ELLA Policy Brief: Sugarcane Agro-ecological Zoning: Greening the Expansion of Ethanol

Abstract

Brazil’s huge expansion in sugarcane production has led to questions being raised about environmental impacts and sustainability. In response to the ethanol industry’s growth, in particular since the introduction of flexible fuel technology in 2003, the Federal Government moved to provide technical support for formulating public policies aimed at encouraging the sustainable expansion of sugarcane. One key strategy the government decided to adopt was providing guidelines for land allocation and rural development policies. To do so, the Government created the National Agro-Ecological Zoning of Sugarcane (Zoneamento Agroecologico da Cana de Açúcar), commonly known as ZAE Cana. This policy instrument is the first of its kind to adapt principles of zoning to the production of a biofuel in Brazil. Through ZAE Cana, the government is able to drive expansion in the areas most favourable for cultivation in terms of potential output and least irrigation needed. At the same time, to reduce environmental harm, certain areas that are environmentally fragile or possess high biodiversity are designated as off-limits for ethanol crops. Importantly, ZAE Cana includes incentives and clear mechanisms for monitoring, such as requirements for compliance before financial institutions will issue loans. Brazil’s experience shows that competition between food and fuel production and the loss of fragile native biomes can be avoided through effective implementation and enforcement of zoning, especially when coupled with incentives for compliance. Evidence suggests that if implemented from the onset of ethanol expansion, ZAE Cana could have preserved native forests and increased sugarcane production by incentivising cultivation on more productive lands. The Brazilian experience may be relevant for decision makers from other regions considering the sustainability of fuel crop expansion in their own countries. Key Lessons: The guidelines set out in ZAE Cana promote efficient use of space by enhancing expansion into degraded areas, and discouraging unsustainable practices, like pre-harvest burning when expanding operations. That being said, Brazil implemented the first agro-ecological zoning for sugarcane 35 years after the development of its ethanol sector. If established from the outset, sugarcane production and productivity could have been higher, with significantly diminished environmental impacts. Given that ZAE Cana is not a federal law, it does not have regulatory power, so its provisions are merely guidelines. However, involving public and private financial institutions in the policing of sugarcane expansion has proven effective in reducing the need for a costly monitoring and fining system, acting as an alternative in the meantime while the policy has not been signed into law