Restoring pastureland and producing biofuel in Paraguay

Location

Alta Paraguay, Paraguay

About the project:

According to data from World Resources Institute's Global Forest Watch, Paraguay has lost 22% of its tree cover between 2000 and 2017. This represents 5.46 million hectares of natural forest. First, the Amazon was hit. Now, deforestation has spread to the Gran Chacho.

The loss of millions of hectares of forest in the heart of Latin America has had a devastating impact on the regulation of the climate and water cycles, as well as carbon sequestration. Latin American governments are already taking steps to reduce the pace of deforestation, but not all of them can afford monetary incentives for reforestation. So how can we generate economic benefits to restore degraded cattle lands while boosting ecosystem services and positively impacting local communities?

Canopy Energy has now committed to filling that space. Canopy seeks to harness silvopastoral systems to sequester carbon, generate economic growth and increase cattle productivity — all at the same time. To reduce livestock-related deforestation, Canopy and its local partner Investancia have combined grazing land with pongamia trees that produce vegetable oil. This nitrogen-fixing tree species has the ability to restore soil fertility, limit erosion and create a favorable climate for native species. Biofuel manufactured from the vegetable oil can be refined into diesel fuel. Investancia benefits from the biofuel revenue, while trees planted on pastureland will sequester carbon, improve soil fertility and reduce animal stress. Finally, these new agricultural activities will provide jobs and positively impact local communities. The vegetable oil meets the growing biofuel demand while the trees capture and store greenhouse gases.

In addition to the environmental and economic potential, the silvopastoral model can improve cattle farming. A study conducted in Nicaragua and Costa Rica analyzed what happens when trees are added to pastureland. Thanks to the shade from trees, animal productivity can also improve. The switch from treeless pasture to land with a tree canopy cover of 20% increased meat yields by 10%.

Silvopasture will also improve the sustainability of the meat industry in Paraguay and potentially provide a competitive advantage to cattle ranchers fighting for their place in global commodity supply chains. Refrigeration companies and European food and leather retailers are under pressure to certify the origins of their animal products and to think about sustainability and ethical production in their supply chains. The demand for meat, leather and animal co-products from farmers that also reforest land is expected to grow in the coming years. Investancia's silvopastoral model is expected to generate long-term economic opportunities for private companies, cattle farmers and local populations throughout Latin America.

Canopy is starting small with 10,000 hectares, but the sheer size of the cattle industry in Latin America presents a large opportunity to scale up this type of profitable restoration. Canopy will continue to expand its restoration efforts in Paraguay.

Investment type