Avoided Deforestation (REDD) and Indigenous ... - Amazon Fund

Another important governance element of the project is to guarantee financial returns
that are compatible with the environmental services provided by the forestry resources on
the Surui land. This goal shall be achieved by using sound methodologies aimed at valuing
environmental services to preserve forest resources that take into consideration the long-term
benefits derived from reforestation, afforestation and forest conservation, including, but not
limited to, a thorough analysis of the price of environmental services (including carbon) on the
national and international markets. It is important to note that the sale of credits below national or
international average prices may raise concerns among some stakeholders regarding a violation
of the Brazilian Indians’ rights. Such concerns may trigger administrative and judicial actions by
organizations such as Funai, the District Attorney’s Office (“Ministério Público”) and others who
must protect the Brazilian Indians’ rights and have the legal standing to sue under the Public
Civil Action Law (“Lei de Ação Civil Pública”). The sale of REDD credits below market prices may
also trigger claims on the grounds of an alleged negative impact on the Brazilian national REDD
strategy (as a result of which such action may be contrary to national interest) in light of future
Brazilian commitments under a Post-2012 Kyoto or UNFCCC regime.
In light of those considerations, we recommend that Surui consider sales strategies which
allow proper publicity, keep a record of important transactions, and, if possible, take advantage
of competition among buyers to sell credits. In that regard, the Surui Community may consider
selling the credits through the Brazilian Mercantile and Future Exchange (BM&F/Bovespa) or any
other carbon platform which guarantees a credible auction system.
With respect to the use of contract instruments for the commercialization of the credits
(either ERPAs or VERPAs, depending on the circumstances), it is important that such instruments
are compatible with the legal nature of the Surui rights. In that regard, the hybrid proprietary
rights over the land and constitutional barriers to any future encumbrance over the land shall be
considered. As a result, the parties may have to choose payment structures which condition the
disbursement of money with regard to effective reforestation, afforestation or forest conservation.
Any early payment by the buyers or any other financing activity cannot be conditional on the
securing of any of the natural resources present in the Surui land, or the land itself.
Conclusion
Based on our assumptions and discussions above, our legal analysis has shown that:
The Clean Development Mechanism (CDM) and REDD projects proposed by the Surui
are conceptually in accordance with the international and national climate change regime and in
142 Av o i d e d d e f o re s t A t i o n (redd) A n d i n d i g e n o u s p e o p l e s: experiences, chAllenges A n d o p p o r t u n i t i e s in t h e A m A zo n c o n t e x t