The Republic of Paraguay is a global leader in food security, sitting above Argentina, west of Brazil, and south of Bolivia. With less than 0.1% of global CO2 emissions, the South American nation is also one of the world’s largest natural carbon sinks.
It is seeking financial equity — to continue developing in equilibrium with the environment. To this end, Paraguay has 45 million hectares of land — bigger than Germany’s 35 million hectares — and has very little deforestation even though its economy is dependent on agriculture. The international community should, therefore, recognize the country’s gifts, compensating it for absorbing CO2 emissions released by wealthier nations.
“It’s time for the world to know,” Paraguay’s President Santiago Peña told a gathering of COP28 attendees in Dubai. “We are among the world’s top 10 beef exporters, whose quality is guaranteed by strict compliance with health protocols and feeding based on natural grass. Our CO2 emissions are the lowest in the Latin American region, representing only 0.10% of global emissions.”
He said 44% of the nation has forest cover, and 15% is under the protected wild areas regime. And soybeans dominate the country’s Eastern section, and is free of deforestation. It’s the world’s sixth largest producer of that crop.
Paraguay grew at a 4.8% annual rate this year. While it has rapidly expanded in recent years, about a fifth of its population remains poor.
The country generates most of its electricity using hydropower, exporting electricity to Argentina and Brazil. Paraguay’s state-owned utility, Administracion Nacional de Electricidad, controls the generation, distribution, and transmission system. Furthermore, hydropower can create a pure hydrogen fuel, increasing Paraguay’s potential as a green exporter of this emissions-free power source.
Paraguay is also a global leader in smart agriculture, which reduces the tension between food production and forest conservation. Simply, farmers do not remove large volumes of soil and thus, maintain its nutrients. When its agronomist grow food crops, they do so plant by plant, maintaining a green cover and avoiding wind and sun erosion.
The Sustainable Mission
The country is rich with natural habitats, national forests, and savannas, giving life support to wild species like jaguars, monkeys, armadillos, otters, and wild boars.
“In 2004, we promoted a zero-deforestation law in the country’s Western region,” Paraguay’s Environmental Minister Rolando Barros de Barreto told me at COP28. “Forests are a strategy to keep watersheds healthy. Moreover, there has been no economic impact, and the agricultural sector has maximized production and exports,” feeding 100 million people worldwide with soybeans, sugar, and beef.
Notably, the dictatorship of Alfredo Stroessner ruled the country for 35 years — from 1954 to 1989. He repressed free thinking with death squads, a dynamic that fueled rebellion and led to Stroesner’s overthrow. During those times, the agricultural and governmental interests displaced the indigenous population, which had thrived in the rainforest regions. The ruling party killed hundreds and tortured thousands more.
But the country created a national constitution in 1992, spearheaded by the executive, legislative, and judicial branches. It has lived up to its mission statement, resulting in a democracy, free from political persecution and much of the duplicity that had defined the dictatorship. Pena took office on August 15, 2023.
Pena, 45, graduated from Columbia University. He served on Paraguay’s Central Bank and is a former finance minister. Rainforest preservation is a top priority — a national asset that absorbs atmospheric CO2 and maintains watersheds.
Therefore, he says developing nations must compensate Paraguay, allowing it to keep up its low deforestation rates. Because its agricultural sector is crucial to the national economy and is at the mercy of climate change, it is more important than ever to get carbon financing.
“Paraguay has a great desire to grow, and the socioeconomic environment reflects this,” adds Minister Barros de Barreto.
“For years, the government created an attractive ecosystem for investments in general and sustainable investments in particular,” he adds. “Today, we see investments in biofuels, green hydrogen, and biomass, showing that we have the natural and human capital necessary to be profitable in sustainable businesses. Paraguay can contribute significantly to the fight against climate change.
Consider Apple‘s interest: It is committed to nature-based carbon removal projects in Paraguay and Brazil. It first launched the program in 2021 with Conservation International and Goldman Sachs with $200 million, although it is expanding that investment — one managed by HSBCHBA 0.0% Asset Management and Pollination.
The financing aims to restore 150,000 acres of sustainably certified working forests and protect 100,000 acres of native forests, grasslands, and wetlands.
Paraguay has worked its way through a complicated past, emerging with a democratic form of government and a solid commitment to rainforest preservation and the climate change cause. To fully develop, though, the country must have carbon financing — a tool that compensates it for keeping its trees standing while fostering its agro-economy and sustainable enterprises.