International aid earmarked for saving forests in Brazil and Indonesia dwarfed by billions spent on subsidies for palm oil, soy and beef industries that cause deforestation - new report

30 March 2015
International aid earmarked for saving forests in Brazil and Indonesia dwarfed by billions spent on subsidies for palm oil, soy and beef industries that cause deforestation - new report

In Brazil and Indonesia domestic agriculture and biofuel subsidies dwarf international aid for forest protection by over 126 times says new research launched today by the UK’s leading think thank the Overseas Development Institute (ODI).

On average, $41bn of domestic public finance is spent each year subsidising some of the leading causes of deforestation in these two countries where over half of the world’s deforestation occurs. This is compared with over $323m received from the international community to protect forests.

The report Subsidies to key commodities driving forest loss identifies 48 different domestic subsidies to support the leading causes of deforestation - palm oil and timber industries in Indonesia and beef and soy industries in Brazil.

Although these subsidies may come with good intentions, such as supporting smallholder farmers and encouraging rural development, such subsidies also influence private investment decisions, leading to additional deforestation by suppressing commodity prices, which can lead to over-consumption and inefficient production, says the report.

The report’s authors recommend that international forestry aid be used to reform subsidies in manner that safeguards forests, as well as livelihoods and food security. This could include shifting incentives towards agricultural productivity and making subsidies conditional on compliance with environmental regulations, as successfully implemented in Brazil through conditional loans to cattle farmers.

The report’s co-author, Will McFarland, says “While international forest aid seeks to promote private investment in forest protection, governments around the globe are incentivising commodities that drive deforestation. Through subsidy reform, modest sums of forest finance can be used to ensure any subsidies are provided in a manner that both protects forests and the poor”.

– Ends –

Notes to editors:

Click here to download the report http://www.odi.org/publications/9286-subsidies-commodities-deforestation-Brazil-Indonesia-REDD

For further information, interview requests and infographics, contact Paul May: p.may@odi.org.uk, +4420 3817 0013 –

1.       The full data for Brazilian and Indonesian subsidies are below. The sources for our data on subsidies are: REDD+ finance (Norman and Nahkooda, 2014); Agricultural subsidies (OECD, 2014); Biofuel subsidies (Gerasimchuk et al, 2012).

2.       ‘International forest finance’, or aid, refers to public finance for ‘REDD+’: reducing emissions from deforestation and forest degradation; conservation of forest carbon stocks; sustainable management of forests; and enhancement of forest carbon stocks, as defined by the Intergovernmental Panel on Climate Change (IPCC, 2014).

3.       ODI’s research identified a total of 48 different subsidies across beef and soy in Brazil and timber and palm oil in Indonesia – the commodities widely regarded as the leading causes of deforestation in these countries.

4.       The Overseas Development Institute (ODI) is the UK's leading independent think tank on international development and humanitarian issues.

REDD+ finance (2006 – 2014 annual average) in million USD

Agricultural subsidies (2010 – 2012 annual average)  in million USD

Biofuel subsidies (2009)  in million USD

Brazil

158

11,082

2,700

Indonesia

165

27,072

79

Total

323

38,154

2,779