[{"bbox": [119, 152, 1110, 207], "category": "Text", "text": "holding most of the land (including within protected areas), will be involved in the implementation to ensure\nsustainability and better compliance of existing rules and laws."}, {"bbox": [119, 217, 1110, 325], "category": "Text", "text": "As a result, this Action can set the scene for supply-side engagement strategies in views of the forthcoming\nEU Regulation on deforestation-free products and also make preparations for sustainable growth\nopportunities that will come along with the EU - Mercosur Association Agreement. The technical support\nenvisaged under this project can help Paraguay meet sustainability requirements."}, {"bbox": [119, 335, 1110, 444], "category": "Text", "text": "The duration of this Action will be five years and the budget EUR 12 million. It will be implemented through technical assistance (mainly to public authorities), grants to civil society organisations for the management of protected areas, and a contribution agreement with a pillar assessed entity (possibly an EU Member State Development Agency)."}, {"bbox": [109, 510, 323, 540], "category": "Section-header", "text": "## 2 RATIONALE"}, {"bbox": [109, 572, 252, 598], "category": "Section-header", "text": "### 2.1 Context"}, {"bbox": [119, 616, 1110, 936], "category": "Text", "text": "Since 2004, Paraguay has been characterised by sustained economic growth (4.4% average gross domestic product growth until 2019), which helped in reducing poverty and raising living standards. However, the level of inequality remains amongst the highest on the continent. Informality and poor diversification of the economy hamper sustainable and inclusive development. With a gross national income per capita of over USD 5700, Paraguay is today classified as an upper-middle-income country. The country features considerable endowment of natural resources, vast energy potential, ample fertile land and young population (50% of the population is under the age of 30). Economic growth has been consistently above the regional average, inflation has been under control⁸ and public debt stayed at a sustainable level (33.9% of GDP in January 2022). The financial sector is sound with well-capitalised banks. Growth has been based on extensive leveraging of the country's natural resources, particularly land and water. The good performance of the agricultural and livestock sectors explains the positive contribution of both commodities (soybean and beef) to growth."}, {"bbox": [119, 946, 1110, 1001], "category": "Text", "text": "However, since 2019 Paraguay has faced economic and social challenges, mainly due to weak performance of its main partners in the region, the COVID-19 pandemic and climate adversities."}, {"bbox": [119, 1011, 1110, 1147], "category": "Text", "text": "Agriculture, which is largely based on soybeans, beef, cotton and timber, contributes around 20% to Paraguay's GDP. The forestry sector in Paraguay also plays an important economic and environmental role. Forestry contributes 2.7% of total GDP while forest industries contribute about 2.2%. Of this, 26% was generated in primary forest activities, and 74% in wood processing - covering solid wood products and pulp, paper and board."}, {"bbox": [119, 1157, 1110, 1292], "category": "Text", "text": "The extraordinary success of agribusiness and agri-exports has been based on large-scale and unsustainable use of two renewable resources: water and land. The massive conversion of natural land into agricultural use causes deforestation and grassland transformation, precisely the fountain source of the second renewable resource, namely water for electricity production. The unsustainable consumption of both resources is explained below."}, {"bbox": [119, 1302, 1110, 1487], "category": "Text", "text": "Paraguay has five terrestrial ecoregions. The largest ecoregion is the Dry Chaco, which includes 17,269,795 ha in Western Paraguay. The second largest ecoregion is the Humid Chaco, with 12,856,674 ha in the centre of the country on both the east and west banks of the Paraguay River. The Upper Parana Atlantic Forest ecoregion occupies 8,661,796 ha, entirely located in Eastern Paraguay. The Pantanal ecoregion, with 187,778 ha, is on the border with Brazil and Bolivia along the Paraguay River and Rio Negro River while the Cerrado ecoregion, with 819,596 ha, is in the north of Eastern Paraguay, also along the border with the Brazilian state of Mato Grosso do Sul."}, {"bbox": [109, 1563, 1120, 1615], "category": "Footnote", "text": "⁸ In 2022 first quarter, rising food and imported fuel prices sent inflation soaring 11.8%, almost three times the central bank's 4% target and one of the highest in the region."}, {"bbox": [1013, 1680, 1121, 1705], "category": "Page-footer", "text": "Page 5 of 27"}]