Policy Paper written for the Dutch Embassy in Colombia interested in supporting green business development programs in the Amazon region.

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Opportunities for the Colombian Amazon
POLICY PAPER by Anamaria Aristizabal, June 20091
The Colombian Amazon Policy Paper hopes to be a starting point for discussions with various stakeholders
regarding the post-conflict vision for the Colombian Amazon. The document is a work in progress. After giving
a very brief overview of the current situation and a case for action, this document hopes to provide a
preliminary picture of where the conversation is with respect to a vision for the Amazon, outline the most
striking opportunities in the realm of sustainable development, and propose steps forward.
The document aims to encourage the international community and Colombian society in general to take action
with respect to the Colombian Amazon. The time is ripe to join forces, uncover common agendas, and engage
a variety of stakeholders in creating a vision for the sustainable development of the region. The development
threats will be strong as the conflict starts to subside, leaving the Amazon subject to a variety of conflicting
interests. The Amazon has enormous potential to contribute to the solution of global scale problems, such as
climate change and biodiversity loss, for which the international community must advocate. There are new
market instruments and political will to make this happen. This Paper hopes to provide a few pointers in what
hopefully will be a large scale process that contributes to real solutions and commitments from various groups
and organizations on behalf of this unique biological and cultural ecosystem.
1. The value of the Colombian Amazon
Colombia has established its urban centers and development initiatives mainly in the Andean Region and the
Coast. Historically, this has framed people’s mind to disregard the rich resource that constitutes the Amazon.
As the Geo Amazonia report states, “there is a very minimal presence of the State in the Amazonian region
because it has always been considered an inhospitable region of low priority”. This is slowly changing, as the
general population realizes the enormous potential that this region holds.
The Colombian Amazon has a considerable size, over 47 million ha, corresponding to
41.7% of the Colombian territory, encompassing 10 departments, and 6.8% of the
total Amazon area. The Amazon has a rich biodiversity and cultural diversity, with
70% of animal and vegetable species of the world, and 62 indigenous cultures. The
region has a population of almost one million inhabitants, corresponding to 2% of the
national population. Of this group, 9% corresponds to indigenous populations and 3%
to afro-Colombians.
1
'This discussion document, though commissioned by the Embassy, does not necessarily reflect the Embassy's public or
political position. The Netherlands Embassy is a large scale donor in environmental policy, notably through budget
support for the Ministry of Environment, as well as additional programs and projects.
Figure 1: The Colombian Amazon (in green), covering 10 departments (Wikipedia).

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The Colombian Amazon has global importance. It has outstanding
potential to mitigate climate change, and to preserve biodiversity and
cultural diversity. As we can see in table 1 below, Colombia’s annual
deforestation rate of 942km2/year is relatively low in the region. Peru,
Bolivia, and overwhelmingly Brazil (by a factor of 10) face substantial
development pressures. According to the SINCHI institute, in 2001,
around 95% of the Colombian Amazon was considered natural or
minimally transformed. The coverage was distributed as follows: natural
forests 43,311,755 ha (90.75%); cultivated pasturelands 2,186,524 ha
(4.58%); natural grasslands 833,232 ha (1.75%); bodies of water 535,614
ha (1.12%); and the remaining area, with less than 1% is divided into
scrublands, secondary vegetation, annual or transitional crops,
heterogeneous agricultural areas, and urban areas. 2
The relatively small
deforestation rate is due to causes that we will explain below. This slow
deforestation rate positions the Colombian Amazon to be a premium
vehicle to address climate change.
The Colombian Amazon is unique in the world, due to the presence of a
number of instruments geared for conservation. In its territory, the
Amazon harbors 179 indigenous reserves, encompassing over 25 million
hectares, representing around 60% of the total Amazon area. The
importance of these is discussed in the side bar to the left.
The region also has 16 protected areas, occupying over 7 million hectares,
or 17.2% of the territory. Protected areas in Colombia have played a very
important role in conservation. The Yale Sustainability Index provides the
indicator of Effective Conservation, measuring the percentage of habitat
inside protected areas that is actually intact (as opposed to “paper
parks”). This indicator places Colombia second among the megadiverse
countries. Without a doubt, protected areas have been essential to fulfill their conservation role.
Among both modalities (which in some cases overlap), over 30 million Ha3
, that is 73.7% of the total Colombian
Amazon area is under some sort of protection. This was the notable result of a number of policies and laws
passed in the 70s and 80s to protect indigenous rights, and to assure the conservation of natural and cultural
resources. This circumstance is favorable for the connectivity of ecosystems and thus a more viable
2
OTCA, 2008
3
Foro Nacional Ambiental, 2008
“Indigenous territories form the
most important barrier to Amazon
deforestation. Indigenous land
occupies a much larger area than
the parks in the entire Amazon.
Conservationists may argue that
indigenous peoples will cease to
protect forests as their contacts
with a market society increase, but
Nepstad et al. (2006) found that
virtually all indigenous lands
substantially inhibit deforestation
up to 400 years after contact with
the national society. There was no
correlation between population
density in indigenous areas and the
inhibition of deforestation. In a
large part of the Amazon, forest
protection can be reconciled with
human habitation and sustainable
management – it would not
happen without the people. We
therefore recommend
strengthening protected area
management and the creation of
new protected areas ahead of the
agricultural frontier. Furthermore,
the rights of indigenous peoples
over their land should be
recognized and the capacity of
indigenous organizations to
manage their own territories
should be strengthened.”
-WWF 2009

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preservation of species, as well as the viability for a number of rich indigenous traditions and knowledge of the
natural world.4
Table 1: Comparative forested areas and deforestation rates5
COUNTRY
ACCUMULATE
DEFORESTED AREA
(km²) 2005
% TOTAL
DEFORESTED AREA
2005
ANNUAL
DEFORESTATION
(km²/year) 2000-
2005
BRAZIL 682.124 79,50% 22.513
PERÚ 69.713 8,20% 123
BOLIVIA 45.735 5,30% 2.247
COLOMBIA 29.302 3,4%, 942
VENEZUELA 12.776 1,50% 553
ECUADOR 8.540 1,00% 388
GUYANA 7.390 0,90% 210
SURINAM 2.086 0,20% 242
TOTAL 857.666 100% 27.218
The Colombian Amazon provides a host of additional environmental services, such as climate regulation,
hydrological stabilization, nutrient retention, fire protection, pollination, disease regulation, and timber, and
non timber forest products. These environmental features have global significance. As the Prince of Wales’
Rainforest Project Report claims, “Reducing tropical deforestation will be vital if the world is to avoid
catastrophic climate change and preserve important ecosystem functions. (…) Rainforests cool the planet,
regulate the water cycle and provide a home to countless species; it is right and essential that the world pays
for these services.”
Of prime importance is the role of the Amazon in regulating the climate and mitigating climate change. Given
the ecological properties of this biome, the Amazon has an established equilibrium among its forests, water,
and climate. The result of a high rate of evapo-transpiration, otherwise termed as “water recycling” results in a
cooling and stabilization of the regional climate. The same thing occurs at global scale. The Amazon is quoted
as “the largest air conditioner in the world”. It has enormous capacity for heat absorption, water retention and
rain, amounting to a water recycling rate between 20 and 50%.6
Additionally, the forests function as massive
storage sinks for carbon. All of the above, along with a large body of evidence explain the link between the
Amazon and global climate change. However, as much as the link can have a beneficial influence on the global
4
There is also the land use designation of forestry, which also holds the potential to contribute to conservation. (Andrade,
2008)
5
OTCA, 2008
6
Andrade, 2008

