Eco-Currency and Sustainability: A Case of the Atlantic Forest

Abstract

Deforestation in the tropical Atlantic Forest of Brazil has reduced native forest cover in the biome to ~22%. Research suggests that restoration to at least 30% of native forest cover is required to avoid a potentially catastrophic ecological collapse. This paper presents a policy recommendation for the restoration of native forest cover in the Atlantic Forest, through an eco-currency called the Marc (Mata Atlantica Restoration Currency) based on heterodox monetary theories of Chartalism and Modern Monetary Theory (MMT). The Marc eco-currency would be issued by the Brazilian government to landowners in the Atlantic Forest in compensation for restoring forest cover. The government would then impose taxes in Marcs corresponding to the amount of forest cover it wishes to restore, and once backed by taxes the Marc would function as a parallel currency. We show that compared to the Brazilian Real, the Marc eco-currency would lead to a greater incentive for landowners to restore forest cover because the Marc would be resistant to currency speculation and inflation. The Brazilian government can simply print Marcs as per the restoration requirements, without significantly reducing their value. Moreover, taxes imposed in Marcs can be used to achieve other social and ecological goals.

Keywords: Eco-currency, Modern Monetary Theory (MMT), Chartalism, Deforestation, Forest restoration, Taxation