When one thinks of Brazil, everyone immediately thinks of the Amazon forest, with its incredible size and biodiversity. Just think that it is estimated that the Amazon forest is home to about 390 billion trees of 16,000 different species.

Many think that it is an invaluable wealth, but someone has tried instead to estimate it to help us understand the treasure that Brazil has in its hands.

A very recent study by the World Bank tried to calculate what we could define as the annual GDP of the Amazon rainforest and arrived at the incredible figure of about 317 billion dollars, or almost 20% of the entire Brazilian GDP in 2022 and the equivalent of Austria's GDP.

This value corresponds to seven times the potential profits that would derive from various exploration activities of the economic resources of the region.

That is, protecting and conserving the Amazon forest is worth about 317 billion dollars a year, while extracting its resources and cultivating its surface would produce “only” 45.

But how were these 317 billion dollars calculated?

First of all, let us remember that the Kyoto Protocol, signed in 1997, created “carbon credits” with the aim of reducing the gases that produce the greenhouse effect and consequently serious effects on the climate. The “carbon credits” represent the “non-emission” of carbon dioxide into the atmosphere and are a sort of currency that helps the most polluting countries to achieve their reduction goals.

For every tonne of CO2 not emitted, a “carbon credit” is generated, which can be traded with countries that fail to meet their zero-emissions target.

In February 2023, the value of a carbon credit, on the regulated market, exceeded the ceiling of 100 euros for the first time and is now quoted at 102 euros.

Having said that, let’s go back to our calculation. Of the 317 billion annual value of the Amazon forest, about 210 are the value attributed to the carbon dioxide absorption capacity of the forest.

Another $20 billion is the value attributed to ecosystem services for South America alone, such as the value of rainfall for agriculture.

10 billion dollars is the estimated value of pharmaceutical innovations based on genetic resources from the biodiversity produced by the Amazon rainforest.

65 billion dollars comes from the “existence value”, i.e. the value of preserving the Amazon rainforest for future generations.

Unfortunately, these estimates are purely hypothetical, because there is no way yet to turn them into real money.

And the Brazilian government, whether it’s Bolsonaro or Lula, is absolutely right when it claims that the whole world wants the Amazon forest to be preserved and conserved, but it is not willing to adequately finance Brazil.

To protect the Amazon, Brazil must not only invest from its own pocket but must also give up the revenues that could come from the sale or exploitation of forest resources.

As the figure below shows, the deforestation situation is dramatic, but some recent data show a trend reversal thanks to the resumption of interventions by IBAMA and the forest police.

Annual deforestation in the Amazon

(source: World Bank)

In economic terms, deforestation represents a huge destruction of wealth, threatens global climate balance and biodiversity, as well as the traditional human communities that populate the Amazon.

The only institution of weight that finances environmental protection projects with foreign resources is the Amazonia Fund, which counts on the annual contribution of Norway (1.2 billion dollars) and Germany (0.07 billion dollars). Too little, even if Norway is setting a great example.

Brazil has very advanced environmental legislation and is committed to its application, but the time has now come for the whole world, first of all the most industrialized countries, to find a fair way to finance the preservation and conservation of its forests.

One of the solutions concerns the possibility of transforming the carbon dioxide absorption capacity of the Amazon forest into "carbon credits", forcing the countries with the most polluting industries (especially China and the USA) to buy them as a form of compensation. A utopia? Perhaps, but a solution must be found quickly, Brazil cannot be left alone in this battle for the climate.