Photo: State Park of Três Picos, by José Caldas

Environmental compensation is an important source of complementary funding for biodiversity conservation in Brazil. The mechanism was established under Federal Law 9.985/2000, which regulates the National Protected Areas System (SNUC, in Portuguese) which obliges the entrepreneur of projects with a significant environmental impact to promote actions in the Conservation Units in the Direct Impact Area of the project. This obligation can be converted into money and is an important source of complementary resources for biodiversity conservation in Brazil. The actions (or values) are stipulated during the environmental licensing process, a public management instrument that controls the impact of human activities on the environment. In the state of Rio de Janeiro, companies apply to the Environmental Institute (Inea) which, using different environmental impact valuation methodologies, establishes the amount of compensation to be paid, based on the environmental impact study.

Funbio designed the Mechanism for Biodiversity Conservation in the State of Rio de Janeiro (Atlantic Forest Fund—FMA/RJ) in 2009, at the behest of the State Environmental Department (SEA). Funbio was chosen for this commission on the strength of its experience with the Amazon Region Protected Areas Program (ARPA). The mechanism is a one-of-a-kind model in Brazil, designed to enable the effective, transparent and well-managed use of environmental offset payments at the state’s protected Areas (PAs).

From 2009 to 2016, Funbio was financial and operational manager of phase one of the mechanism. When Phase I reached completion, SEA/RJ opened a public call for tenders to formalize partnerships with civil society institutions, and FUNBIO was selected as the operational manager for Phase II, with the Brazilian bank Bradesco as financial manager. The new agreement, which came into effect in September 2016, involves funds from environmental compensation, donations, conduct adjustment agreements, mandatory forest restoration orders and other sources.

From December 2009 until the end of the agreement in November 2016, FMA/RJ supported 99 projects benefitting 50 state, municipal and federal Protected Areas (PAs), covering a combined total of 506 thousand hectares. The 99 undertakings that signed with FMA/RJ pooled a total of R$ 295 million, of which R$ 285 million was received, R$ 183 million allocated, R$ 163 million solicited and R$ 114 million executed, 84% of the funds.

The project is submitted for independent external adit and the financial reports are available on the Funbio website.