LONG READ: How a decree created a REDD old mess in Brazil, and the new effort to fix it

The reporting for this story was conducted over several months by Quantum journalists Vinicius Maffei and Olivier Lejeune, and independent journalist Steve Zwick.

A podcast on the same topic was published on April 16 at https://bionic-planet.com/podcast-episode/098-the-case-of-the-tangled-titles

Quantum Commodity Intelligence – Lush with trees, sparse with people, and 10 times the size of England, albeit with 1/40th the population density, the northern Brazilian state of Pará is a gateway to the Amazon forest and a microcosm of all the threats to forests everywhere.

It's "a fast-changing region characterised by forests rich in valuable timber species, illegal logging, unclear land tenure laws, widespread land speculation, overall weak law enforcement and severe poverty," according to a 2013 conservation document.

"With these variables combined, the result cannot be other but the depredation of natural resources in the benefit of few," it concludes.

Tens of thousands of UN delegates will see this depredation first hand at the end of next year, when the state's capital, Belém, hosts year-end climate talks (COP 30).

If they went there now and braved the 16-hour ferry to the frontier city of Portel, they'd also see clusters of half-finished schools, derelict ranger stations, and resurgent deforestation where four private conservation initiatives have been put on ice.

One of those projects is the RMDLT Portel-Pará REDD Project, from which the 2013 project document comes.

That project, like the others now on ice, was created to slow deforestation in part by helping settlers clarify their rights to the land, but they've now been sidelined by the very tenure uncertainties they say they were created to rectify.

Until now, it looked like they'd remain frozen until a judge managed to untangle the competing claims, but that could take years.

This week, Quantum learned of efforts to broker a negotiated settlement that assuages local officials and passes muster with global standard setting bodies, but that is far from guaranteed.

Belém in the vortex

Belém city is a rapidly-growing hub that is fast becoming an eco-tourist destination for those wanting to explore the rich biodiversity of the Amazon.

With deforestation accounting for around 15% of global GHG emissions, stopping deforestation in the Amazon and in Brazil is widely seen by UN negotiators as a low-cost and rapid way to slow climate change.

Indeed, doing so has been a policy priority of newly-elected President Luiz Inácio Lula da Silva (Lula), who has overseen a one-third fall in logging rates in just over a year.

Despite this, logging remains uncontrollably high due to the advancement of the agricultural frontier and cattle ranching.

In this sense, Pará should be an investors paradise for those wanting to pile money into emission reduction (REDD), biodiversity-boosting projects who can then sell carbon and biodiversity credits to companies that wish to make a positive impact on the environment.

But it isn't, and there are many reasons why not.

Some involve a lack of demand for credits from corporate buyers over fears they do not actually cut emissions, while others involve low returns due to the low prices that such credits bring.

Such issues can be dismissed as temporary.

But more problematic for frontier investors, is that it's been hard to get such initiatives off the ground because of what they claim is low-level corruption by local officials.

The biggest wrench in the system now has hit landowners who say they're slowing deforestation by sharing their land with settlers under a long-term conservation and economic development agreements.

The wrench comes from a local official who says the land isn't theirs to share, and it's a claim that's enmeshed in edicts dating back to the days of Portuguese rule, fragmented record keeping, and differences between federal and state jurisdictions, not to mention current laws that create three different types of property – documentary, possessional, and concessional.

The first is land that's secured by a deed or a title; the second is land that you control by putting to good use within the parameters of the law (and the consent of the owners); and the third is property that's owned by the government but involves the right to farm, mine, or deforest granted to a private person or entity.

Then there are settlements, which can fall into the second category but are recognised by local governments.

Each type of property right carries different legal implications, levels of security, and requirements for acquisition and protection under Brazilian law.

The dormant beast

The specter of land tenure disputes has always haunted Brazilian land transactions, but it became manifest in the past year when US-based registry Verra, which administers the Verified Carbon Standard (VCS), suspended four prominent REDD+ projects managed by several developers in the state following a complaint by a public defender, while a fifth project is also on hold due to a separate inquiry.

Quantum has spent several months investigating the situation in Pará by talking to multiple developers, local officials, and lawyers with knowledge of the area.

