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Agricultural Productivity and Forest Conservation: Evidence from the Brazilian Amazon

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  • Nicolas Koch
  • Erasmus K H J zu Ermgassen
  • Johanna Wehkamp
  • Francisco J B Oliveira Filho
  • Gregor Schwerhoff

Abstract

A mix of public policy and market interventions in the mid-2000s led to historic reductions in deforestation in the Brazilian Amazon. The collateral impact of these forest conservation policies on agricultural production is still poorly understood, though evidence is sorely needed given the economic importance of agriculture in Brazil and many other forest-rich countries. We construct a ten-year panel dataset for agriculture and deforestation in the Brazilian Amazon (2004–2014), and use two complementary difference-in-difference strategies to estimate the causal effect of one of Brazil’s flagship anti-deforestation strategies, the Priority List (Municípios Prioritários), on agricultural production and productivity in three sectors: beef, dairy, and crop production. We find no evidence for trade-offs between agriculture and forest conservation. Rather, reductions in deforestation in priority municipalities were paired with increases in cattle production and productivity (cattle/hectare), consistent with a model where policy-induced decreases in the value of clearing new land cause credit-constrained farmers to shift investments from deforestation to capital investments in farming. The policy had no consistent effect on dairy or crop production. Our results suggest that in regions with large yield gaps and where technologies for increasing yields are readily available, efforts to constrain agricultural expansion through improved forest conservation policies may induce intensification.

Suggested Citation

  • Nicolas Koch & Erasmus K H J zu Ermgassen & Johanna Wehkamp & Francisco J B Oliveira Filho & Gregor Schwerhoff, 2019. "Agricultural Productivity and Forest Conservation: Evidence from the Brazilian Amazon," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(3), pages 919-940.
    • Handle: RePEc:oup:ajagec:v:101:y:2019:i:3:p:919-940.
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    Citations

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    Cited by:

    1. Mastrangelo, Joao Paulo S. & Gori Maia, Alexandre, 2021. "Impacts of land tenure security on deforestation: evidence for the Amazon rainforest," 2021 Annual Meeting, August 1-3, Austin, Texas 313918, Agricultural and Applied Economics Association.
    2. Laura Villalobos & Juan Robalino & Catalina Sandoval & Francisco Alpízar, 2023. "Local Effects of Payments for Ecosystem Services on Rural Poverty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(3), pages 753-774, March.
    3. Felipe Figueiredo Silva & Lilyan E. Fulginiti & Richard K. Perrin & Marcelo Jose Braga, 2022. "The increasing opportunity cost of sequestering CO2 in the Brazilian Amazon forest," Empirical Economics, Springer, vol. 62(2), pages 439-460, February.
    4. Benjamin T. Phalan, 2018. "What Have We Learned from the Land Sparing-sharing Model?," Sustainability, MDPI, vol. 10(6), pages 1-24, May.
    5. West, Thales A.P. & Fearnside, Philip M., 2021. "Brazil’s conservation reform and the reduction of deforestation in Amazonia," Land Use Policy, Elsevier, vol. 100(C).
    6. Stabile, Marcelo C.C. & Guimarães, André L. & Silva, Daniel S. & Ribeiro, Vivian & Macedo, Marcia N. & Coe, Michael T. & Pinto, Erika & Moutinho, Paulo & Alencar, Ane, 2020. "Solving Brazil's land use puzzle: Increasing production and slowing Amazon deforestation," Land Use Policy, Elsevier, vol. 91(C).
    7. Juliano Assunção & Robert McMillan & Joshua Murphy & Eduardo Souza-Rodrigues, 2019. "Optimal Environmental Targeting in the Amazon Rainforest," NBER Working Papers 25636, National Bureau of Economic Research, Inc.
    8. Sills, Erin & Pfaff, Alexander & Andrade, Luiza & Kirkpatrick, Justin & Dickson, Rebecca, 2020. "Investing in local capacity to respond to a federal environmental mandate: Forest & economic impacts of the Green Municipality Program in the Brazilian Amazon," World Development, Elsevier, vol. 129(C).
    9. Miranda, Javier & Börner, Jan, 2021. "Farm-Level Impacts of Shifts in Conservation Policy Regimes in Brazil’s Arc of Deforestation," 2021 Conference, August 17-31, 2021, Virtual 315225, International Association of Agricultural Economists.
    10. Isabelle Chort & Berk Öktem, 2023. "Agricultural shocks, coping policies and deforestation: evidence from the coffee leaf rust epidemic in mexico," Working Papers hal-03715600, HAL.
    11. Léa Crepin, 2022. "Do forest conservation policies undermine the soybean sector in the Brazilian Amazon? Evidence from the blacklisting of municipalities," Working Papers 2022.07, FAERE - French Association of Environmental and Resource Economists.
    12. Chandio, Rabail, 2022. "Conservation and Conflicts in the Amazon," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322465, Agricultural and Applied Economics Association.
    13. Palmer, Charles & Groom, Ben & Langton, Steve & Sileci, Lorenzo, 2022. "Biodiversity-food trade-offs when agricultural land is spared from production," LSE Research Online Documents on Economics 116614, London School of Economics and Political Science, LSE Library.
    14. Daniella Tiemi Sasaki Okida & Osmar Abílio de Carvalho Júnior & Osmar Luiz Ferreira de Carvalho & Roberto Arnaldo Trancoso Gomes & Renato Fontes Guimarães, 2021. "Relationship between Land Property Security and Brazilian Amazon Deforestation in the Mato Grosso State during the Period 2013–2018," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    15. Pan, An & Zhang, Wenna & Shi, Xunpeng & Dai, Ling, 2022. "Climate policy and low-carbon innovation: Evidence from low-carbon city pilots in China," Energy Economics, Elsevier, vol. 112(C).
    16. Ermgassen, Erasmus Klaus Helge Justus zu & Ayre, Ben & Godar, Javier & Bastos Lima, Mairon G. & Bauch, Simone & Garrett, Rachael & Green, Jonathan & Lathuillière, Michael J & Löfgren, Pernilla & MacFa, 2019. "Using supply chain data to monitor zero deforestation commitments: an assessment of progress in the Brazilian soy sector," AgriXiv xb3nk, Center for Open Science.
    17. Shang Xu & H. Allen Klaiber & Daniela A. Miteva, 2023. "Impacts of forest conservation on local agricultural labor supply: Evidence from the Indonesian forest moratorium," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 940-965, May.
    18. Juliano Assuncao & Robert McMillan & Joshua Murphy & Eduardo Souza-Rodrigues, 2019. "Optimal Environmental Targeting in the Amazon Rainforest," Working Papers tecipa-631, University of Toronto, Department of Economics.
    19. Dario Schulz & Jan Börner, 2023. "Innovation context and technology traits explain heterogeneity across studies of agricultural technology adoption: A meta‐analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(2), pages 570-590, June.
    20. Mastrangelo, João Paulo & Gori Maia, Alexandre, 2023. "Does land tenure security reduce deforestation? Evidence for the Brazilian Amazon," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334335, Agricultural Economics Society - AES.
    21. Queiroz, Pedro & Fulginiti, Lilyan & Perrin, Richard, 2021. "Induced Innovation in South American Agriculture: Deforestation and Directed Technical Change," 2021 Conference, August 17-31, 2021, Virtual 315416, International Association of Agricultural Economists.
    22. Pinillos, Daniel & Poccard-Chapuis, René & Bianchi, Felix J.J.A. & Corbeels, Marc & Timler, Carl J. & Tittonell, Pablo & R. Ballester, Maria Victoria & Schulte, Rogier P., 2021. "Landholders' perceptions on legal reserves and agricultural intensification: Diversity and implications for forest conservation in the eastern Brazilian Amazon," Forest Policy and Economics, Elsevier, vol. 129(C).
    23. Moffette, Fanny & Skidmore, Marin & Gibbs, Holly K., 2021. "Environmental policies that shape productivity: Evidence from cattle ranching in the Amazon," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).
    24. Gori Maia, Alexandre & Eusebio, Gabriela dos Santos & Fasiaben, Maria do Carmo Ramos & Moraes, Andre Steffens & Assad, Eduardo Delgado & Pugliero, Vanessa Silva, 2021. "The economic impacts of the diffusion of agroforestry in Brazil," Land Use Policy, Elsevier, vol. 108(C).

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