Rural Credit Policy Landscape of Climate Finance for Land Use in Brazil 2021-2023

This report analyzes the rural credit policy landscape for climate finance related to land use in Brazil from 2021 to 2023. It examines the volume of climate-related credit, the criteria used for classification, the sources of funding, and the challenges regarding the verification and actual environmental impact of these financial flows.

• Between 2021 and 2023, rural credit was the primary instrument for climate finance for land use in Brazil, averaging US$ 9.9 billion annually. However, this represents only 16% of the total rural credit operations for the same period, which averaged US$ 63.7 billion per year.
• A significant portion of the growth in climate-smart rural credit is attributed to changes in database classification rather than increased sustainable practices. Specifically, US$ 2.2 billion (23% of tracked rural credit) between 2021 and 2023 was categorized as climate credit solely because it was recorded as no-till farming in the SICOR system, a practice that was not registered in that system until 2018.
• Climate rural credit is heavily concentrated in a few criteria and products. No-till farming, intensive soil correction, minimum tillage, and sugarcane production account for 69% of tracked climate rural credit. Soy is the primary product benefiting, receiving US$ 2.2 billion per year (22% of the total tracked), largely due to no-till farming which accounts for 75% of the credit for soy.
• Private resources constitute 78% of climate-aligned rural credit, totaling US$ 7.7 billion per year. Public resources account for 22% (US$ 2.4 billion per year), with BNDES providing 9% and the federal government providing 13% through the Constitutional Financing Funds of the North (FNO), Northeast (FNE), and Midwest (FCO) regions.
• There are concerns regarding the effectiveness and integrity of climate finance flows. The ABC Recuperação credit line for recovering degraded pastures has shown limited effectiveness in improving pasture quality or land use. Additionally, an analysis found that 31% of properties that deforested between 2020 and 2022 accessed subsidized credit, averaging R$ 14 billion (US$ 2.8 billion) per year, suggesting that climate-relevant credit may benefit properties that deforest.

APA

Climate Policy Initiative (2024). Rural Credit Policy Landscape of Climate Finance for Land Use in Brazil 2021-2023. https://www.climatepolicyinitiative.org/rural-credit-policy-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/

Chicago

Climate Policy Initiative. Rural Credit Policy Landscape of Climate Finance for Land Use in Brazil 2021-2023. 2024. https://www.climatepolicyinitiative.org/rural-credit-policy-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Rural Credit Policy Landscape of Climate Finance for Land Use in Brazil 2021-2023 |date=7 November 2024 |url=https://www.climatepolicyinitiative.org/rural-credit-policy-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2024rural, author = {{Climate Policy Initiative}}, title = {{Rural Credit Policy Landscape of Climate Finance for Land Use in Brazil 2021-2023}}, institution = {Climate Policy Initiative}, year = {2024}, month = nov, url = {https://www.climatepolicyinitiative.org/rural-credit-policy-landscape-of-climate-finance-for-land-use-in-brazil-2021-2023/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }