SISGEMA

Overview

SISGEMA is a hybrid environmental-economic model for assessing economic and environmental impacts of alternative land uses in Brazil. The model augments the standard economic accounting matrix—in monetary terms—by introducing environmental accounting that represents ecosystem services variables—in physical terms—in the economic modelling. In nature, it is similar to the EU’s NAMEA (National Accounting Matrix with Environmental Accounts) project. The model can be used to analyse different scenarios of policies and other factors that have an impact on land use, such as the necessary price levels for and impacts of an effective Payment for Ecosystem Services (PES), the investment requirements of implementing Brazil’s Forest Code, and the impacts of using alternative assumptions related to deforestation rates, land prices, costs of recovering forest areas (e.g. labour costs) and of preserving forest areas (for example, interest rates), among others. Since the model is spatially disaggregated at the municipal level (over five thousand municipalities in the Brazilian territory), it is possible to aggregate results according to different criteria (biomes, geographic and administrative regions, etc.) and to establish analytical comparisons with other variables available at the municipal level. SISGEMA is developed by the Environmental and Sustainable Development Group of the Economics Institute at the Federal University of Rio de Janeiro (GEMA–IE/UFRJ).

Key features of the SISGEMA model

Components

The model comprises two main components. The first component refers to quantifying the costs of preserving and recovering forest areas. Cost of forest preservation is based on estimates of land use opportunity costs, i.e. on the compensation land owners would have to receive to give up agriculture and, instead, adopt practices to preserve ecosystem services. Three alternative models to estimate opportunity costs have been developed, and the mean of each models’ results is used. Results are provided for each of the Brazilian 5,700 “munícipios” (local administrative unit , similar to UK counties). The latest estimate is that an average amount of R$ 403/hectare/year (approximately EUR 102/hectare/year) could compensate the maintenance of ecosystem services provision in half of Brazil’s municipalities – but it is important to note that there are strong heterogeneities among regions. Cost of forest recovery is calculated by estimating costs of fencing, inputs and labour, also per município. Estimates show that the median of this cost is R$ 7,466/hectare/year (approximately EUR 1,892/hectare/year). These results show that maintaining ecosystem services provision is much cheaper than recovering forest areas. This cost is then added to the opportunity cost in areas where forest areas have been depleted. Based on these two sets of costs, supply curves of preserving ecosystem services and recovering forest areas are estimated, respectively.

The second component of the model concerns introducing ecosystem services into the model. This component constitutes the hybrid component of the model, i.e. the modelling of ecosystem services in physical units, established in a geographic information system (GIS), in a framework that is integrated with economic accounting—i.e. with economic variables in monetary units. Adjusted by the different stages of forest growing, this component provides estimates of carbon captured by forests, methane emissions related to alternative cattle raising practices, soil erosion and biodiversity, also for each “município”. This allows, for instance, to quantify a supply curve of avoided deforestation (and related avoided CO2e emissions) subject to different carbon prices.

Geographic coverage

The SISGEMA model covers the entire territory of Brazil, via over 5 thousand municipalities.

Policy questions and SDGs

Key policies that can be addressed

Necessary price levels for and impacts of an effective Payment for Ecosystem Services (PES)
Investment requirements of implementing Brazil’s Forest Code
Impacts of using alternative assumptions related to deforestation rates, land prices, costs of recovering forest areas (e.g. labour costs) and of preserving forest areas (for example, interest rates), among others

Implication for other SDGs

SISGEMA can provide insights into SDG15 (life on land) directly, as it estimates the deforestation rates, as well as the conservation and restoration cost in each of the Brazilian municipalities.

Recent publications using the SISGEMA model

Study	Focus	Key findings
Young et al. (2017)	Analysis of the implications of a potential market for Environmental Reserve Quotas (Cotas de Reserva Ambiental - CRA) in Brazil	The obtained results reveal that a biome-restricted CRA transaction market is the strategy that results in the highest environmental benefit per-cost unit. The total cost of implementing this strategy is R$ 63.9 billion, with transactions of 15.3 million hectares of land. Comparing both of these outcomes, results indicate a superiority of the CRA market per biome in relation to a national scenario because, despite the lower cost associated to the unrestricted scenario (R$ 52.6 billion, with 18.5 million hectares transacted), the volume of environmental services would be much lower: it would culminate in 37% less CO2 emissions avoided/captured, and 40% less soil erosion avoided. In addition, a significant portion of the values transacted would be concentrated in the Caatinga biome, which would alone account for 68.2% of total compensation for Legal Reserve deficit areas. This is mainly due to the lower opportunity costs and the extensive forest asset areas presented by this biome.
Young et al. (2016)	Organisation of the necessary subsidies for the Brazilian Government’s position on National Policy for Payment for Environmental Services	The study provided estimates of costs and benefits of a possible Payment for Environmental Services System (PES) in Brazil and identified possible sources of funding to implement it, which are important inputs for policy proposals for an efficient National PES Policy.

References

Young, C. E. F., Alvarenga Jr, M., Gandra, F. M., Costa, L. N. A., & Mendes, M. P. (2017). Custos e Benefícios da Implementação de um Mercado de Cotas de Reserva Ambiental (CRA) no Brasil. In: XII Encontro Nacional da Sociedade Brasileira de Economia Ecológica, 2017, Uberlândia. XII Encontro Nacional da Sociedade Brasileira de Economia Ecológica. Uberlândia: Sociedade Brasileira de Economia Ecológica.

Young, C. E. F., Castro, B. S., Rocha, R., Santanna, A. A., Erazo M., J. A., Buckmann, M. F. Y.,, De Bakker, L. B., Alvarenga Jr, M., Pereira, V. S., Aguiar, C., Tornaghi, L., Costa, D. S., Mendes, M. P., Costa, L. N. A., Almeida, D. M. (2016). Estudos e produção de subsídios técnicos para a construção de uma Política Nacional de Pagamento por Serviços Ambientais. Relatório Final com apêndices. (Relatório de pesquisa). UNDP PROJECT BRA/11/022.