Looking to spur reforestation and reduce imports of forest products, Brazil’s Environment Ministry plans to grant special loans for new or expanded tree plantations.

The program, to be launched in September, is a far cry from true reforestation, since it would involve single-species plantings of trees for eventual harvest. But some here believe the initiative could ease pressure on Brazil’s heavily cut native forests by creating an alternative source of wood products.

As the proposal stands now, the government would give states and municipalities low-cost credit lines to furnish small-scale private landowners with seedlings. Loans also would be made available to help existing tree plantation operators, such as pulp and fiberboard makers, increase planted acreage.

Several funding sources have been identified—among them, multilateral agencies, an international conservation program supported largely by industrial nations (PP-G7), and an existing levy on native-wood buyers in Brazil, usually small businesses, that do not sponsor tree planting programs.

Still, it’s not certain there will be funding to boost plantation acreage sufficiently, acknowledges Antonio do Prado, of Ibama, the Brazilian agency in charge of implementing environmental policy. Do Prado, Ibama’s director of renewable natural resources, says $150 million to $200 million annually would be needed.

Should the reforestation credits materialize, most of them will likely go to southern and southeastern Brazil, where generous rainfall and rich soil provide fertile ground for tree plantations. In the Amazon, poor soil conditions make tree-plantation operations difficult.

Raimundo Deusdara Filho, an Environment Ministry official developing the plan, says more tree farms would help the trade balance and reduce cutting in native forests.

Environmental officials have not calculated how much plantation forests will have to expand before these goals are met. But the Brazilian Silvaculture Society (SBS), a tree-plantation industry group helping to shape the program, has set a target.

The SBS says 0.8%, or 11 million acres of Brazil’s 1.36 billion acres of forests are plantations. The industry group estimates this acreage must increase by 5.4 million acres—to 16.4 million acres, or 1.2% of Brazil’s total—over the next 10 years or Brazil will risk becoming a net importer of wood products.

(Brazil’s forest-product exports currently amount to $3.5 billion a year, of which $2.2 billion come from planted forests, while wood imports are totaling $1 billion a year.)

In addition to working with SBS, environmental officials are consulting with NGO and university experts to develop the new program.

The Amazon program director of one such NGO, Roberto Smeraldi of the Brazilian chapter of Friends of the Earth, doesn’t support subsidized loans for forest-product companies.

Says Smeraldi: “These are lucrative firms which don’t need a huge injection of public money to finance new plantation forests.”

The loans with the best terms—long grace and maturity periods and lower-than-market interest rates—will go to states and municipalities. The funds will be earmarked for seedling purchases by small landowners who start plantations where native forest has been cut or where there is no tree cover.

Meanwhile, additional credits with less favorable but still better-than-market terms will be offered to plantation forestry businesses that use the money to expand their acreage.

Officials say the financing is justified. Small landowners have a hard time getting credit, they point out, and many plantation companies grow eucalyptus, which requires seven years to mature. (Eucalyptus accounts for 60% of plantation trees, pine varieties for 30% and other softwoods the remainder.)

Smeraldi of Friends of the Earth says that while it is too early to evaluate the reforestation program, “we think that, under certain conditions, plantation forests can contribute to alleviating pressures on natural forests.”

In Brazil, he says, illegal cutting occurs in over 80% of the natural forests; companies with licenses to cut in certain areas fell trees illegally in nearby national forests or indigenous areas.

Beneficiaries of the government reforestation credits will not be required to comply with sustainable forestry standards, such as those developed by the nonprofit Forest Stewardship Council (FSC), based in Oaxaca, Mexico.

Walter Suiter, executive secretary for the FSC’s Brazil office, says certification should nevertheless be taken into account in the distribution of reforestation credits.

“While the national reforestation program won’t demand FSC or equivalent certification to be eligible to get its funding, it should view such certification favorably because [it] opens new export markets and thus boost exports of goods from plantation forests.”