signatory of the protocol of banks for social and environmental responsibility a common effort by the public banks controlled by the federal government towards ensuring social and environmental responsibility in funded enterprises 2.4 independent auditing com vistas a garantir a transparência e confirmar a efetiva aplicação dos recursos do fundo uma auditoria externa será contratada uma vez por ano junto à instituição de competência internacionalmente reconhecida de modo a verificar a propriedade da aplicação dos fundos e da implementação do fundo amazônia 3 operational management 3.1 support to projects the resources of the fund shall be allocated to projects directed towards the achievement of results related to the areas 8

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of the amazon fund described in the presidential decree no 6,257/2008 they may be submitted by agencies directly or indirectly controlled by the federal state or municipal public administrations research support foundations non-governmental organizations civil society organizations of public interest private companies cooperatives governmental and university research centers environmental entities land administration bodies and federal state and municipal support entities scientific and technological institutes environmental control and environmental crime-fighting entities the resources to implement the projects will be granted to proposing institutions in accordance with the amazon fund s operating standards submission of projects in order to have access to amazon fund resources proposing institutions have to formalize a consultation letter to the bndes in which the basic characteristics of the institution proposing the project and of the project itself are specified this document may be found on the website www.fundoamazonia.gov.br 3.2 reports and income statements every six months information on the allocation of the resources shall be submitted to the guidance committee of the fund the amazon fund 9

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allowing for the follow-up on the fund s performance on the demands from the several support lines and on the fundraising performance among other information required for the followup activities to be carried out by the committee the annual report of the amazon fund shall also be published yearly with the purpose of disclosing the donations received and the respective donors and to communicate fund guidelines and priorities for the period the results achieved by supported projects and the financial and operational performance of the fund 4 fund raisings fundraising for the amazon fund shall be carried out by the national bank of economic and social development bndes jointly with the brazilian forest service sfb bndes is the operational manager of the amazon fund and counts on technical support from the ministry of the environment mma and from the brazilian forest service for actions to follow-up on fund results and for the relationship with donors and potential beneficiaries annual fundraising limits shall be determined by the reduction of emissions as certified every year by the technical committee 10

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4.1 fund-raising mechanism 4.1.1 estimates and perspectives of fund raising the first fundraising period raised from contributions for avoided emissions in the calendar-year of 2006 began in august 2008 and lasted until july 2009 using the standard price of us 5.00/tco2 five us dollars per ton of carbon dioxide the funds raised and integrated in this period total approximately us 110 million and in accordance with the proposed methodology these resources shall be allocated by july 2011 the amazon fund is expected to raise approximately us 20 billion by 2020 future prices may vary in accordance with fund dynamics especially regarding the demand for projects so as to ensure an adequate flow of resources to support initiatives to reduce deforestation 4.1.2 donors donations1 to the amazon fund may be done by any individual company or institution including foreign governments 1 resources donated to the amazon fund shall be deposited in a dedicated bank account maintained by bndes and all financial activity shall be carried out in accordance with financial legislation and legislation on operations with national and international capital therefore they are conditioned to standards and regulations to prevent fraud and money laundering ensuring external auditors access to all operations the amazon fund 11

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interested in contributing on a volunteer basis to the reduction of carbon emissions arising of deforestation the donors will have the right to receive a certificate corresponding to their contribution to reduced carbon emissions from deforestation in the amazon area in a given reference period and may if they authorize it be mentioned in the media promoting the amazon fund certificates issued to donors shall be nominative and nontransferable not generating proprietary rights or credits of any nature the amounts corresponding to avoided emissions shall not be negotiated in carbon markets the certificates issued and their amounts will be available for reference on the internet 5 estimated reduction of emissions arising from deforestation the estimated deforestation reduction uses a simple calculation method that is easy to comprehend and verify the estimated carbon emission reduction takes into account 1 the deforestation rate accrued annually by the national institute of space research inpe 2 historical average deforestation rate and 3 estimated carbon contained in forest biomass obtained by the brazilian forest service 12

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as it facilitates understanding the method is praised for its simplicity and caution in this sense the estimates are conservative so as to ensure the amounts of reduced emissions are never overestimated 5.1 deforestation data in the brazilian legal amazon area a highly efficient forest coverage monitoring system for the brazilian amazon area has been implemented by the national institute of space research inpe since 2002 these estimates are obtained by a digital image classification system that follows the prodes2 methodology3 a characteristic that made the system more reliable and acknowledged its main advantage is the accuracy of the geo-referencing of deforestation areas used to produce a multi-temporal geographical databank the methodology of calculation used by the prodes derives from the deforestation increments identified in each image the rates are calculated yearly for periods that range from the 1st of august to the 31st of july hence the reference rate for 2007 for example involves the deforestation identified from the 1st of august 2006 to the 31st of july 2007 2 3 brazilian amazon forest satellite monitoring project câmara g d m valeriano j.v soares 2006 metodologia para o cálculo da taxa anual de desmatamento na amazônia legal inpe national institute of space research 24 p available on the websites http www.obt.inpe br/eng/prodes.html and http www.obt.inpe.br/prodes/metodologia.pdf the amazon fund 13

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in view of its reliability in providing annual deforestation data the prodes is the system adopted to provide the deforestation estimates for the amazon fund deforestation rate the annual deforestation rates dr to be employed in the calculation of emission reductions are compared every year to the average of deforestation rates in ten-year periods such periods are updated every five years so that in the 2006 to 2011 period annual deforestation rates will be compared to the average of 1996 to 2005 1996-2005 average deforestation rate adr in the following period 2011 to 2015 annual deforestation rates will be compared to the average deforestation rate of 2001 to 2010 the table below presents the deforestation rates obtained by the prodes system in the period between 1995 and 2007 in square kilometers per year km2/year and the range of values used for the first average deforestation rate 1996-2005 adr to be employed in the calculation of yearly avoided emissions in the 2006-2010 periods 14

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table 1 periods and values employed for calculation of the first average deforestation rate 1996-2005 adr of the amazon fund reference year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 deforestation rate dr km2 29.059 18.161 13.227 7.383 17.259 18.226 18.165 21.204 25.151 27.429 18.793 14.030 11.224 average deforestation rate 1996-2005 adr 19,508 km2 or 1.95 million the deforestation rates correspond to the periods from august of the previous year to july of the reference year the amazon fund 15

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