The findings shed light on the difficulties of investing in nations with a weak rule of law, but where funds are desperately needed to scale if the world is to combat climate change.

They also raise several questions, such as:

• Should foreign entities be primary investors in large land transactions where carbon is the asset?
• Are local land laws robust enough to justify land-based projects such as those registering under the VCS?
• And are project-based REDD+ schemes worth the risk, or should they all be jurisdictional?

Frontier

The story starts 200 kilometres west of Belém to the territory of Portel, described by some as the global capital of REDD projects.

It is sparsely populated and right on the frontier of deforestation in the Amazon with around 10 active REDD projects.

Previously subjected to high rates of logging, forested land there is under threat from what carbon analyst agency Renoster says is industrial deforestation in the south and expanding indigenous populations in the north who cut trees for subsistence.

"You've got to understand, this territory of Portel is the last large private rainforest territory on the eastern Amazon, south of the river," said Michael Greene, a US developer with a deep knowledge of the area who has been involved in REDD+ projects in Pará for 16 years.

But out of the 10 or so projects currently under operation or consideration, almost half are under threat from accusations of landgrabs – allegations that developers say are politically motivated.

Indeed, project design documents show a common theme of slowing deforestation in part by helping settlers get their rights recognised and then working with them to manage land sustainably, with carbon proceeds eventually being divided among the settlers and owners to provide a bulwark against illegal loggers.

The strategy is contingent on the project developers having the right to manage the land.

Last year a local public official, public defender Andréia Macedo Barreto, questioned that right – or, more specifically, several land titles – in projects occupied by ribeirinhos, a traditional population who live near rivers, and fish and farm on a small scale.

In total, four VCS projects were hit by Barreto's action and were suspended by US-based registry Verra, including:

• RMDLT (VCS977) owned by small Canadian investors, led by Ron Dewhurst;
• Pacajai (VCS981) owned by UK-based developer ADPML, led by Kevin Tremain;
• Rio Anapu Pacajá (VCS2252) owned by Michael Greene's firm Agfor; and
• Ribeirinho (VCS2620) owned by the Union of Rural Producers of Portel, still in development at the time of the action and where Greene acted as a consultant.

The reason given for the suspension was that the projects overlap with public lands belonging to the state of Pará and are therefore not legitimate.

Speaking to Quantum, Barreto said the property documents did not have legal validity because they were a form of "land-grabbing" and did not comply with rules on consulting local communities.

Barreto said she sourced her complaint not from the indigenous and river communities, who mostly seem to support the projects, according to a reporter from Mongabay who visited the area, but from a report by the World Rainforest Movement (WRM) in late 2022 titled "Neocolonialism in the Amazon: REDD Projects in Portel, Brazil" that also focused on the four projects.

The WRM is funded primarily by European NGOs, including Olin gGmbH and the Heinrich Böll Foundation, which have funded efforts to oppose market-based efforts to slow deforestation.

WRM's 2022 annual report states that "opposing REDD, and supporting communities in their struggles against the imposition of REDD projects in their territories are among WRM's key activities."

That doesn't mean their tenure claims are wrong, and one would think such land-claim disputes could be resolved by examining land registries and titles to determine ownership.

But then one encounters the overlapping jurisdictions, multiple land categories, and fragmented databases.

These all mean there is a strong history of large landowners grabbing vast swathes of the Amazon for their own benefits.

As a forest carbon expert who knows the area well recently told Quantum: "You'll never be able to reach a conclusion" in land dispute cases in the area.

"Those lands have a lot of issues. More than 75% of the titles that we've looked at in Pará have problems," he said.

Smear

Greene, a US citizen, says his primary motivation is to preserve the forest and benefit local communities.

Yet he is a complex character, and his relationship with fellow project developers in Brazil is mixed at best.

He contends the action brought by Barreto was targeted at foreign investors and the projects he has been involved in are the subject of a smear campaign designed to hand over land rights to local businesses who are more likely to run the project for profit and not for the benefit of the community.

Greene told Quantum he has collected sufficient evidence to prove that a competing developer is seeking to discredit him to gain access to the area, but he has not yet provided that evidence.

