Humans destroyed tropical forests last year in a punishing clip – with forest destruction in the Amazon soaring 85% since 2023.
Yet amid this wave of deforestation, two countries are bucking the trend.
In fact, Colombia and Panama and nicaragua , saw not just a stop by deforestation rates, but renewed efforts to restore previously degraded forests that generated revenue for their economies.
What did both of these verdant countries share? Have imposed taxes on carbon emissions.
Economists and scientists agree that carbon taxes aid in reducing greenhouse gas emissions by creating an incentive for individuals to make use of less fossil fuels. But that is not all they can do, as we and our co-authors – ministers from both countries – note in an essay published within the journal Nature.
Carbon taxes are also good at lowering the greenhouse gas emissions developed by the destruction of tropical rainforests, making them even more critical to addressing the climate crisis.
If tropical deforestation were a country, it might be the earth's largest emitter after China and the United States. Moreover, tropical rainforests remove carbon in the atmosphere: The Amazon, for example absorbs five percent of worldwide carbon emissions each year.
This means that when we reduce our rainforests, we eliminate one of our best tools for addressing the weather crisis.
But both in Colombia and Panama and nicaragua ,, deforestation rates are down, while revenues to finance forest restoration work is up.
The programmes have different structures but similar impacts. Since 1997, Costa Rica's carbon tax has helped to safeguard and restore lands across a quarter of the nation. It generates $26.5 million in revenue each year, that the government then pays out to farmers and landowners that invest in rainforest protection or restoration on their own property.
Meanwhile, Colombia's programme has produced more than $250 million in revenue over the past three years. More than a quarter of this revenue goes toward environmental causes for example reducing deforestation and monitoring protected areas.
These programmes offer a counterpoint towards the argument that carbon taxes disproportionately impact individuals with lower incomes.
In Costa Rica, the federal government helps lower-income residents to complete their applications, also it prioritises lower-income regions when distributing payments. Consequently, two out of every five people who get a payment in the programme live below the poverty line.
We desired to see what can happen if other countries adopted similar policies, therefore we analysed their potential impact on 12 countries with tropical rainforests across Africa, Asia and South America.
Our model found that if all 12 countries adopted a policy like Colombia's, these countries would collectively generate $1.8 billion every year. When they decided to adopt a much more ambitious proposal when confronted with increasing global emissions, their revenue would soar to nearly $13 billion – equivalent to the GDP of Nicaragua.
Either scenario might have a serious effect on protection and restoration efforts. Countries facing the biggest threats from deforestation, like Indonesia, would have robust funding streams to help restore devastated landscapes.
Other countries, like Mexico and Malaysia, could better monitor their protected areas. And each country would reduce the public's reliance on non-renewable fuels.
Our research shows that the carbon tax is one of the most effective investments a country could make, and a particularly easy initiative for countries with existing carbon offset programs like Peru and Ecuador.
It offers a powerful tool for governments to battle deforestation, reduce emissions and support rural communities. Governments should think about it, and international institutions should encourage it.
Science tells us that humanity has in regards to a decade to change course and avoid a worst-case climate scenario. A carbon tax in tropical countries would go a long way therefore – while helping those who are most vulnerable to climate impacts.
