Brazil issues first Forest Reserve Credits, opening path to a national conservation market

The issuance of Brazil’s first Forest Reserve Credits (CRAs) was celebrated on Tuesday, 2 December, at the Museum of Tomorrow in Rio de Janeiro, an achievement awaited for over a decade by environmental experts, public managers, and organisations involved in the implementation of the Forest Code. During a panel held as part of the 1st State Meeting on the Rural Environmental Registry (CAR) and Environmental Regularisation Programmes (PRA), representatives from the Brazilian Forest Service (SFB), the Rio de Janeiro State Environmental Institute (INEA), the Natural Heritage Association (APN), and BVRio discussed how these credits can be transformed into tangible economic value for landowners and for the country.

According to Maurício de Moura Costa, BVRio co-founder and director, the issuance of the first CRAs marks the beginning of a more complex stage: tackling the core economic challenge posed by the instrument, ie, a structural imbalance between supply and demand. While designed to support environmental compliance, CRAs have emerged in a landscape where around 70 million hectares are eligible for credit generation, while demand for offsetting environmental liabilities is estimated at just 17 million hectares.

Mauricio explained that, “The primary purpose of CRAs is environmental regularisation, but the economic obstacle is clear: demand is vastly outpaced by supply. And by the first law of economics, if supply exceeds demand, you don’t have a functioning market.”

He argued that the long-term success of CRAs depends on developing new, permanent sources of demand. CRAs are government-validated, traceable, and based on robust technical criteria; therefore, the instrument could go beyond compliance, especially as a recognised asset in Brazil’s future regulatory carbon market.

“It is natural, desirable, and arguably essential that CRAs be recognised as a representation of conservation activity within the carbon market. They have already undergone extensive government validation and meet the methodological standards required to generate tradable credits, ensuring that those who conserve are compensated, and helping to scale up Brazil’s emissions market.” added Mauricio.

He also pointed to the Tropical Forests Forever Fund (TFFF) as another strategic opportunity to unlock CRA potential. Designed to finance payments for environmental services in tropical countries, the TFFF could manage large-scale investments, and CRAs, he argued, are the most ready-to-use instrument for deployment in Brazil.

“The CRA structure is already in place. It’s auditable, validated, and ready to go. So the question is: why not integrate CRAs into the implementation of the TFFF once it is operational in Brazil?”

“Markets alone aren’t enough; Integrity and legitimacy are essential”

Roberta del Giudice, BVRio Director of Forests and Public Policy, broadened the discussion by analysing the role of economic instruments in conservation. These tools, she noted, aim to reshape the economic system itself, because climate change calls for a deep transformation of the economy to ensure a viable future. However, she warned: “Relying on markets to protect forests is an appealing idea, but one that is insufficient on its own.”

Roberta stressed that environmental economic instruments only function when grounded in context-specific understanding and institutional adaptability. Tools such as Payments for Environmental Services (PES), reforestation offsets, conservation funds, reverse logistics credits, and CRAs themselves must work within a well-aligned ecosystem, not as isolated solutions.

“No mechanism can succeed without participatory processes, transparency, and strong governance. Markets alone won’t solve the problem. We need integrity and legitimacy.” Roberta stated and outlined five core pillars that must underpin any credible and scalable mechanism:

• Policy integration, so that instruments reinforce rather than operate in silos
• Territorial and socio-economic contextualisation, recognising that what works in one place may fail in another
• Adaptability, to respond to climatic, economic and political change
• Institutional stability, essential for investor confidence, and
• Co-production, ensuring participatory processes that build trust and long-term durability.

She cited the Responsible Commodities Facility (RCF), a programme financing low-deforestation soy in Brazil’s Cerrado biome led by Sustainable Investment Management (SIM), as a promising example. Developed through two years of consultation and technical design, the RCF shows how financial mechanisms can build credibility and uptake when grounded in real territorial needs, and backed by independent auditing, transparent governance, and clear conservation outcomes.

The event reinforced the enduring relevance of Brazil’s Forest Code, considered the country’s most powerful climate policy infrastructure. With CRAs beginning to circulate, Brazil now has a tangible opportunity to convert conservation into economic value. With robust governance, genuine participation, and integration between mechanisms, the country is well-positioned to develop financing models that reward conservation and extend Brazil’s leadership on climate beyond COP30.