Elements for a new architecture of the economy and the carbon market in Bolivia

Abstract

Bolivia faces a critical paradox: it has extensive forest coverage, yet its regulatory framework encourages deforestation by prioritizing agricultural expansion. In response, the economy and the carbon market emerge as strategic solutions to enhance the value of standing forests and attract climate investment. The proposal for a new national architecture is based on the separation of roles, preventing the State from being both judge and party. The central level should act as a regulator and international negotiator, while subnational levels (departments and municipalities) must manage the territory and receive performance-based incentives. This structure aims to promote territorial equity and international competitiveness, ensuring that financial benefits reach those who conserve ecosystems. A fundamental pillar is the social value of carbon, prioritizing projects that generate co-benefits such as green jobs and biodiversity protection. Furthermore, it is suggested that the State operate as a "wholesale buyer" to provide liquidity to small producers. Finally, the reform of Article 7 of Supreme Decree 24463 (RAU) is urgent. Currently, this framework imposes fiscal penalties on the sale of carbon credits by treating it as a commercial activity, which discourages conservation. Adjusting this regulation is essential for making forest protection financially viable and competitive against traditional deforestation.