Late last year, Greene's firm, Agfor, sued the WRM for defamation in a Brazilian court, asking for BRL50 million ($10 million) worth of reparations.

The case is pending.

"The WRM report only attacked four projects, of which three Brazil Agfor participates as a mere manager, consultant or proponent. These projects did not make a profit," he said.

"In most cases, REDD projects sold credits at a price of less than $1 per credit, resulting in financial losses."

He points out that Barreto is operating outside of her district. She's not the local public defender of Portel, but is situated more than 200 kilometres away in Castanhal, to the east of Belém.

For Greene, that warrants suspicion that the motives are political, but others contend that Barreto is a specialist in the type of lands that can be found in the area.

Spats aside, what happens in Portel holds important lessons for the rest of the Brazilian REDD+ market, which has boomed in recent years despite a severe downturn in prices since 2022.

And to understand it you need to go back 40-years.

Selling timber

The four Portel REDD projects on hold at Verra are all located on parcels that are either currently or were previously owned by one of the largest landowners in the state, a man named Jonas Morioka.

Morioka, the son of Japanese nationals, arrived in Brazil from Japan in the 1980s and started investing in various companies in the construction, mining and export-import sectors.

A medical doctor by training, he leveraged business and political connections in both Japan and Brazil to benefit from both Japan's economic boom in the 1980s and 1990s as well as Brazil's economic opening and re-democratisation over the same period.

A key sector he identified was timber, which led him to buy large land farms in Portel in 1990, a few years after the end of the military dictatorship in Brazil.

He started by exporting timber to Japan, China and some European nations.

"At the time, no one was talking about the Amazon, and the region had less international prominence than the Sahara Desert," he said.

"I never imagined that this region would be the target of international dispute or that it would be seen as a jewel for humanity."

Back then, land transactions could be laborious, but Morioka said he followed all the rules when buying his land, adding he purchased the land through a notary's office, had registrations and deeds, chain of titles and federal registration numbers, with the help of local lawyers.

The transactions, he said, were subject to an investigation - known as a correição in Portuguese - by a state body in Pará that found no irregularities with the transactions.

"In this process, indirectly all my properties were analysed and no errors were found," said Morioka.

"Subsequently, the same registry office went through another correction process. Again, indirectly, my properties were investigated by the Pará State Internal Affairs Department and no irregularities were found."

Political winds

Brazil is one of the most unequal countries on the planet, with many large properties in the hands of just a few individuals.

Morioka's purchase of land in the late 1980s and 1990s happened just as political winds started to change in the country following the fall of the military government and the adoption of a new constitution, which called for the expropriation "for the purpose of agrarian reform" of "rural property that is not performing its social function".

From the mid-1990's onwards, growing attempts were made to question the legality of large land plots, also called latifundios, supported by the emergence of a landless workers' movement, known as Movimento dos Trabalhadores Rurais Sem Terra (MST).

In 2002, Lula was elected as president for the first time on a platform to support the poor and in 2005, he committed to an increase in the pool of land available for redistribution following a deal with the MST.

Businessmen in the country labelled the MST a terrorist organisation at the time.

Around that time, Morioka started cooperating with Greene and other actors on two REDD projects on his land - VCS977 and VCS981 - in a bid to stop encroachment and wood cutting, he said.

In payment, Morioka transferred some of that land to Greene for those services.

Morioka says he was one of the first landowners in Brazil to conduct a survey of trees on his land when he attempted to set up a project with the Winrock Foundation in the 2000's.

"I went from being a big timber cutter to one of the first to seek preservation and economic means to make preservation viable," he said.

But things were getting complicated, legally.

All land is public land

In 2006, the Court of Justice of Pará ordered the blocking of properties across the state - including Morioka's land - amid suspicion of land-grabbing and historic document falsification at notary offices across the state.

The Inspector of Justice, Osmarina Onadir Sampaio, stated in her decision at the time that there were several municipalities in Pará whose amount of registered private properties vastly exceeded their territorial surface by a factor of two or more.

The decision blocked land titles from properties with more than 10,000 hectares registered between 1934 and 1964, more than 3,000 hectares if registration was done between 1964 and 1988, and 2,500 hectares for properties registered from 1988 onwards.

