ALIGNING RURAL CREDIT WITH THE FOREST CODE

This white paper by the Climate Policy Initiative recommends aligning Brazil's Rural Credit policy with the Forest Code to incentivize environmental conservation and agricultural productivity without requiring additional treasury funds.

• The authors propose increasing credit limits for rural producers who comply with the Forest Code, specifically those without environmental liabilities or those with an approved Environmental Regularization Program (PRA).
• Integrating the Forest Code with Rural Credit is presented as a feasible policy change because it requires no new funds from the National Treasury, does not alter the technical conception of credit granting, and maintains existing distribution channels.
• Data from the 2016/2017 agricultural year indicates that 14% of the total amount of credit across analyzed lines was granted in contracts with values over 95% of their limits, suggesting a significant number of producers would benefit from limit expansions.
• The Compulsory Resources credit line for production costs was particularly impacted by limit constraints, with 45% of its total amount lent to contracts that exceeded 95% of the line's limit in 2016/2017.
• Historical evidence suggests that linking credit to environmental rules is effective in Brazil; for example, Central Bank Resolution 3,545/2008, which conditioned credit in the Amazon on environmental compliance, contributed to a 15% reduction in deforestation between 2008 and 2011.
• The proposal draws a comparison with the European Union's Common Agricultural Policy (CAP), where over 95% of expenditures are direct payments to producers conditioned on providing public goods like forest and biodiversity conservation.
• The document argues that Brazil can more than double its agricultural production in existing areas without further deforestation, meaning the alignment of credit and environmental policy can foster modernization over area expansion.

APA

Assuno, J., & Souza, P. (2019). ALIGNING RURAL CREDIT WITH THE FOREST CODE. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/05/White_paper_Credit_FCode_ENG_FINAL_07JUN2019.pdf

Chicago

Assuno, Juliano, and Priscila Souza. ALIGNING RURAL CREDIT WITH THE FOREST CODE. Climate Policy Initiative, 2019. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/05/White_paper_Credit_FCode_ENG_FINAL_07JUN2019.pdf.

Wikipedia

{{cite report |last1=Assuno |first1=Juliano |last2=Souza |first2=Priscila |title=ALIGNING RURAL CREDIT WITH THE FOREST CODE |publisher=Climate Policy Initiative |date=February 2019 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/05/White_paper_Credit_FCode_ENG_FINAL_07JUN2019.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2019aligning, author = {Assuno, Juliano and Souza, Priscila}, title = {{ALIGNING RURAL CREDIT WITH THE FOREST CODE}}, institution = {Climate Policy Initiative}, year = {2019}, month = feb, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/05/White_paper_Credit_FCode_ENG_FINAL_07JUN2019.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }