Strategic Analysis of the Forest Carbon Market in Brazil

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

I read carefully the authors' interesting work. It can be a very good research effort that will provide interesting results on the subject of carbon markets and the related strategies that can support the development of these markets at the international level, especially with reference to one of the most important forest ecosystems for climate change mitigation, such as that of the Amazon and Brazil in general.

However, I believe that the paper presents important issues that should be reconsidered and reformulated by the authors. More specifically:

In the literature review there are significant gaps in the coverage of the topic of carbon markets. The authors use general references on addressing climate change and do not focus on carbon markets and related strategies from the international arena. They do not address the distinction between mandatory and voluntary markets, the differences, potentials and trends of these markets and specifically on the Brazilian reality. They also do not provide data on the evolution of carbon credits prices and market development at the international level. Another very important issue that the authors should analyse, is the issue of carbon credits certification and market transparency and the supporting strategies and policies to enhance this transparency. The supply and demand of carbon credits is also an issue that should be analysed by the authors. What are the factors that shape it and in particular for the Brazilian socio-economic context. The literature review section should be rewritten in its entirety. 

Regarding the methodology, it is not clear how the variables and questions of the questionnaire were chosen. The authors state that they relied on the literature to do this. What is the relevant literature? (see comments above). How was the validity and reliability of the questionnaire checked? The questions seem to focus on general issues of sustainable forest management and climate change mitigation rather than issues specific to carbon markets. 

Furthermore, who was the survey population and how many were they? A total of 77 questionnaires were completed by a population not identified by the authors. Here another issue concerns the composition of the population which is quite heterogeneous, from NGOs to business executives, academics and policy makers. How are all these groups represented in the sample, what is their particular relationship to carbon markets and how do you consider the questionnaire representative of all these audiences targeted? It is clear that each stakeholder group's perspective on carbon markets is different. I would expect at least this differentiation to be shown in the results with additional statistical analysis as well as in the analysis of the qualitative variables with relevant categorisation.

In my view, the above could also lead to a more coherent and targeted discussion of the results to formulate the final strategy proposal that the authors advocate. 

I therefore suggest that the paper be resubmitted by the authors taking into account the above comments which I believe will improve the paper qualitatively by highlighting its contribution to the debate on carbon markets at the international level.   

Comments on the Quality of English Language

Minor english language editing.

Author Response

I read carefully the authors' interesting work. It can be a very good research effort that will provide interesting results on the subject of carbon markets and the related strategies that can support the development of these markets at the international level, especially with reference to one of the most important forest ecosystems for climate change mitigation, such as that of the Amazon and Brazil in general.

However, I believe that the paper presents important issues that should be reconsidered and reformulated by the authors. More specifically:

Comments 1.: In the literature review there are significant gaps in the coverage of the topic of carbon markets. The authors use general references on addressing climate change and do not focus on carbon markets and related strategies from the international arena. They do not address the distinction between mandatory and voluntary markets, the differences, potentials and trends of these markets and specifically on the Brazilian reality. They also do not provide data on the evolution of carbon credits prices and market development at the international level. Another very important issue that the authors should analyse, is the issue of carbon credits certification and market transparency and the supporting strategies and policies to enhance this transparency. The supply and demand of carbon credits is also an issue that should be analysed by the authors. What are the factors that shape it and in particular for the Brazilian socio-economic context. The literature review section should be rewritten in its entirety.

Response 1. To address the reviewer's comments, we have made several changes to the introduction to better cover the topic of carbon markets. We included detailed information on the growth of the global carbon market, the distinction between mandatory and voluntary markets, and the evolution of carbon credit prices. Additionally, we addressed the issue of carbon credit certification and market transparency, highlighting the supporting strategies and policies to enhance this transparency. We also analyzed the supply and demand of carbon credits, including the factors that shape this market in the Brazilian socio-economic context. With these modifications, we believe that the introduction now provides a more comprehensive and detailed view of carbon markets, addressing the concerns raised by the reviewer.

Comments 2: Regarding the methodology, it is not clear how the variables and questions of the questionnaire were chosen. The authors state that they relied on the literature to do this. What is the relevant literature? (see comments above). How was the validity and reliability of the questionnaire checked? The questions seem to focus on general issues of sustainable forest management and climate change mitigation rather than issues specific to carbon markets. 

Furthermore, who was the survey population and how many were they? A total of 77 questionnaires were completed by a population not identified by the authors. Here another issue concerns the composition of the population which is quite heterogeneous, from NGOs to business executives, academics and policy makers. How are all these groups represented in the sample, what is their particular relationship to carbon markets and how do you consider the questionnaire representative of all these audiences targeted? It is clear that each stakeholder group's perspective on carbon markets is different. I would expect at least this differentiation to be shown in the results with additional statistical analysis as well as in the analysis of the qualitative variables with relevant categorisation.

Response 2 .Regarding the methodology, we clarified that the selection of variables and questions for the questionnaire was based on a comprehensive literature review, including reports from the Intergovernmental Panel on Climate Change (IPCC), peer-reviewed articles, NGO reports, and academic publications. Specific references were included to support the relevance and comprehensiveness of the questions.

To ensure the validity of the questionnaire, we conducted a pilot test with a group of randomly selected specialists, which helped us identify and correct any ambiguities or difficulties in the questions. Additionally, we consulted experts in the field to ensure that the questions were relevant and comprehensive in relation to the study's objective.

We also clarified that the sample consisted of individuals with proven experience in the carbon market, encompassing a wide range of professionals from environmental NGOs, academics, government representatives, and private sector participants. The representativeness of each area in the survey participation was detailed in the results.

In my view, the above could also lead to a more coherent and targeted discussion of the results to formulate the final strategy proposal that the authors advocate. 

I therefore suggest that the paper be resubmitted by the authors taking into account the above comments which I believe will improve the paper qualitatively by highlighting its contribution to the debate on carbon markets at the international level.   

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The Introduction should be expanded with information regarding the current state of research in the area, and displaying the need for the implemented study. Furthermore, the article often simply lists terms without properly explaining, and referencing them, e.g. carbon market, natural-based solutions, role of the Amazon region in climate balance and biodiversity, etc.

Additional references, especially peer-reviewed articles, should be added as reference sources. 

The Authors list the following as the main goals of the study:

- understand the magnitude and impacts of climate change,

- comprehend the role and potential of the carbon market in financing forest conservation and reforestation efforts in Brazil,

- provide support for developing public policies and regulatory frameworks,

-inclusion of local communities and Indigenous peoples

The formulation of the goals and type of the implemented research are not in accordance.  To "understand the magnitude and impacts of climate change" the study would need to focus on environmental indicators evaluating these factors. The present study is based on a questionnaire of a number of professionals thus giving information on their opinions, not scientific analysis or proof.

I also don't see the "inclusion of local communities and Indigenous peoples" as indicated in the research goals. How is this goal attained through the research?

The issue regarding "comprehend the role and potential of the carbon market in financing forest conservation and reforestation efforts in Brazil" is also not studied, and there are no conclusions or results in this aspect. 

It is simply mentioned in one spot in the paper.

Author Response

Comments 1: The Introduction should be expanded with information regarding the current state of research in the area, and displaying the need for the implemented study. Furthermore, the article often simply lists terms without properly explaining, and referencing them, e.g. carbon market, natural-based solutions, role of the Amazon region in climate balance and biodiversity, etc.

Response 1.

The Introduction has been expanded with information regarding the current state of research in the area and displaying the need for the implemented study. Specifically, references to recent studies and literature reviews have been added to contextualize the importance and potential of the carbon market, nature-based solutions, and the role of the Amazon in climate balance and biodiversity.

In the introduction, we highlight the need for climate change mitigation strategies, citing various peer-reviewed studies that demonstrate the intensification of global warming and its impacts. For example, "According to the AR6 [1], climate change will intensify the impacts on natural and human systems, increasing regional disparities and negatively affecting biodiversity, human health, and food production" (page 2).

To explain terms like "carbon market," we included specific definitions and references: "carbon credit markets offer a solution, providing compensation for emission reductions through reduced deforestation and forest degradation, as well as improved forest management under the REDD+ acronym" (page 2).

Additional references were inserted to detail the importance of "nature-based solutions": "Nature-Based Solutions, emphasizing forests as tools for climate change mitigation" (page 3).

We also expanded the discussion on the role of the Amazon in global climate balance and biodiversity: "the discussion often focuses on the Amazon region, globally recognized for its vital role in climate balance and biodiversity" (page 3).

These changes aim to provide a more robust and detailed context, addressing the reviewer's concern about the need to expand the introduction with information on the current state of research and the necessity of the implemented study.

Additional references, especially peer-reviewed articles, should be added as reference sources. 

The Authors list the following as the main goals of the study:

- understand the magnitude and impacts of climate change,

- comprehend the role and potential of the carbon market in financing forest conservation and reforestation efforts in Brazil,

- provide support for developing public policies and regulatory frameworks,

-inclusion of local communities and Indigenous peoples

The formulation of the goals and type of the implemented research are not in accordance.  To "understand the magnitude and impacts of climate change" the study would need to focus on environmental indicators evaluating these factors. The present study is based on a questionnaire of a number of professionals thus giving information on their opinions, not scientific analysis or proof.

Comments 2: I also don't see the "inclusion of local communities and Indigenous peoples" as indicated in the research goals. How is this goal attained through the research?

Response 2.

Regarding the inclusion of local communities and indigenous peoples as indicated in the research objectives, we would like to clarify that this objective is indeed addressed and achieved in several parts of the text. Specifically, this objective is achieved when we cite in the section:

• Strengths Section:

"Among the identified strengths, the Traditional knowledge about forest management by traditional peoples and communities was elucidated by the work of Garcia et al. [12], who highlight the vital role of indigenous peoples in forest carbon projects in the Amazon. According to them, carbon credits generated by REDD+ projects in the Voluntary Carbon Market (VCM) are the property of indigenous peoples, granting them exclusive rights over forest management and carbon revenue distribution. This recognition not only demonstrates that traditional knowledge is a valuable resource but also underscores the importance of including these communities in the development and implementation of forest carbon projects, ensuring that their values and practices are respected and valued."

• Opportunities Section:

"The recognition of the importance of local communities and traditional peoples in forest conservation received a mean score of 8.68, emphasizing the crucial role these communities play in effective forest management and conservation efforts."

• Conclusions Section:

"Collaboration between public and private sectors, technological innovation, and the active inclusion of local communities and indigenous peoples are essential for the market's sustainability and growth."

"A recent example is the decision by the Brazilian Supreme Federal Court (STF) in 2023, rejecting the thesis of the temporal framework for the demarcation of indigenous lands, which brings a new context for forest conservation and the carbon market in Brazil. This legal change, by affirming the fundamental rights of indigenous peoples over their lands based on ancestry and tradition, can positively influence biodiversity preservation and the expansion of the forest carbon market. It underscores the importance of integrating forest conservation policies with the recognition of indigenous rights, aiming for sustainable development that values both biodiversity and traditional cultures."

These sections show how the research includes and acknowledges the importance of local communities and indigenous peoples, especially in the context of forest carbon projects and the sustainability of the carbon market in Brazil.

Comments 3: The issue regarding "comprehend the role and potential of the carbon market in financing forest conservation and reforestation efforts in Brazil" is also not studied, and there are no conclusions or results in this aspect. 

It is simply mentioned in one spot in the paper.

Response 3.

"Understanding the role and potential of the carbon market in financing conservation and reforestation efforts in Brazil" is a central objective of this research, and it is reflected in various parts of the article.

• In the Introduction section, we mention that "In this context, carbon credit markets offer a solution, providing compensation for emission reductions through reduced deforestation and forest degradation, as well as improved forest management under the REDD+ acronym" (page 2). This highlights how carbon credit markets can finance the reduction of deforestation and forest degradation, as well as improve forest management.
• In the Results and Discussion section, specifically in the Strengths sub-section, it is mentioned that "Traditional knowledge about forest management by traditional peoples and communities that can contribute to the implementation of forest carbon projects" (page 6). This illustrates the role of traditional knowledge in the implementation of forest carbon projects, which can be funded by the carbon market.
• In the Opportunities sub-section, it is highlighted that "Recognition of the importance of local communities and traditional peoples in forest conservation" (page 7) and "Possibility of raising financial resources" (page 8). These points reinforce how the carbon market can be a crucial source of funding for forest conservation initiatives, valuing biodiversity and ecosystem services.
• The Strategic Analysis directly addresses how the "Offensive Actions (Strengths and Opportunities)" position Brazil as a potential leader in the global carbon market, emphasizing the promotion of policies that encourage innovation and technological development for forest conservation (page 11).

These excerpts and analyses throughout the article demonstrate how the carbon market is studied as a vital tool for financing conservation and reforestation efforts in Brazil, aligning with the research objectives.

Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The paper titled “Strategic analysis of the forest carbon market in Brazil” offers valuable insights and is likely to capture the attention of researchers in the field. In addition, this manuscript is based on the views of 77 experts from different professional fields, using a SWOT analysis to assess the dynamics of this market. No matter from the language expression, writing logic, or the structure of the article is very perfect. The authors also offer readers the way out of Brazil's forest carbon market in the face of illegal deforestation and vulnerable public policies, and the way to ensure its sustainable development. In general, I think this manuscript should be received smoothly after determining that the language editing is accurate.

Author Response

Comments: The paper titled “Strategic analysis of the forest carbon market in Brazil” offers valuable insights and is likely to capture the attention of researchers in the field. In addition, this manuscript is based on the views of 77 experts from different professional fields, using a SWOT analysis to assess the dynamics of this market. No matter from the language expression, writing logic, or the structure of the article is very perfect. The authors also offer readers the way out of Brazil's forest carbon market in the face of illegal deforestation and vulnerable public policies, and the way to ensure its sustainable development. In general, I think this manuscript should be received smoothly after determining that the language editing is accurate.

Response. Thank you very much

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

Comments and Suggestions for Authors

I read the revised article and saw that the authors made the necessary changes according to the original comments in the first edition. The article has been significantly improved and conveys a more targeted approach to carbon markets at the international level and the challenges and opportunities it presents for sustainable development.

One minor comment, relates to the methodology section and the literature support for checking the validity and reliability of the questionnaire. By completing this point by the authors, I consider that the article can be published.

 

Comments on the Quality of English Language

Minor check of english language

Author Response

REVIEWER 1

Comments and Suggestions for Authors

I read the revised article and saw that the authors made the necessary changes according to the original comments in the first edition. The article has been significantly improved and conveys a more targeted approach to carbon markets at the international level and the challenges and opportunities it presents for sustainable development.

One minor comment, relates to the methodology section and the literature support for checking the validity and reliability of the questionnaire. By completing this point by the authors, I consider that the article can be published.

Response 1:

We appreciate the positive comments and the suggestion to further improve our work. In response to the comment on the methodology section and the literature support for checking the validity and reliability of the questionnaire, we would like to clarify the changes made:

 

We included a more detailed description of the construction of the SWOT matrix in the methodology:

Altered Excerpt: "...including the construction of a detailed SWOT matrix"

We added an explanation about the development of the structured questionnaire, including the main sources of literature used:

Altered Excerpt: "The process began with the development of a structured questionnaire designed to collect relevant information aimed at evaluating the strengths, opportunities, weaknesses, and threats perceived by professionals, thus composing a SWOT matrix, based on a literature review. The main sources of literature included reports and publications from the Intergovernmental Panel on Climate Change (IPCC), peer-reviewed journal articles, reports from non-governmental organisations, and publications from academic institutions addressing climate change mitigation strategies, sustainable forest management, and carbon markets. Key references included IPCC reports [1][11][14], studies on climate change mitigation strategies [5][6][16], and carbon market analyses [8][9][15]."

We also detailed the validity of the questionnaire through a pilot test and consultations with experts:

Altered Excerpt: "To ensure the validity of the questionnaire, a pilot test was conducted with a group of randomly selected specialists, which helped identify and correct any ambiguities or difficulties in the questions. Additionally, consultation with experts in the field ensured that the questions were relevant and comprehensive in relation to the study's objective. The sample consisted of individuals with proven experience in the carbon market, encompassing a wide range of professionals from environmental NGOs, academics, government representatives, and private sector participants. The representativeness of each area in the survey participation was detailed in the results. The questionnaire was disseminated online via Google Forms, and data collection took place over a month, with reminders sent to increase the response rate."

And finally, we mentioned the construction of a detailed SWOT matrix after analyzing the responses:

Altered Excerpt: "After analysing the responses, a detailed SWOT matrix was constructed, which formed the basis for the strategic analysis."

We hope these changes meet your expectations and we are available for any further suggestions.

Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

I would like to thank the Authors for the implemented corrections and provided clarifications.

Please complement the Manuscript with additional references, as recent as possible.

Further, I suggest submitting the paper as a case study, considering its nature.

 

Author Response

REVIEWER 2

Comments and Suggestions for Authors

I would like to thank the Authors for the implemented corrections and provided clarifications.

Please complement the Manuscript with additional references, as recent as possible.

Further, I suggest submitting the paper as a case study, considering its nature.

Comments 1: The reviewer suggested that the manuscript be complemented with additional references.

Response 1: We appreciate the reviewer’s constructive suggestions. We made the following changes and additions to the manuscript:

1. Addition of Recent References:
• We added new relevant and recent references to strengthen the theoretical foundation of the manuscript. The new references include:
• LYU, C., & SCHOLTENS, B. Integration of the international carbon market: A time-varying analysis. Renewable and Sustainable Energy Reviews, 191, 114102, 2024. [104]
• LIANG, C., GOODELL, J.W., & LI, X. Impacts of the carbon market and climate policy uncertainties on financial and economic stability: Evidence from connectivity network analysis. Journal of International Financial Markets, Institutions and Money, 92, 101977, 2024. [106]
• WU, Y., LIU, X., & TANG, C. Carbon market and corporate financing behavior - From the perspective of constraints and demand. Economic and Political Analysis, 81, 873-889, 2024. [111]
• XIE, Q., et al. Carbon price prediction considering climate change: A text-based framework. Economic Analysis and Policy, 74, 382–401, 2022. [114]
• SEDDON, Nathalie et al. Understanding the value and limits of nature-based solutions to climate change and other global challenges. Philosophical Transactions of the Royal Society B: Biological Sciences, 375(1794), 20190120, 2020. [110]

Author Response File: Author Response.pdf