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Financing Ecologically Responsible Bamboo-Wood Production in Brazil With Ethereum Smart-Contracts

(Andre Silva - August, 2018)

Introduction

Background: there is a federal law in Brazil that establishes a national policy of incentive for bamboo cultivation and use. The law is from 2011, but it has never been regulated (i.e. practically implemented).

Bamboo is a thousand-uses material that has great potential for income generation and sustainability, but there is not an established internal market nor production chain.

There are some isolated initiatives to foster production in the country, and independent work done by a few remarkable individuals.

The idea is to use private micro-finance contracts (credit money) to enable production by small farmers and cooperatives.

The cost of production is relatively low. To plant one hectare (10.000 m2) one needs around $ 4,200.00 BRL or $ 1,146.51 EUR. (1 Brazilian Real [BRL] = 0.27 Euro [EUR], as of August 2018)

One hectare of adult (after 4-6 years) giant bamboo (genus Dendrocalamus or Guadua) yields around 1400 culms per year.

The material may be sold for around $ 10.00 BRL per linear meter. Adult giant bamboo culms reach around 15-30 meters. So there's a good potential return of investment for farmers.

The contract works like this:

Someone finances any amount to a farmer, and gets his/her money back after 7 years (84 months) with a 12% annual interest rate. After any amount of time the person may sell this contract to someone else to get her money back at the same rate, anytime. This is backed by a regular financial partnership contract in which an individual or organization lends money to a farmer or coop to plant bamboo.

This financial contract originates a token that is backed by bamboo, and whose value increases at a rate of 12% / year. The token has high potential liquidity, being convertible to legal tender currency at any time. Investors who buy the tokens are financing sustainable bamboo production.

Legal Context

[Brazil Bamboo Law] Lei 12.484/2011, "Política Nacional de Incentivo ao Manejo Sustentado e à Cultura do Bambu - PNMCB"

[Memorando Brasil-China] Memorandum of Understanding (MoU) signed in 2011 by the Brazilian Ministry of Science, Technology, Innovation and Communications (MCTIC) and China's Ministry of Science and Technology (MOST).

In 2011, the Ministry of Science, Technology, Innovation and Communications (MCTIC) signed a Memorandum of Understanding (MoU) with the Ministry of Science and Technology of China (MOST) to strengthen the bamboo production chain in Brazil.

MOU on bilateral scientific and technological cooperation in bamboo between the Ministry of Science and Technology, Federative Republic of Brazil, and Ministry of Science and Technology, P. R. China

Decreto Legislativo 141/2016. DOU 26/08/16

Bamboo as a Commodity

Bamboo is an extremely versatile plant, possessing various properties that make it a valuable commodity. Bamboo exhibits high mechanical strength, making it an ideal material for construction and engineering purposes. Its tensile strength is comparable to that of steel, allowing it to withstand significant loads and pressures. Bamboo's rapid growth rate and high cellulose content make it an excellent source of renewable energy. Its ability to generate biomass quickly ensures a steady supply of biofuels and bioenergy. Furthermore, bamboo showcases impressive carbon-capture capabilities. As it grows, bamboo efficiently absorbs carbon dioxide from the atmosphere. This makes bamboo an effective option for mitigating greenhouse gas emissions.

Given its properties, bamboo finds numerous applications in industry. In the construction industry, bamboo serves as a sustainable alternative to traditional materials. It can be used for structural elements such as beams, columns, and flooring, providing strength and durability to buildings. Bamboo's renewable energy potential is harnessed through the production of biofuels and biomass-based electricity generation, reducing dependence on fossil fuels and contributing to a greener energy mix. Additionally, bamboo-based products, such as furniture, textiles, and paper, have gained popularity due to their aesthetic appeal, durability, and eco-friendly nature. Bamboo's versatility also extends to erosion control, water purification, and landscaping applications, making it an essential resource for environmental conservation efforts. The adoption of bamboo as a commodity not only promotes sustainable practices but also fosters economic growth and innovation in various sectors.

Based on bamboo's properties and uses in industry, policies to facilitate or subsidize bamboo adoption serve to directly address the following UN Sustainable Development Goals (SDGs):

SDG 1:
End poverty in all its forms

SDG 7:
Provide affordable, sustainable and reliable modern energy services for all

SDG 11:
Access to adequate and affordable housing

SDG 12:
Efficient use of natural resources

SDG 13:
Address climate change

SDG 15:
Protect and restore terrestrial ecosystems.