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climate, it can also have a detrimental one. Carbon stored can quickly be released in the atmosphere as a
result of deforestation or forest fires, and cooling effect can be overturned as the region threatens to turn into
a savannah or even suffer desertification processes after its delicate balance has been lost. 7
2. The urgency of envisioning the post-conflict Amazon
In spite of the conservation instruments in the country, the
Colombian Amazon is vulnerable to development pressures both
current and future. Currently, the Amazonian departments of
Putumayo, Caquetá, Nariño, Meta, Cauca, and Guaviare face the
most land use change and transformation of their forests. Cattle
ranching and agriculture are the prime target uses, due to
processes of spontaneous, -or non planned- colonization. In many
cases, most notably in Guaviare and Putumayo, this colonization is
associated to illicit crops such as coca and poppy.8
In addition to these current pressures, the most severe of them are still to come, opening up the departments
of Vaupes, Guainía and Amazon for deforestation (see map in figure 1)9
. There have been circumstantial
disincentives to develop the region. These disincentives are related to the multi-dimensional conflict that
afflicts the country and to the cultivation of illicit crops, which paradoxically and non-intentionally have helped
maintain relatively reduced rates of deforestation. On the one hand, it has kept investors from coming to the
region, because of the lack of government presence, the presence of illicit activities, and the perceived threat
of terrorist attacks. On the other hand, it has provided a profitable economic alternative that uses less land10
.
While one hectare of coca generates around $27 million pesos/year (around $11,000 USD)11
, a conventional
farming activities (agriculture and cattle raising) is of $123.765 pesos/year.12
Circumstances are bound to change. In an effort to bring the armed conflict to an end, Colombia is investing
considerably in strengthening the presence of the government in areas like the Amazonian departments of
Meta and Caquetá. Under its “Consolidation Plan”, the government has been testing a methodology to
increase the legitimacy and effectiveness of government presence through sequenced interventions involving
the military, the police, coca eradication programs, and strengthening of civil service delivery in justice,
education, health and infrastructure promoting the transition towards a licit economic development.
7
Andrade, 2008
8
Sinchi 2006
9
Data in map comes from Sinchi 2006
10
Juan Pablo Ruiz, Personal communication
11
UNODC, 2004
12
Figures: Ruiz, S et all, 2007. Note: This is not to say that illicit activities such as coca cultivation have not caused serious
damage at social and political levels.
“It is necessary to have a
strategic vision on the
exploitation of Amazonia,
which recognizes and values
the heterogeneity of its
natural, human and cultural
resources”
-ACTO, GeoAmazonia Report

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Figure 1: Colombian Amazonian departments by deforestation rate. (Data from Sinchi, 2006)
The day illicit activities are no longer viable, in order to obtain the same profit as coca, conventional farming
activities will need 219 times the amount of land used by coca. The need to generate similar levels of income
that coca cultivation can cause dramatic deforestation. Additionally, illicit crops have caused an artificial
economy attracting the presence of population, which without coca their presence in certain territories would
not be viable. Due to the remoteness and small size of the population, government presence in these areas
would be costly and unfeasible, unless new opportunities are available. We will talk about some of these
opportunities in the next section, which could provide sizable funding not only for conservation of the
rainforest, but for the social and economic development of the region.

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3. Opportunities on the table
Preventing deforestation is essential for maintaining safe levels of CO2
emissions. 17% of global CO2 emissions come from deforestation,
compared to 13% for transport sector. Indeed, as the latest McKinsey
& Company research has shown, on current trajectories, without
including the conservation of forests in the short-term, it will
effectively be impossible to achieve climate stability.13
Before, forests were not considered part of an attractive development
plan. Now, given the increased concern for climate change and
sustainability in general, there are markets and instruments that place
value in forests, making them a viable element in a development
strategy. These include the Clean Development Market (CDM) and
voluntary carbon markets, the possibility of a Reduced Deforestation
and Degradation – “Avoided Deforestation” (REDD) both as part of the
Kyoto Protocol post 2012 or a voluntary market, payment for
ecosystem services (PES)14
schemes, sustainable forest product
markets, including certified wood, and non timber forest products,
among others. According to recent valuations, this set of services
represent an approximate value of $426 -700 USD per hectare per
year, which for the entire Colombian Amazon under natural parks or
indigenous reserve regime (30 million ha), represents between 10 and
20 billion USD per year15
.
REDD is currently considered one of the highest potential instruments
to prevent forest loss. Under this scheme, governments and/ or
companies compensate developing countries for reducing emissions
related to forest loss and forest degradation, in post-2012 climate
regimes. During the 2007 climate conference in Bali, countries agreed
to start REDD pilot projects. There are other modalities under
implementation: certain countries have opted for non-Kyoto Protocol,
national level REDD-type payment schemes, as in the case of Costa
Rica, discussed below. There is also a project based REDD in
formulation by the Fondo para la Acción Ambiental y la Niñez, also
discussed below. Overall, REDD initiatives hold great promise, as
stated by the WWF-Netherlands report “Nepstad (2007b) states that
REDD-related financing has the potential to become the largest
13
http://www.rainforestsos.org/
14
For a simple definition of REDD and PES see side bar in the next page.
15
Beukering P et al, (2007) and Ruiz, S et all, 2007
Some helpful definitions
CDM: “Clean Development Mechanism
is an arrangement under the Kyoto
Protocol allowing industrialized
countries with a greenhouse gas
reduction commitment to invest in
projects that reduce emissions in
developing countries as an alternative
to more expensive emission reductions
in their own countries.” (Wikipedia)
REDD: “Reduced Emissions from
Deforestation or Degradation” often
referred to “Avoided Deforestation”
refers to commitments at national or
regional/project scale to reduce
deforestation rates with respect to an
agreed-upon baseline, for which there
is a corresponding payment from a
REDD Fund. While originally excluded
from the Kyoto Protocol, it is suspected
to be included in its successor”
(Wikipedia)
PES: “Payment for Environmental
Services” is a transaction between a
buyer and a seller of a well defined
environmental service. The most
common PES schemes are the carbon
markets (both voluntary or official-as
part of the Kyoto Protocol), wetlands
mitigation, and payments for water
services.

