A recovery of degraded areas stopped being just one environmental speech and started operating as credit policywith goals of productivity, climate e traceability — and direct impacts on risk management in the field.
In a new phase of Caminho Verde Brasil programthe government structured a financial engineering to finance the call “productive restoration” at scale, supported by Eco Invest Brasilmechanism that combines public catalytic capital e private resources to unlock sustainable investments in the country.
When taking the credit for historically degraded areas and condition the financing environmental and production goalsthe program also changes the way risk is perceived in the field and puts risk mitigation instruments back on the agenda, such as the rural insurancealthough without direct integration into the program design.
The consolidated Pre-Allocation Report from the second Eco Invest auction, held at the beginning of the year, indicates the capture of R$30.2 billion in total investments, destined for the productive restoration of around 1.4 million hectares, with disbursements scheduled between 2025 and 2027.
In practice, Caminho Verde Brasil now enters its most sensitive stage: transforming resources allocated into contracted projects, execution in the field, inspection and productive results.
According to Mapa’s special advisor (Ministry of Agriculture and Livestock), Carlos Augustin, this moment marks the transition from institutional design to operation.
He states that the program “is already underway”, with resources secured, and that the banks that won the auction have started to structure the offer of credit to producers and investors.
“We already have ten banks that are in agreement, that won the auction, and that, I believe, at the beginning of next year, are already putting this in order, offering customers, farmers and investors who want to use these resources to go from low productivity to high productivity”, he told the CNN Money.
“It could be livestock, crops, fruit growing, whatever. In fact, speaking exactly about that, .”
In addition to raising the initial R$30 billion, the government signed, during COP30, in Belém, associated with a financial contribution of up to US$1 billion for the recovery of degraded areas.
With the input of these resources and the combination with other financing instruments, the government is working with the possibility of increasing the total volume of the program to around R$50 billion.
“The potential is 40 million hectares. How long it will take us to do this depends, obviously, on the size of the resources. We started well, with R$30 billion. We expect the approval of more resources from JICA and other instruments, which could take us to something close to R$50 billion”, said Augustin.
On the operational side, ten banks were selected — seven private and three public (Banco do Brasil, BNDES and Caixa Econômica Federal). Wide participation expands the program’s reach, but also raises the challenge of standardizing technical criteria, measuring results and monitoring on a national scale.
The report data also indicates where resources tend to be concentrated and which production models gain priority in this initial phase.
The pre-allocation points to strategic biomes, with around 57% of resources in the Cerrado, followed by Atlantic Forest (13%), Amazon (12%), Caatinga (10%) and Pampa and Pantanal (around 4% each).
In the distribution by type of financeable activity, the greatest interest appears in perennial crops (33%) and integrated approaches (29%), such as SAF (Agroforestry Systems) and ILPF (Crop-Livestock-Forest Integration). Annual crops or isolated livestock (27%) and forestry and restoration (11%) also appear.
From the program’s point of view, the rule for access to credit is explicitly environmental and productive. The Caminho Verde Brasil guide lists practices such as bio-inputs, cover planting, integrated systems, labor certification and bovine traceability as part of the sustainability package.
Among the central requirements, the producer cannot deforest for ten years and must demonstrate a reduction in greenhouse gas emissions, with satellite monitoring and technical protocols coordinated by Embrapa (Brazilian Agricultural Research Company).
According to Augustin, the logic of the program is to align financial incentives and environmental requirements to induce a structural change in land use.
“It is not just an investment plan in agriculture. It is a plan that presupposes not deforesting, using poorly used areas, reducing emissions and producing much more. The idea is to produce more, with less emissions, greater productivity, greater savings and market competitiveness”, he stated.
Rural insurance is no longer just an accessory product
This new configuration in the field exposes historical limitations of a sector that, according to agribusiness itself, is still unable to offer protection on the same scale as the risk: .
Recent data from the CNA (Confederation of Agriculture and Livestock of Brazil) indicate that coverage fell from around 30% of the agricultural area to just 5% this year, as a result of an increase in defaults on rural credit.
It is in this scenario that rural insurance stops being just an accessory product and starts to be discussed as part of the financial gear of new green credit models, even though it faces challenges of scale, dissemination and technical adaptation.
For the president of the Rural Insurance Commission of FenSeg (National Federation of General Insurance), Glaucio Toyama, the product offering exists, but still faces information bottlenecks.
“There has been insurance for forest restoration in native forest areas for more than three years. What happens is that this type of product is still little publicized. Many producers believe that there is no coverage available for restoration, when, in fact, it already exists”, he said.
According to Toyama, complexity increases when financing begins to include integrated systems, such as ILPF and SAF, which combine agriculture, livestock and forestry in the same area.
“When we talk about systems like ILPF or agroforestry systems, the challenge is that there is no standardization. Each project combines crops, forestry and livestock in a different way. This makes it difficult to create a mass product, because there is no single statistical basis for pricing risk”, he highlighted.
Faced with this scenario, the insurance market has advanced through customized solutions, such as the combination of agricultural, livestock and forestry insurance, or the structuring of income insurance that considers the performance of the system as a whole.
Regarding pricing, Toyama explains that the recovery of degraded areas tends to improve the risk over time, but requires care in the initial phase of productive conversion.
“At the beginning of the recovery, productivity is not yet equal to the regional average. Therefore, insurance needs to consider an initial technological level. It is not possible to treat a recently recovered area as if it were already fully consolidated”, he considered.
He illustrates with a practical example:
“If the regional average is 50 bags per hectare, the traditional trigger may be 70% of that, around 35 bags. In a recently recovered area, where the expectation may be 40 bags, the trigger needs to be adjusted to something close to 28 bags.”
In the agricultural insurance risk map, two weather events continue to account for more than 70% of claims: excess and lack of rain. The solution, according to Toyama, is parametric insurance, triggered by climate indices.
“They help bring predictability even when productivity is still being formed”, he concluded.
