Industrial Impact Compensation (Brazil)

Industrial Impact Compensation (Compensação Ambiental) is mandated by the National Protected Areas System Law, which originally required that a maximum of 0.5% of the capital costs of a development impacting protected areas the equivalent of IUCN category 1 and 2 go to the Protected Areas System (SNUC) through the Environmental Compensation Fund (FCA). [Note: developers also have the option of providing compensation themselves, although this option has only been excercized in one instance.] The FCA is to be used solely for the protection of existing protected areas, unless a protected area itself is directly affected by the development work. The program, therefore does not fund additional land conservation. There are currently no criteria available for determining compensation nor the application of funds paid by the developers, even though funds are usually paid. Furthermore, a number of administrative bottlenecks exist that make monetary payments by developers to be efficiently spent on priority activities for protected areas. There is some effort to reform the program, but the focus has been on changing the fee rather than making a more direct link between impacts and compensation. The Environmental Compensation Fund is currently being reviewed and reformatted by the federal government to improve its design. The previous system of a fixed minimum amound (0.5% of total development costs) for industrial impact compensation has been declared illegal by the Supreme Court, putting much of the program in limbo.

Program Statistics

Date Established: 2000 Status: Active Program Type: Compensation
About the program:
Annual size of program (area): (acre) Year of Data:
Cumulative size of program (area): (acre) Years of Data: -
Annual payments of program (US$): 2,650,000 Year of Data: 2008
Cumulative payments of program (US$): 21,200,000 Years of Data: 2000 - 2008
Notes on program size or payments:

The Chico Mendes Institute for Biodiversity Conservation reported that from 2000 to 2008, the amount in the 'developer's offsets' Compensation Fund equaled approximately R$500 million (US$214 million). However, only R$49.5 million (US$21.2 million) of the Fund has been executed and our Payments figures represent the amount of payments that have been executed.

Species or habitat types (if applicable):
Notes: http://www.forest-trends.org/publication_details.php?publicationID=522
Bank regulator information: Brazilian Institute of Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renovveis) Last Updated: November 24, 2010