The carbon price in Brazilian citriculture has been estimated at US$ 7.72 per ton of carbon dioxide equivalent (tCO2e). This is the first time this indicator has been reached for orange production. It can function as a reference for the voluntary carbon market, as well as other initiatives aimed at sustainability, such as payment for environmental services. The estimate comes from the team at the National Agricultural Research Corporation (EMBRAPA Territorial) in a paper presented at the 62nd Congress of the Brazilian Society of Economics, Administration, and Rural Sociology.
Daniele Tatiane de Souza, an analyst at EMBRAPA, says the study is a pioneer in the citrus sector, one of the most significant export chains in Brazilian agribusiness. The country does not yet have a regulated carbon operating market in agriculture, allowing only estimates. “We’re doing proactive work to outline perspectives and set benchmarks based on internationally implemented methodologies.”
Understanding the market
As the main greenhouse gas (GHG) emitted into the atmosphere since the beginning of industrialization, carbon dioxide has become an environmental indicator. For comparative purposes and standardization in the market, the emission of other GHGs and agents causing environmental impact is converted into tons of CO2 equivalent for measurement and valuation. By estimating the carbon price of an economic activity, a financial incentive is created to invest in more sustainable technologies and practices. For example, improving fertilization practices to reduce the use of nitrogen and the emission of nitrous oxide—another important GHG—into the atmosphere.
“As the reduction of GHG emissions and the removal of CO2 from the atmosphere have a cost (social, economic, and environmental), pricing is necessary to learn how much should be paid for a ton of CO2 equivalent that is no longer emitted or that an activity or project has removed from the atmosphere. Carbon pricing is a reference for who will be paid and who will pay for it. Of course, it’s just a reference since companies that already have a Reduced Emission Certificate (CER) can negotiate higher values than those who have yet to start a project,“ says EMBRAPA researcher Lauro Rodrigues Nogueira Júnior. “This value is also useful for government programs to reduce emissions that need references, as well as for the payment programs for environmental services being implemented in Brazil,” he adds.
The estimated value is close to what is observed for the agricultural sector in the international voluntary carbon market. Over the last three years, the average carbon price in the global voluntary agricultural market, as surveyed by Eurosystem Marketplace, has ranged from US$ 6.61 to US$ 11.02 per tCO2e. As there are no estimates in Brazil, for comparison purposes, the EMBRAPA team used a previous study that provided an average value for the carbon price of Brazilian agriculture and livestock. Considering a monetary update, it would be US$ 7 per tCO2e—very close, therefore, to the US$ 7.72 per tCO2e estimated for the citrus sector.
How the analysis works
The calculations for citrus farming were based on socio-economic and environmental data, combining two sets of determinants: the “social cost of carbon” and the “marginal abatement cost.” This makes it possible to assign a monetary value to the environmental and social consequences of greenhouse gas emissions and climate change.
The marginal abatement cost includes the technological expense of reducing these emissions. “We modeled and simulated how much the carbon price in Brazilian citriculture could be based on a set of determinants that impact the carbon price in agriculture,” says Souza. For this estimate, 297 cities in the citrus growing region were considered, which includes the state of São Paulo and part of Minas Gerais.
For the analysis, the team used data such as the municipal Gross Domestic Product (GDP) and the share of agriculture in this indicator, per capita CO2 emissions, the area of the cities, and the portion set aside for preserving native vegetation. The higher a locality’s GDP, the higher the carbon value, since a more dynamic economy tends to produce higher GHG emissions.
Innovation and wildlife
The work is part of a research project by EMBRAPA and the Citrus Defense Fund (FUNDECITRUS), which evaluates the dynamics of carbon stocks and the fauna biodiversity in citrus-growing areas of São Paulo and Minas Gerais. The project was selected by the Innovation Fund for Farmers, financed by the UK company Innocent Drinks. This action offers financing to suppliers in initiatives aimed at the transition to low-carbon agriculture, increasing biodiversity, and fair agricultural practices.
The research estimated the carbon stocks in the citrus growing region at 36 million tons, in the orchards, in the soil, and in the areas with native vegetation within the producing farms. “Today we know that 1 hectare of citrus trees stores approximately 2 tons of carbon per year, which is equivalent to 7.32 tCO2,” says Nogueira Jr. It was an unprecedented piece of work, which collected data to estimate the volume of carbon stored in Brazilian orange trees and obtained an average of 50 kg of carbon per tree.
The same project identified 314 species of wild animals in the Brazilian citrus growing zone. Traces of 268 birds, 28 mammals, and 18 amphibians and reptiles were spotted or identified. The puma, ocelot, and maned wolf were some of the large animals the sensor cameras captured at night. Others were photographed or identified by footprints, their feces, nests, and other evidence.
The world’s largest orange juice producer
Brazil is responsible for 35% of the world’s orange production and 75% of the international orange juice trade. In the last harvest, production stood at 307.22 million boxes, and juice exports exceeded 2.8 million tons.
There are 463 thousand hectares of orchards in the citrus belt alone, the main producing region, where juice and by-product processing industries are also concentrated. The sector represents a turnover of around US$ 14 billion per year.