Policy impact assessment revealed a remarkable finding about two decades of Paraguay’s forest laws: in the Eastern Region, deforestation fell even as the agricultural economy kept expanding. 

Forests cover 17.7 million hectares, roughly 45 per cent of Paraguay’s territory, and represent a strategic component for the country’s environmental, social, and economic development. In this context, Paraguay promoted for the first time an integrated evaluation of two of its main forest policies: the Zero Deforestation Law and the Forest Plantation Incentive regime.  

Paraguay’s third Nationally Determined Contribution (NDC 3.0), submitted in 2025, commits to expanding forest conservation and restoration. To ground those commitments in evidence, Paraguay conducted an assessment of two of its principal forest policies.

Assessing two key forest policies 

Two laws have defined Paraguay’s approach to forest policy for decades. The Zero Deforestation Law, first enacted in 2004 and extended through 2030, prohibits the conversion of native forest in the Eastern Region. The Forest Plantation Incentive, introduced in 2013, created a legal mechanism that separates land ownership from plantation rights, enabling long-term forestry investment. Both of these laws have shaped the country’s forest sector for years. However, until recently, their effectiveness has not been systematically evaluated.

Paraguay’s National Forestry Institute (INFONA) partnered with the Initiative for Climate Action Transparency (ICAT) through a tailored project implemented with technical support from the Greenhouse Gas Management Institute. Its objectives were twofold: to apply the ICAT Forest Methodology to assess the greenhouse gas impact of Paraguay’s two flagship forest policies, and to develop a monitoring and evaluation system that would allow these assessments to continue beyond the project itself. 

The ICAT methodology enables a comparison of emissions and removals under two scenarios, one with the policy in place and one without, and quantifying the difference attributable to the policy. For Paraguay, this meant drawing on the National Forest Monitoring System and the National Greenhouse Gas Inventory (1990-2021), keeping the analysis grounded in official, comparable national data.

Throughout the project, a broad range of stakeholders were engaged – from government agencies, agricultural associations, the forestry and timber industry, to indigenous institutions, and academia. Technical workshops and consultations brought these actors together to provide input on the project activities and discuss the results. The breadth of institutions represented throughout the project reflected the cross-sectoral nature of forest policy in Paraguay and the importance of building shared ownership of the results. 

Remarkable results of the assessment

The results of the assessment were striking. The Zero Deforestation Law avoided approximately 455 million tonnes of CO₂ emissions between 2005 and 2024. Without the Zero Deforestation Law, emissions from deforestation during that period would have been nearly twice as high.

In parallel, the forest plantation area grew from 204,631 hectares in 2022 to 339,866 in 2024, a 66 per cent expansion in two years, supporting nearly 5,900 direct industrial jobs. However, this growth cannot be fully attributed to the Law, as the project assumed that all forest plantations are under the Forest Plantation Incentive regime. Other variables may also have influenced this increase, such as the exponential growth of the forest industry in the region. 

Perhaps the most striking finding concerned the relationship between economic growth and deforestation. While Paraguay’s cattle herd and soy production grew throughout the assessment period, deforestation in the Eastern Region declined. Where the Zero Deforestation Law applies, agricultural growth and forest loss have moved apart. 

“Although Paraguay continued to grow in terms of cattle numbers and soybean crops, which are pillars of our economy, deforestation actually decreased. This gave us another perspective.” – Mabel Noguera, National ICAT Project Coordinator, INFONA

The data from this project pushes back on a familiar concern that climate-aligned forest policies inevitably constrain economic growth. In Paraguay’s Eastern Region, the evidence points the other way.

The assessment also identified areas for continued attention. Small-scale deforestation in plots under 20 hectares, often linked to vulnerable rural communities, has continued even under the law. Questions also remain about whether some deforestation pressure has shifted to the Western Chaco region, where the Zero Deforestation Law does not apply. Both of these nuances were flagged as priorities for future work.

From assessment to ongoing practice

One of the project’s most important outputs was a system built to support systematic assessments. As part of the ICAT project, Paraguay developed a monitoring and evaluation framework with two priority indicators: deforested area in the Eastern Region, and the number of early deforestation alerts attended to. A draft resolution is expected to formally institutionalize the system. This would enable evidence-based policy evaluation to become a continuous practice, equipping Paraguay with the tools to identify gaps, adjust course, and achieve progress over time.

“Evaluating policies contributes to institutional learning to make evidence-based decisions, and the participatory nature of the evaluation process improves the quality of the analysis.” – Mabel Noguera, National ICAT Project Coordinator, INFONA 

Contributing to Paraguay’s climate commitments

The assessment results could be incorporated into Paraguay’s second Biennial Transparency Report. In addition, the work directly supports tracking progress on NDC 3.0, particularly against targets related to forest conservation, restoration, and sustainable agroforestry systems. Beyond reporting, this evidence can provide the foundation for effective policy planning, implementation, and accountability.

Looking ahead, INFONA is exploring expanding the assessment efforts to obtain a complete picture of forest policy performance at the national level. As part of the project, a preliminary set of sustainable development indicators has been developed to guide future evaluations of how policies affect jobs, biodiversity, and the everyday lives of rural communities. Building on that foundation, future activities could draw on the ICAT Sustainable Development Methodology to assess these impacts. 

The interest generated by the project has extended beyond the forest sector. Other ministries and institutions in Paraguay, including those working on transport and energy, have indicated interest in applying the same approach to assess policies in their own sectors. What began as a forest-sector effort has the potential to grow into a broader practice of evidence-based policy evaluation across Paraguay’s economy.

Paraguay’s experience shows what becomes possible when countries have the tools and the data to assess their policies, providing institutions with both the confidence to defend them and the rigour to refine them.