Sampaio justified her decision at the time as a measure to support the state's handling of the "grave land-ownership issue" arising from "land-grabbing of great proportions."

With the blockade, notary offices were prevented from authorising any modification to the land titles, effectively barring owners from selling the lands, but not from owning or using them.

The land block was meant to be temporary, and it would be reversed as long as owners could prove to the state's land agency - ITERPA - the official transfer of land from the state or federal governments.

But, instead of being temporary, it created a situation that has in effect lasted until today.

Greene said the 2006 ruling affected around 5,000 properties throughout the state worth millions of hectares, although he estimates Morioka and another large landowner in a different part of the state, in São Félix do Xingu, were the prime targets.

"The government ran out of land and they needed Morioka's land to do more settlement areas," he said.

"Subsequently, a private rainforest area in São Félix do Xingu is all cattle farms today. They really invaded. Morioka had the REDD projects, so they couldn't really do too much, and Morioka fought it," Greene said, adding other landowners were not so fortunate and their lands are now deforested.

At the time, judge José Torquato Araújo de Alencar accused Morioka of adding zeros to the size of his properties in order to gain lands from the public, an accusation Morioka has strongly denied.

"If the judge had requested certificates from the Portel Property Registry Office, it would have been clear that the areas of the properties remained the same as their original ones, no property was increased, no fraud was committed, no irregularities were committed," he said.

He said these allegations of land grabbing remain in place today.

According to records, Morioka's land was first registered in the name of Archangelo Poly Estate, before it was sold to a firm called Moura & Lopes in 1925, and then to Morioka in 1990.

In Brazil, all land is considered public until proven otherwise, as it was conquered by the Portuguese Crown during colonial times and transformed into national property following the country's independence unless it has been sold or donated by authorities to private owners.

Therefore, any person claiming to be the owner of a property must have documents proving that such land has been removed from public inventory.

After 2006, some landowners attempted to reverse the state judicial decision at the Federal Supreme Court, claiming the measure to be unconstitutional.

Nevertheless, the court ruled in favour of Pará, and many land titles remain officially blocked today.

Temporary

Greene insists the 2006 decision "did not take away land ownership", adding that several lawyers have reviewed the situation.

"Even the decree says it is provisional and administrative. It's just a block that basically said, 'We are blocking your title until you get your survey and register that survey with the government,'" Greene told Quantum.

"At no time it states the land is not usable and Morioka still has control over the territory."

Regardless, the public defender has argued that the developer should have asked for government approval before developing the scheme because of the presence of local ribeirihno communities in the area of the project.

And she contends that the local registry office failed to cancel Morioka's titles as it should have.

Michael Greene's Agfor, in a legal submission seen by Quantum, said "at the time the REDD project was developed, the areas covered by it were private and thus appeared in public records, and private documents still remain registered at the Portel-PA Property Registry Office."

Jonas Morioka says more than 2,000 families have now settled on the land, but that he has paid taxes on it and maintained the legal requirement to keep 80% of the land undeveloped.

He also points to laws giving private owners the right to challenge settlements recognised by local authorities, and says he will exercise that right if forced to.

"Interestingly, the settlements were only superimposed on the areas that had carbon credit projects," he said.

In a petition to Verra seen by Quantum, the Morioka legal team reiterated their claims to superior ownership even if the registration is blocked but said that, in recognition of a "social need" they were seeking "in an extrajudicial process a cooperation agreement, co-participation and co-ownership between the owner Jonas Morioka, the Settlers and with the approval of the representative bodies of the State of Pará (presumably ITERPA) so that in a common agreement we can extinguish the territorial and current dispute in a cooperative manner over the management and control of the areas already mentioned."

Such an arrangement would, essentially, codify the tenets of the original project descriptions, with ITERPA, the Moriokas, and local communities recognising each others' rights and codifying a share of proceeds, thereby reviving the projects and avoiding a lengthy court battle.

Morioka has said he could legally cut down the rainforest on his land, yet creating conservation projects on it has proved a lot more complex.

