Forests as an Asset: Why Brazil’s Experience Cannot Be Copied, but Should Be Understood

Viktor Smal, Head of the State Forest Resources Agency of Ukraine

Brazil has done something that has been widely discussed in recent years, but that almost no one had dared to implement in practice. For the first time, the state has transferred the process of forest restoration to a private company. This is not about traditional forest management, but about a different mechanism: businesses invest in restoring degraded territories and recover their investments through the sale of carbon credits on the global market.

In essence, this is an attempt to move the restoration of degraded forest ecosystems into the market sphere — combining environmental goals with financial instruments. In theory, this could help the country attract the private sector to the restoration of natural resources, while also developing the green credit market.

And although this case will undoubtedly become an important signal for the world, directly copying such an approach in Ukraine is unlikely to be possible.

National Specifics

Ukraine’s current forestry management system has historically been built on a strong professional foundation, with established processes for forest inventory, protection, and accounting. At present, no private structure possesses comparable expertise, infrastructure, or capabilities.

Moreover, the idea of transferring forest restoration to private operators appears attractive only at first glance. Such a decision may also indicate vulnerabilities within the forest governance system itself. In recent years, information about illegal logging in the Amazon has repeatedly emerged — on such a scale that the consequences are visible from satellites.

Under such conditions, the state may seek alternative forest protection models, including experimenting with private-sector involvement. In other words, this is not only about innovation, but also about responding to governance challenges.

Institutional Capacity

It is also important to understand that any forestry management model is not only about instruments, but also about institutions.

The carbon credit market cannot function at scale and in a stable manner without accreditation, accounting, monitoring, and verification systems, which are typically ensured by the state or authorized institutions. No international investor will work with an individual operator unless there is a transparent and understandable national framework behind it.

That is why Ukraine’s key task today is not the launch of isolated projects, but the creation of a comprehensive carbon credit trading system.

This work is already underway. With the support of international partners, including the World Bank, the institutional framework is being developed that will allow the forestry sector to become one of the drivers of climate finance. At the same time, Ukraine must continue building the regulatory and market infrastructure necessary for full participation in the global carbon credit market.

What Is Worth Adopting

The world is moving toward a common goal — limiting global warming to 1.5°C and achieving carbon neutrality by 2050. In other words, the level of emissions must equal the level of their absorption. This is not an abstract objective, but a response to very real risks — from local crop failures to food crises affecting entire regions.

The carbon credit market creates interaction between sectors that generate emissions and those that absorb them. In this system, forests play a key role as natural carbon sinks. They are becoming not merely a resource, but a strategic asset within the climate finance system.

Prospects for Ukraine

Climate finance opens up several practical opportunities for Ukraine.

The first is the restoration and development of forest ecosystems in territories affected by the war. In particular, revenues from the sale of carbon certificates could be directed toward demining efforts.

The second is the preservation of naturally regenerated forests on agricultural lands. This remains one of the country’s most underestimated resources.

Green finance could become an incentive for local communities to preserve self-forested territories. In doing so, we solve several tasks simultaneously: increasing forest area, ensuring a high level of CO₂ absorption, and attracting financial resources for local economic development.

The third is further digitalization of the forestry sector. Significant progress has already been achieved in this area: Ukraine has built a transparent system for timber accounting, control, and traceability, which is an important prerequisite for investment. At the same time, there remains considerable potential for further development, including through green financing of digital services.

Ukraine’s Own Path

The Brazilian case is an important signal of a broader shift in global thinking: forests are becoming part of the financial architecture of climate policy.

However, for Ukraine, the key is not to copy instruments, but to build its own model — one based on institutional capacity, professional expertise, transparency, and trust.

Climate finance is undoubtedly part of our future. The only question is whether we prepare for it systematically.