The Brazilian Forest Code was established in 1965, creating a legal framework for forest governance in Brazil. Although far from perfect, the Brazilian Forest Code remains one of the most comprehensive pieces of legislation governing forests on private lands in the world.
Among the most important components of the Forest Code is the designation of Legal Reserves (LRs), which establish the minimum area (as a percentage of the property) that must be retained as primary forest vegetation. While some exclusions and exemptions do exist, in general, the Legal Reserve designates a set aside that occupies 80% of the property in the Amazon biome, 35% in the Cerrado biome (if located in the Legal Amazon, otherwise 20%), and 20% in all other areas of the country. Therefore, the Legal Reserve represents the area of the property in which deforestation is prohibited.
In addition, the Forest Code also designates environmentally sensitive areas as Areas of Permanent Preservation (APPs), aiming to conserve water resources and prevent soil erosion. APPs include both Riparian Preservation Areas (RPAs) that protect riverside forest buffers as well as Hilltop Preservation Areas (HPAs) for high elevation and steep slopes. The newly amended Forest Code also includes mechanisms to address fire management, forest carbon stocks, and payments for ecosystem services.
One of these new mechanisms is the Environmental Reserve Quota (Portuguese acronym, CRA), a tradable legal title to land areas with intact or regenerating native vegetation exceeding the requirements of the Legal Reserves (LR). The CRA (surplus) on one property may be used to offset a Legal Reserve debt (i.e. a property with less than the minimum requirement of forest cover) on another property within the same biome and, preferably, within the same municipality or state. Full implementation of the CRA could create a viable trading market for forested lands, incentivizing forest conservation. The CRA market could abate up to 56% of the LR debt.49 Exchange of CRAs could become a cost-effective way to facilitate compliance, while protecting forest surpluses that might otherwise be legally deforested.