The Amazon in the spotlight at Davos

In the public imagination, the Amazon remains the poster child of humanity’s negative impact on the natural world. But in recent months, news of dropping deforestation rates has been providing a glimmer of hope for the world’s most famous ecosystem – and at World Economic Forum 's Annual Meeting #WEF24 in Davos, there were productive discussions on a range of initiatives that are contributing to this important trend.

Agricultural production and expansion are the largest drivers of deforestation in tropical forest regions – and in Brazil, agriculture is responsible for around 75% of the country’s emissions, mostly from cattle ranching. With so much at stake, and demand for cattle-related products rising (leather, as well as beef), particularly in increasingly prosperous countries like China, it is vital to find ways of decoupling ranching from deforestation. There are also other issues that must be addressed to halt and reverse forest and ecosystem loss more broadly – including in important savanna ecosystems such as the Cerrado.

At COP28, the Amazonian state of Pará launched an initiative – the Pará Cattle Integrity and Development Program – that focuses on establishing full traceability of its vast cattle herd of 26 million cows. In a state covering an area of over 1 million km2, this is no easy feat – and should be seen as a very positive step towards eradicating deforestation. It also has the potential to be replicated throughout the Amazon region and Brazil as a whole. Although sizeable in itself, Pará’s cattle herd is just one tenth of Brazil’s total cattle herd so there is much to be done across the whole country.

These systems-level transitions were the focus of attention at various Davos sessions on the Amazon. What is required is a transformation of the rural economy to one that also creates sustainable livelihoods for the 30+ million people who live in cities in the region. This includes the development of value chains that can augment the traditional agricultural economy into a new bioeconomy – a system that promotes the responsible use of biodiversity, development of sustainable agricultural and forestry systems, protection and restoration of native vegetation, socioeconomic integration of traditional communities and family farmers, and income generation for Brazil’s rural and forestry sectors.

This transition will not happen without the active engagement of the financial sector – and all forms of capital are required.

• Philanthropic capital can play a critical role in building social infrastructure and bringing relevant products to local markets. Impact and concessional capital can support financing of the early stages of institutional development, product expansion and skill building. 
• Public financing can help to build the essential infrastructure to bring products to market at the scale required for long-term viability.
• And, eventually, commercial capital seeking an appropriate risk-adjusted rate of return can help to scale the production, processing and delivery of goods to broader markets.

The process of identifying and structuring capital is itself a significant investment of time and resources.

The following quotes from sessions at Davos capture the spirit of the discussions outlined above:

“The Amazon has to become a space for solutions, for balancing the world’s climate, for setting up a new paradigm shift. There is a need to diversify economic models to develop the region. Part of this diversification includes environmental services. Development of a model compatible with sustainability – cultural and political sustainability. We need technology and finance investment to develop the bioeconomic model, but paired with ethical commitments. Private investment is important, within financial systems that reinvest and are aligned with strategic decisions.” - Marina Silva, Minister of Environment, Brazil.

“There is a consortium of Amazon states where Pará is a role model, and we have a two-year window of opportunity with Brazil’s hosting of the G20 and COP30 in Belem in 2025. The timeline is important, and this initiative should be seen as a legacy not just for Pará but for Amazon states and others.” - Ilona Szabó de Carvalho, co-founder and president of the Igarapé Institute.