Environmental compensation in Brazil: up to 0.5% of the investment
Environmental compensation is the obligation of anyone licensing a project with significant environmental impact in Brazil to support protected areas. See what the SNUC Law says, how the amount is calculated, up to 0.5% of the investment, where the money goes, the other compensations in law and why, for most companies, the best path is to cut impact at the source.
By T&D Sustentável 8 min read
In this article · 8
- What is environmental compensation?
- Who has to pay environmental compensation?
- How is environmental compensation calculated?
- Where does the money from environmental compensation go?
- What other types of compensation does the law provide for?
- What does environmental compensation mean for your company?
- Frequently asked questions
- Sources
Environmental compensation is the obligation that Brazil’s National System of Conservation Units Law (Law No. 9,985/2000, the SNUC Law) imposes on anyone licensing a project with significant environmental impact, with an environmental impact study and report (EIA/RIMA): to support the establishment and upkeep of protected areas. The amount is calculated by the licensing authority and, in federal licences, can reach 0.5% of the project’s investment, depending on the degree of impact.
In short:
- Who pays: the developer of a project or activity with significant environmental impact, licensed with an EIA/RIMA, such as hydropower plants, highways, mining and large industries.
- How much: in federal licensing, CA = VR × GI: the reference value of the investment multiplied by a degree of impact that ranges from 0 to 0.5%.
- Where it goes: protected areas, first to land tenure regularisation, then to management plans, goods and services, studies and research.
- Other compensations: the law also provides for Legal Reserve compensation under the Forest Code and compensation for clearing Atlantic Forest, in the same river basin.
- For most companies, which do not go through an EIA/RIMA, the path is different: cut impact at the source, starting with water and effluent.
What is environmental compensation?
It is a mechanism to compensate society and nature for the negative impacts of a large project. Article 36 of the SNUC Law states that, in the licensing of projects with significant environmental impact, as considered by the environmental authority on the basis of the EIA/RIMA, the developer must support the establishment and upkeep of a protected area in the Full Protection group, such as national parks, biological reserves and ecological stations.
The regulation requires the calculation to consider only negative environmental impacts, each counted once. Compensation does not replace the mitigation measures required in licensing: they come first, to avoid and reduce impacts, and investment in them does not even enter the calculation base.
Who has to pay environmental compensation?
The developer whose project or activity was considered to have significant environmental impact and was licensed with an EIA/RIMA. In practice, these are large projects: hydropower and thermal power plants, highways, railways, ports, mining, dams and large industrial plants.
The licensing authority decides which protected areas will benefit, considering the proposals in the EIA/RIMA and hearing the developer, and may even include the creation of new protected areas. If the project affects a specific protected area or its buffer zone, that area must be among the beneficiaries, even if it is not in the Full Protection group, a rule worded by Law No. 15,190/2025. Since Law No. 13,668/2018, the obligation may also be met, in the public interest, in publicly owned Sustainable Use areas, especially in the Legal Amazon.
How is environmental compensation calculated?
By the degree of impact multiplied by the investment. The law originally set a floor of 0.5% of the project’s total costs; in 2008, Brazil’s Supreme Federal Court, in ADI 3,378, struck down that floor, and the amount came to depend on the impact. In 2009, Decree No. 6,848 added to Decree No. 4,340/2002 the formula used in federal licensing:
| Term | What it is |
|---|---|
| CA | Environmental compensation amount |
| VR, reference value | Sum of the investments needed to build the project, excluding investments in mitigation plans, projects and programmes required in licensing, financing charges and costs, and insurance |
| GI, degree of impact | Degree of impact on ecosystems, from 0 to 0.5%, calculated using the method in the decree’s annex |
| Formula | CA = VR × GI |
The EIA/RIMA must contain the information to calculate the degree of impact, and the developer submits the reference value data before the installation licence. In federal licensing, IBAMA, the federal environmental agency, does the calculation, an appeal can be filed within ten days and, once the amount is final, IBAMA decides where it goes, after hearing the Chico Mendes Institute. In state licensing, each state’s rules apply.
A detail that weighs on the amount: since mitigation investments are left out of the reference value, what the project invests to reduce impacts does not increase the compensation base.
Where does the money from environmental compensation go?
