Environmental Reserve Units (CRA)

January, 2015

The study aims to contribute to the discussion about the opportunities and limits whereby Environmental Reserve Units (CRAs, initials in Portuguese) can be construed as negotiable securities for offer to the public, attracting the interest of investors not directly or operationally interested in offsetting Legal Reserve deficits. 

Several international experiments are presented involving the development of markets for environmental purposes, but it is recommended doing subsequent additional in-depth studies, so that the lessons learned in those other markets can provide inputs for the process of reflecting on the public policies involving this issue in Brazil. Historically in Brazil, reconciling agribusiness activity with an increase in vegetation cover has been an economic challenge. There is a need to develop financial mechanisms that enable these two agendas to converge, in addition to taking environmental aspects into account in price formation mechanisms. CRAs represent a prime opportunity for attracting large-scale private capital to agribusiness, as well as for the Brazilian forestry and ecosystem services agenda. Other countries have advanced in agendas with similar challenges, engaging the financial markets as partners.

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