Meanwhile, public defender Barreto, who is specialised in land issues related to the country's agrarian reform, continues to argue that the issue goes back hundreds of years, to a gap in the transfer of land titles from the Portuguese crown to private hands in this part of Portel.

She has also not been shy about casting aspersions on Morioka.

"The real estate registrations attached to the case, with cancelled titles, by the Portel Single Registry Office is sufficient evidence of land grabbing practiced by the defendants... Jonas Morioka is a famous character involved in fraud," she stated a 2023 court report.

"The lands are public. They never stopped being public. Neither before or after 1990."

In a further twist to the story, in February, most of Jonas Morioka's titles have reportedly been registered once again at a different land titles registry office, adjacent to Portel, in Breves.

Verra review

Verra is currently reviewing all the evidence and has sent the Portel projects a list of questions that they must answer soon.

This week, in response to a lengthy legal opinion from the Moriokas' legal team and efforts to reach an extrajudicial agreement, they were given an additional 45 days to answer the questions.

Verra has come under fire but may be stuck between a rock and a hard place, although Morioka and his legal team dispute this.

Under its rules, Verra cannot issue credits that are in violation of local laws, and they have deferred to the local defender.

Legal analysts we've spoken with say that a public defender's job is to provide free legal support to people who request it, and that a complaint is not a judgement.

Most sources said Verra may choose to await further progress in the public defender's case before deciding on the carbon projects' future, but in the meantime, many of the schemes are bleeding money and have had to stop community activities.

Greene told Quantum deforestation in the Portel area has increased sharply since the suspensions as wood cutters have felt emboldened.

The developer has stopped construction at 10 schools after completing six units, while a further four planned facilities have not been started and are behind schedule because of a lack of funds.

"Everybody who was invading and trying to invade has used the suspension to cut and to stake their claim," he said.

In an odd twist of events, the public defender has even denied that the construction of new schools has taken place, despite media reports confirming their existence following a ground visit from reporters.

A reporter from Mongabay, working on a separate story independently, confirmed the presence of the schools.

There is a provision in the VCS rulebook that states that developers do not need to own the land on which they do a project, but rather exert control over it.

The clause was inserted in part to enable indigenous groups and traditional communities to create carbon projects on public lands, although Brazil is in the process of clarifying its legal framework for carbon projects on different types of lands.

In Brazil, a country with a vast interior where enforcement is hard, there is a fine balance between "land grabbing" and holding control of the land.

"The land control argument doesn't stand under Brazilian law," says a specialist of Verra's processes, who adds that many of the projects in Portel are "old ones and Verra was still learning at the time... they wouldn't accept nowadays projects with legal issues such as blocked or cancelled titles."

Last year, the newly-established federal government authorised REDD+ and reforestation projects on public lands under a system of concessions, which followed from a decree passed by former president Jair Bolsonaro in the dying days of his mandate.

Under the system, developers are allowed to create carbon projects on public lands, but they must pay state authorities a fee and must compensate local communities.

Last month, São Paulo-based project developer Future Carbon won the first two awards of a public concession in Amazonas state for forest conservation.

Other Amazonian states, most notably Pará, are considering similar tenders.

Meanwhile, several of the ribeirinho communities that are part of Michael Greene's Rio Anapu-Pacajá REDD+ project have decided to sue Verra and ask for BRL120 million ($24 million) in damages following the suspension, as reported by Quantum last week.

Michael Greene says he is not involved in the lawsuit and only heard about it after it was filed, and the judge has not yet agreed to hear the case.

Among other things, he is awaiting proof that the plaintiffs have the standing to file on the communities' behalf.

"These aren't just schools, they're like everything. They're the community centre, the cafeteria, the bathrooms, the showers, the teacher housing. And there's 10 of them half built, with the walls, chest high, already half built, just waiting to be finished," said Greene.

"And I have no doubt that when the communities heard me say that it wasn't going to happen because of the suspension that they had no choice but to basically make it happen."

Jari

Over in a different part of Pará state, another VCS project is on hold.

The Jari pulp and paper project was created in the 1970's, during Brazil's military dictatorship, by American shipping magnate Daniel Ludwig.