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financial flow into tropical forest conservation. According to this author, carbon finance at US$ 5 per ton or
less could tip the balance from non-sustainable use towards sustainable forest management over 96% of the
(…) Amazon.”
These PES and REDD incentives are already being considered in Colombia. A policy document, the CONPES,
was formulated in 2003 to encourage the PES business, mainly under CDM. Some results can already be seen,
with respect to forest-based CDM, PES, and REDD.
Under the CDM, there is a forestry project in validation phase, called Procuenca. The CDM market promises to
bring more business. The national level REDD roundtable is currently formulating a proposal to be submitted
to the Carbon Finance Unit of the World Bank, in charge of managing
funds donated for the purpose of a REDD system. The proposal and
associated studies are being done with funds from a small grant
received by selected countries who in turn are eligible, based on the
merits of their proposal, to $6 million USD seed money to establish a
national REDD program.
In parallel and independently, the Fondo para la Accion Ambiental y
la Niñez (FAAN) is currently in discussion with indigenous
communities in the Colombian Amazon regarding a REDD project to
cover at least 50,000 hectares, where the FAAN would provide
payment according to measured CO2 absorption and periodic
monitoring. The specifics of the payments and the duration of the
contract are currently under review.
Aside from CDM and REDD initiatives there is an emerging market for
PES. There are many examples of PES for water, which function well
at local level, where companies pay landowners for the watershed
services to provide clean water. There are also a number of examples
of PES for carbon, which fall under the voluntary carbon market. A
notable effort is being carried out by another environmental fund,
the Fondo Patrimonio Natural, which received US$6.8 million from
the Dutch cooperation to formulate and implement PES projects in
various regions, in particular indigenous reserves. In different regions
of the country PES projects are being tested. A more complete
national strategy for PES is under approval at this moment.
The vast majority of the voluntary carbon market transactions occurs “over the counter” and are not easily
monitored. However, there is currently a GEF project being formulated by the Colombian non profit Fundación
Natura which aims to create a Colombian Carbon Exchange Mechanism (CCEM)16
, which would consolidate all
CDM and voluntary carbon transactions under a national registry, approve and verify projects, and provide
additional services, such as technical assistance to entities for project formulation, incentives for companies to
16
This is not the oficial accronym, but it is used for practical purposes in this document.
“Killeen mentions that the largest
economic asset of Amazonia is its
carbon reserves, which are estimated
at a value of US$2,800 million, if it were
monetised at current market values.
For example, if the Amazonian
countries would accept to reduce
their rates of deforestation by 5% per
year for thirty years, this could qualify
as a reduction in greenhouse gases and
generate around US$6,500 million
annually during the life of the
agreement. Distributed on an equitable
basis among approximately 1,000
Amazonian municipalities, that amount
would be equivalent to nearly US$6.5
million per year
per community that could be duly
invested in health and education, which
are priority requirements for most of
these communities (Killeen and Da
Fonseca 2006). Although
this option of selling carbon services is
not yet totally developed and some of
the countries have reserves about
entering into this system, it is a good
opportunity for posting a referent for
the region’s potential value”
- ACTO, GeoAmazonia Report

