🔥 Brazil Overshoot Day: What Happened with the Amazon Rainforest?
Causes of deforestation. Tokenomics solution from MOSS.
On the 12th of August this year, it was Brazil overshoot day. It means that the ecological footprint per person in Brazil is greater than the global biocapacity per person. Biocapacity is the ability of an ecosystem to produce resources and absorb waste. In simple terms, the average person in the country has a larger environmental impact than what the ecosystem can take.
Brazil is important because it has the majority of the Amazon Rainforest (60%), the largest rainforest in the world. But we should not ignore that other countries have also exceeded or will soon pass the limit.
This is not the day to celebrate, but a day of remorse. A dire reminder of our negative relationship with the environment.
How can this happen? what can we do to reverse it? let’s find out.
😕 What happened in the Amazon?
The Amazon rainforest is the home of >40,000 plants and >7,000 animal species which comprises around 30% of the world’s species. The Amazon river delta also houses hundreds of kilometers of freshwater mangroves, which stored more than 8% of the global carbon sink. It is clear that we don’t need to state all the facts and figures about the Amazon rainforest to understand its importance to the world.
Unfortunately, the Amazon rainforest is on the brink of destruction, as I have discussed in my previous article “How Can Gaming and Blockchain Technology Preserve the Rainforest?”. The main cause is deforestation due to land clearing (slash and burn) for cattle farming and soybean plantations. The rate of deforestation is increasing rapidly thanks to our increasing need for food consumption.
Source: Conservation international
But how could this happen? using first principles thinking, we can see that the problem boils down to economics. According to a local researcher, the cost to cut and burn per hectare of forest is only $190 and can be sold to industries for more than 100% profit (up to $500).
Is it legal? many are illegal, but some deforestation activities are happening under the gray zone of the Brazilian regulations.
However, in the long term, it does not make economic sense. The agriculture industry in Brazil is dependent on tropical rain as its main water source (>90%). The Amazon environmental research institute explained that rapid deforestation would reduce rainfall, as the forest serves as a natural rain pump. Water from the plants evaporated to create rain clouds that pour out rainwater back into the area. So there is a reason why it’s called the rainforest.
It is estimated that decreasing rain levels will result in losses of more than 400 million dollars per year to the local agriculture industry, one of the biggest contributors to the GDP of Brazil. And this does not yet consider other negative externalities, such as wildlife disruption, releases of carbon emissions, and diseases.
🪙 So what can we do?
If a misaligned economic incentive is an issue, maybe we can solve it using a new economic model such as Tokenomics. In a recent ReFi Podcast, Luis Adaime, founder of MOSS (A blockchain based carbon credit provider), explained how tokenization of the Amazon rainforest can create a huge impact.
As a native Brazilian, Luis knows how important is the Amazon rainforest for the local ecosystem. Not only that, but he also learned that the degradation of the Amazon have a negative domino effect on the world.
“It’s all connected. Southeastern part of South America regulates the sea currents to Africa. So the deforestation of the Amazon has an impact to the North African Sahara desertification, which leads to the heatwave in Europe”
Luis Adaime
Fortunately, as an ex-investment banker, he also understood how financial innovation could solve large problems at scale. With MOSS, he made it possible to create a transparent funding mechanism to preserve the Amazon rainforest.
MOSS issued an MCO2 token which is backed by verified carbon credit that is stored in a public ledger. They also created a MOSS Amazon NFT that allows anyone to have an encrypted digital ownership certificate of forest areas in the Amazon and contribute to the preservation project. The ownership is not only digital but also carries the legal property right provided by the local authorities.
Check out the full podcast episode below to learn more.