SIMFlor Programme

Financial support for the implementation of the Forest Code

The SIMFlor Programme objective is to promote the implementation of the Brazilian Forest Code, acquiring the rights to Forest Reserve Credits (CRAs) from landholdings that have native vegetation exceeding the minimum area required by the Code (Excess Legal Reserve - ELR), creating an incentive to conserve natural forest, reduce deforestation and protect existing biodiversity.

The programme has already secured R$ 1 billion Reais for the implementation of the Forest Code, with an initial focus on the Brazilian Amazon. This will enable the conservation of 500,000 ha of native vegetation (of which, 100,000 ha of excess legal reserve that can be legally deforested) and store 300 MtCO2e in these areas (of which 60 MtCO2e in areas of excess legal reserves).

Providing that a landholding meets the Eligibility Criteria of the programme, any landowner can apply for participation in the programme.

The Brazilian Forest Code

The Brazilian Forest Code provides the foundation for the long-term protection of Brazil’s forests and the objective of zero deforestation.

If fully implemented, the Code has the potential to protect and/or sequester over 100 GtCO2e, contributing to global climate systems and assisting Brazil in meeting its international climate target (NDC). Enforcement of this law would create one of the most powerful domestic mechanisms for avoiding deforestation and protecting natural forests anywhere in the world.

Implementation of the law, however, has so far been poor and a real risk exists that this objective won’t be achieved. There is a need to promote the implementation of the Forest Code and to provide incentives for landowners to comply with its requirements, creating positive social, economic, and environmental impacts.

Forest Legal Reserves

The Brazilian Forest Law requires that all rural landholdings in the country maintain a certain amount of land under native vegetation (called “Legal Reserves” – Reserva Legal, in Portuguese). The amount of legal reserve required varies depending on the biome (see diagramme), and amounts to 80% in the Amazon.

Landowners that do not have sufficient area with native vegetation in their forest legal reserves, can comply with the law by acquiring Forest Reserve Credits.

Forest Reserve Credits

"Forest Reserve Credits” (or “CRAs”, from the name in Portuguese - Cotas de Reserva Ambiental) is a type of offset mechanism created by the Forest Code to enables landowners to comply with the legal reserve requirement through paying for the maintenance of existing forest areas outside their own lands.

Although this is a potentially transformational approach, this aspect of the law has not yet been regulated and there is no system available to enable the use of this mechanism.

The SIMFlor programme aims to kick start the use of this mechanism by acquiring the rights to CRAs that will be issued in the future, creating an incentive to conserve natural forest, reduce deforestation and protect existing biodiversity.

Cadastro Ambiental Rural ("CAR")

With the support of the newly created Rural Environmental Registry system (Cadastro Ambiental Rural– CAR), a georeferenced digital registry connected to satellite images that enables monitoring and mapping of land use in rural properties, the government will now be able to enforce compliance with this legislation and demand that rural producers fulfil their obligations.

Registration in the CAR is a pre-requisite for the creation of Forest Reserve Credits (CRAs) and for participation in the SIMFlor Programme. The programme also requires registration in the SIGEF system of INCRA (the National Institution of Agrarian Reform, that keeps a data base of land ownership and tenure).

An urgent need to implement the Code

The absence of financial incentives and/or enforcement measures prevent the implementation of the Forest Code. This, in turn, is resulting in unprecedent levels of legal and illegal deforestation, as evidenced by the illegal forest fires of 2020 and 2021.

There is an urgent need to ensure compliance with the Code, and the incentives provided by SIMFlor will contribute to this objective.

BVRio's work with the Forest Code

BVRio was created to promote the use of these mechanisms and increase the level of compliance with the legal reserve obligations in the country, with a focus on the main drivers of deforestation in the Amazon region: soy farmers and cattle ranchers.

At the end of 2012, BVRio launched a trading platform to support de development of a market for Forest Reserve Credits that, to date, includes more than 400 participants offering over 4 million ha of native forests to be conserved, protecting ca. 1.6 GtCO2e.

This effort was complemented by road shows to engage landowners in rural regions, participation in the process of regulation of the law, creating a transparency portal, and providing technical assistance to law enforcement agencies (e.g., the association of environmental public attorneys ABRAMPA).

More recently, BVRio and other collaborators have been developing a national plan for the implementation of the forest code, PlanaFlor, with a view to providing an analysis of the macroeconomic potential of the Code on the Brazilian rural environment.

SIMFlor Programme coordination

The SIMFlor Programme was conceived by BVRio and the environmental finance firm Sustainable Investment Management (SIM), in partnership with climate mitigation project developer ecosecurities.

BVRio and the Forest Code

BVRio supporters

Since 2012 BVRio has promoted the implementation of the Forest Code, and has benefited from the financial support from a series of organisations concerned and engaged with this issue, shown below.