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purchase credits, and conflict mediation in case of dispute. The CCEM aims to guarantee at least 10,000 ha of
avoided deforestation, 50,000-10,000 of tons of CO2 mitigated, and 20 companies committed to being carbon
neutral.
Supporting these initiatives, there is a promising policy tool, a CONPES for the Colombian Amazon, being
formulated. CONPES is a national level planning instrument. Its goal is to establish strategic guidelines for the
sustainable development of the Colombian Amazon region that 1) allow the formulation and implementation
of planning instruments, for the municipal, departmental, and regional levels, and 2) present management
alternatives for the region to confront the challenges it faces of great cultural and biological richness paired up
with preoccupying poverty levels and ecological vulnerability.
Specifically, the CONPES aims to strengthen institutional capacity to exercise better planning over the region.
Aside from providing environmental guidelines for the land use planning exercises, the resulting institutional
framework will coordinate with donors and funding mechanisms to channel funds for the region. Land use
planning and coordination of donors are key actions to generate large scale solutions for the Colombian
Amazon region.
In spite of these efforts, Colombia is lagging behind other countries who have achieved more impressive
results in this field to date. Costa Rica has been a global leader since 2005 when it implemented its PES
program, claiming 250,000 ha of forests under conservation payments. The country is currently scaling up its
efforts by structuring an additional $90 million dollar PES fund with GEF, World Bank, and national money,
coming from a national tax on gasoline. As Juan Pablo Ruiz points out, with a twinge of embarrassment, that “a
country 20 times smaller than ours has a PES program six times larger”17
.
Indonesia and Brazil are also playing a leadership role in the REDD arena. Indonesia’s government is finalizing a
draft on Kyoto based-REDD implementation guidelines. It will be a market-based mechanism, driven by
demand for certificates by developed nations. As for Brazil, in August 2008, the Brazilian Development Bank
created the Amazon Fund with a US$100 million donation grant from the Norwegian government. The
Brazilian government hopes to raise an additional $1 billion within a year and as much as $21 billion by 2021 to
strengthen the fund18
. Norway has already committed up to one billion dollars by 2015 provided Brazil meets
its targets for reducing deforestation19
. The Amazon Fund is set up to compensate projects that have
contributed to lowering deforestation levels. Contrary to the CDM markets, these payments occur ex-post,
that is, after the avoided deforestation has been measured and verified, with respect to an agreed upon
historical baseline. Instead of carbon credits, donors receive “Rainforest Diplomas”, which are non-tradable.
Brazil hopes the Amazon Fund will be a model to be replicated by a Global Deforestation Fund. The fund would
pool together the payments from industrialized nations to be then distributed to countries that can prove
improvements in reducing deforestation levels. The fund could benefit countries at two leves: 1. Countries that
are ready to start, and 2. Countries that need capacity building to be able to receive payments in the future.
The funds for capacity building could come from institutions like the World Bank and voluntary donors in
17
Ruiz, J.P, (2009)
18
Briand, X, (2008)
19
WWF, (2007)