The goal was to produce vast amounts of pulp and paper from hundreds of thousands of purposefully grown trees spread over more than 600,000 hectares in the states of Pará and Amapá.

Ludwig, a secretive executive who only gave one interview to journalists in his entire life, even imported a pulp plant all the way from Japan into the Amazon at vast expense.

The project, however, struggled to produce much pulp and was eventually sold to Brazilian investors in 1982.

The plantations have persisted until now and over time have become important biodiversity hotspots, but they have been threatened by squatters and small farmers through agriculture and livestock activities, as well as infrastructure works.

In 2019, local developer Biofílica Ambipar registered the Jari Pará REDD+ scheme (VCS1811) under the VCS in partnership with Jari Celulose in order to preserve these areas.

But in March 2023, Verra suspended the project, also because of a conflict over land titles that appears closely related to the Portel cases.

Biofílica sent a timeline of events to Quantum that also mentions the 2006 land block in Pará and subsequent events as key factors.

"The Saracura Farm has been classified as a private area since 1856, having been acquired by the Jari Group in 1948," said Biofílica.

"The Jari Group has held possession of the Saracura Farm area for more than 70 years and, in 2014, the activities of the Jari Pará REDD+ Project began, one of the largest conservation projects in the Amazon."

A source said the Jari Group is in the process of resolving the land issues with ITERPA.

"We emphasise that the Jari Group holds possession of the area named Saracura Farm, which meets the requirement of "legal right to control and operate the activities of the project", meeting the land requirement to implement a carbon project by Verra," the developer also says.

"As also pointed out by a third-party auditor, the verification and validation (VVB) of the project, RINA, stated the documentation presented to the auditors is 'satisfactory' to demonstrate compliance with all Verra requirements."

Nevertheless, other sources claimed that the state's land issues run deep regardless of whether the government has an agenda behind the blockades.

Multiple project developers told Quantum that some regions in Pará are simply a no-go zone for them as they consider it "just a matter of time for problems with land titles to arise."

Meanwhile, a lawyer with experience in REDD+ projects in the Amazon, who did not wish to be named, told Quantum that some of the issues faced by the suspended projects are "classic cases" of land dispute in the region and should be a cautionary tale for those willing to invest in projects.

"If a judicial due diligence had been done prior to the project start... it would have been possible to verify that the land title was already suspended when the project started," said the lawyer about one of the projects named by Barreto on her accusation.

"The recommendation is to go deep into the analysis of judicial aspects of projects."

American in the Amazon

Michael Greene first arrived in Brazil in 2008, but he has returned to his home state of Michigan in the US over the last few years and says he is no longer interested in investing in new conservation projects because of low prices and alleged corruption in Brazil.

Zak Morioka, Jonas' son, said Greene was partly targetted because of his nationality.

"It's the perfect storyline to give to people: 'Hey, we have an American and he's trying to get by the city and buy everyone out,'" he said.

There is a rich history of US citizens either visiting or creating businesses in the Amazon.

In 1913-1914, former president Theodore Roosevelt and Brazilian explorer Cândido Rondon set up a pioneering expedition to follow the path of the Rio da Dúvida ("River of Doubt") - a tributary of the rio Aripuanã, itself a tributary of the Amazon - which was eventually renamed 'Rio Roosevelt'.

In the late 1920's, US car magnate Henry Ford tried to set up a massive rubber plantation on the east banks of the Tapajós river, in the state of Pará, which failed to take hold because of 'leaf blight', a pest that affects rubber trees, and other issues.

Daniel Ludwig followed in the 1970's and Morioka a decade later.

Several foreign carbon developers have told Quantum they are trying to keep a low profile for fear of being subject to the same treatment as Greene.

"Some developers are out to get Michael. He's a great guy when you know him, but he also rubs many people the wrong way," said a source at a large international firm.

"Fundamentally, he's done nothing wrong. The fact it's a public defender and not a local prosecutor handling the case tells you a lot."

Some observers, investors and politicians may mull the complexities and vagaries in setting up project-based REDD schemes in developing nations and try to mitigate them.

For others, Greene's story shows just how inappropriate the carbon market is for large-scale emission reduction projects.