To protected areas, in an order of priority set in Article 33 of Decree No. 4,340/2002:
- Land tenure regularisation and demarcation.
- Preparing, revising or implementing the management plan.
- Acquiring goods and services for establishing, managing, monitoring and protecting the area, including its buffer zone.
- Studies for creating new protected areas.
- Research for managing the area and its buffer zone.
In private protected areas, such as Private Natural Heritage Reserves, the funds may be used only for the management plan and protection, research, environmental education programmes and feasibility studies for the sustainable use of the area’s natural resources.
What other types of compensation does the law provide for?
Three come up often and are easily confused:
| Compensation | Law | When it applies |
|---|---|---|
| SNUC environmental compensation | Law No. 9,985/2000, Article 36 | Projects with significant impact, with an EIA/RIMA |
| Legal Reserve compensation | Law No. 12,651/2012, the Forest Code, Article 66 | A rural property that, on 22 July 2008, had a Legal Reserve smaller than required; compensation is one of the options, alongside restoring or letting the vegetation regenerate |
| Compensation for clearing Atlantic Forest | Law No. 11,428/2006, Article 17 | Authorised clearing of primary or secondary vegetation at a medium or advanced stage: setting aside an equivalent area with the same characteristics, in the same river basin and, where possible, in the same micro-basin |
The Atlantic Forest rule shows the basin logic: what is taken from one place has to return to the same river basin, because that is where the forest protects springs, rivers and water sources.
What does environmental compensation mean for your company?
For most companies, nothing directly: offices, shops, hotels, hospitals, schools and most industries do not go through an EIA/RIMA. But the logic applies to all of them. Compensating is the last resort; avoiding and reducing impact come first. And, in the case of water, reducing is measurable: less abstraction, less effluent and less energy for pumping and heating.
That is what sustainability reports ask for, as shown in ESG and water management, and what the 2030 Agenda targets ask for, as shown in 4 SDGs linked to saving water. The legal obligations linked to water, such as permits and effluent, are in water reuse and saving laws in Brazil.
T&D’s SEA 360º cuts impact at the source: it handles implementation, without building works, with a baseline under the IPMVP protocol, efficiency technology at points of use, electronic leak detection and repairs, and continues with ongoing management, with monthly efficiency and ESG impact reports. The ceiling observed in the full programme is a 70% reduction in consumption.
Frequently asked questions
What is environmental compensation in Brazil?
It is the obligation, set in Article 36 of Law No. 9,985/2000, of anyone licensing a project with significant environmental impact, with an EIA/RIMA, to support the establishment and upkeep of protected areas, to compensate for the project’s negative environmental impacts.
How is environmental compensation calculated?
In federal licensing, by the formula CA = VR × GI in Decree No. 4,340/2002: the reference value, which is the sum of the investments to build the project, excluding mitigation, financing and insurance, multiplied by the degree of impact, which ranges from 0 to 0.5%.
Who pays environmental compensation?
The developer of a project or activity considered by the licensing authority to have significant environmental impact, on the basis of the EIA/RIMA. These are generally large projects, such as hydropower plants, highways, mining and large industries.
Where does the money from environmental compensation go?
To protected areas, in the order of priority in Decree No. 4,340/2002: land tenure regularisation and demarcation, management plans, goods and services for management and protection, studies for new areas and research for management.
What is the difference between environmental compensation and mitigation?
A mitigation measure avoids or reduces an impact and is required in licensing. Environmental compensation is an additional obligation, calculated on the project’s negative impacts and met by supporting protected areas. Mitigation investments are left out of the compensation calculation base.
Sources
- Law No. 9,985 of 18 July 2000, Article 36, in Portuguese: environmental compensation under the SNUC, with the amendments of Laws No. 13,668/2018 and No. 15,190/2025 and the note on ADI 3,378
- Decree No. 4,340 of 22 August 2002, Articles 31 to 33, in Portuguese: degree of impact, the CA = VR × GI formula and priorities for use
- Law No. 12,651 of 25 May 2012, Article 66, in Portuguese: Legal Reserve compensation
- Law No. 11,428 of 22 December 2006, Article 17, in Portuguese: compensation for clearing Atlantic Forest vegetation
- T&D SEA 360º