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developed countries. The buyers in developed countries would not receive conventional carbon credits under
the arrangement. Instead they would be receive non-tradable "certificates".20
The Brazilian proposal is in line with research that claims that the carbon markets along will not address the
problem timely and at the appropriate scale. The 2008 Eliasch Review on financing global forests estimates
that US$17-33 billion must be invested annually to halve greenhouse gas emissions from deforestation by
2030. One scenario modeled suggests that the global carbon markets could supply around US$7 billion per
year to reduce deforestation by 2020. There is a gap of 11-19 billion per year. The suggestion is that the
funding come from governments, multilaterals and donors. An example is Norway’s Climate Change and
Forestry mechanism, which has an initial budget of US$2.5 billion for the next five years
The Prince of Wales also makes a strong case for deforestation prevention, led by the international
community. “An Emergency Package is needed to provide substantial funding to Rainforest Nations to help
them address the drivers of deforestation and embark on alternative economic development paths.” The
Prince proposes the creation of an Emergency Package where donors join forces and create a program for
Payments for Rainforest Nations. These payments would be structured under 5 year service agreements, with
clear performance targets. The scheme would work with full cooperation from rainforest nations, who would
define priorities to be funded by the package. Similarly to the Brazilian Amazon Fund, these priorities could
initially include capacity building and policy development activities that reverse the deforestation trajectory,
strengthening forest monitoring and enforcement systems, providing incentives to private individuals,
communities, and enterprises to sustainably manage existing forests, to plant new forests, to shift agriculture
to available non-forested land, and to increase and sustain yields on existing agricultural land, creating
Payment for Ecosystem Services (PES) schemes for landowners, and investing in general economic
development projects such as infrastructure, enterprise finance and education.21
All in all, it is clear that there are many new opportunities to further assess in terms of their effectiveness and
scalability in the Colombian Amazon context. At first glance, these opportunities promise to provide a number
of income generating activities originating in ecosystem services that would benefit the local populations. At
the same time, these initiatives can help halt the receding agrarian frontier, by providing real alternatives to
conventional farming practices that lead to deforestation, in protected areas among others. These activities
have been monetized and summarized in the table below. As mentioned earlier, the research points out that
the bundling of these services could amount to $426 -700 USD per hectare per year, which multiplied by the
possible number of forested hectares signifies the extraordinary amount of 10-20 billion per year. The on the
ground implementation effectiveness of these PES and REDD schemes is still to be confirmed, but given the
increased global interest in the role of the Amazon in stabilizing the climate and providing needed
environmental services, the prospects are pretty good.
20
Mongabay.com, (2008)
21
http://www.rainforestsos.org/

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Table 2: Estimated economic value of selected Amazon ecosystem services. Source: WWF 2009
4. Conclusions and proposed next steps
Colombia’s Amazon is unique in many ways, given the level of preservation of its forests, in large part due to
the percentage of land under protected area or indigenous reserves regime, and paradoxically, given the
conflict, which serves as a development disincentive. These circumstances result in connectivity of ecosystems
and one of the lowest deforestation rates in the region. The international community has a keen interest in the
fate of the Amazon. Given the imminent threats of climate change and massive species extinctions, the
preservation of rainforests is of primary global importance. There are compelling new opportunities and
strategies to fund conservation, due to the keen interest of donors to preserve rainforests as an essential
climate change mitigation strategy.
There is also the availability of new market instruments aiming for the same, such as REDD, official or
voluntary carbon markets (including CDM), and PES that deserve further study and projects to assess its real
potential. These instruments illustrate a new paradigm in solving climate change and preserving rainforests
like the Amazon. What these have in common is to use the force of markets to provide suitable solutions,
given that the markets are starting to put real value in dollars to what the Amazon can contribute to the world.
In addition, there is the clarity that small or even decently sized initiatives will not amount to what it is needed

11. 11 | P a g e
to halt the enormous threat of deforestation and the resulting warming of the planet. To work, these
initiatives will have to come with capacity building for the implementing communities and supporting
institutions.
Given the magnitude of the challenge and the attractiveness of the opportunities to promote and implement a
vision of a sustainable Colombian Amazon, it is necessary to coordinate actions amongst different donors. A
strategy for action22
could include creating an Amazon Donor Roundtable (ADR) to pool together resources
from the international community for the benefit of the Colombian Amazon, similarly to what is proposed by
the Prince of Wales and what is being done in Brazil. The ADR would be composed of selected multilateral,
bilateral, and philanthropic actors interested in the Amazon. This ADR could facilitate and support discussions
amongst the relevant stakeholders in the region, for a more comprehensive pooling of knowledge and
information of the Amazon, the uncovering of common agendas, and the creation of a concerted vision for a
post-conflict Amazonia. As this process unfolds, the ADR will develop a strategy based on the inputs of the
consultations and the prioritization of the most high-impact actions, and provide funding to support the
emerging vision.
22
To see a proposed Action Plan, visit Annex 1.

12. 12 | P a g e
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