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The Effect of Rural Credit on Deforestation: Evidence from the Brazilian Amazon

Author

Listed:
  • Juliano Assunção
  • Clarissa Gandour
  • Romero Rocha
  • Rudi Rocha

Abstract

In 2008, the Brazilian government made the concession of rural credit in the Amazon conditional upon stricter requirements as an attempt to curb forest clearings. This article studies the impact of this innovative policy on deforestation. Difference-in-differences estimations based on a panel of municipalities show that the policy change led to a substantial reduction in deforestation, mostly in municipalities where cattle ranching is the leading economic activity. The results suggest that the mechanism underlying these effects was a restriction in access to rural credit, one of the main support mechanisms for agricultural production in Brazil.

Suggested Citation

  • Juliano Assunção & Clarissa Gandour & Romero Rocha & Rudi Rocha, 2020. "The Effect of Rural Credit on Deforestation: Evidence from the Brazilian Amazon," The Economic Journal, Royal Economic Society, vol. 130(626), pages 290-330.
    • Handle: RePEc:oup:econjl:v:130:y:2020:i:626:p:290-330.
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    File URL: http://hdl.handle.net/10.1093/ej/uez060
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    Cited by:

    1. 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).
    2. Heß, Simon & Jaimovich, Dany & Schündeln, Matthias, 2021. "Environmental effects of development programs: Experimental evidence from West African dryland forests," Journal of Development Economics, Elsevier, vol. 153(C).
    3. Shinde, Nilesh N. & Do Valle, Stella Z. Schons & Maia, Alexandre Gori & Amacher, Gregory S., 2022. "Can an environmental policy contribute to the reduction of land conflict? Evidence from the Rural Environmental Registry (CAR) in the Brazilian Amazon," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322584, Agricultural and Applied Economics Association.
    4. Brandão, Frederico & Befani, Barbara & Soares-Filho, Jaílson & Rajão, Raoni & Garcia, Edenise, 2023. "How to halt deforestation in the Amazon? A Bayesian process-tracing approach," Land Use Policy, Elsevier, vol. 133(C).
    5. Mullan, Katrina & Caviglia-Harris, Jill L. & Sills, Erin O., 2021. "Sustainability of agricultural production following deforestation in the tropics: Evidence on the value of newly-deforested, long-deforested and forested land in the Brazilian Amazon," Land Use Policy, Elsevier, vol. 108(C).
    6. João Pedro Vieira & Ricardo Dahis & Juliano Assunção, 2023. "The Role of Sanctions and Spillovers in Forest Conservation," Monash Economics Working Papers 2023-16, Monash University, Department of Economics.
    7. 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.
    8. Albuquerque Sant'Anna, André & Costa, Lucas, 2021. "Environmental regulation and bail outs under weak state capacity: Deforestation in the Brazilian Amazon11The authors gratefully acknowledge Antonio Ambrózio, Juliano Assunção, Arthur Bragança, Filipe ," Ecological Economics, Elsevier, vol. 186(C).
    9. Bragança, Arthur & Dahis, Ricardo, 2022. "Cutting special interests by the roots: Evidence from the Brazilian Amazon," Journal of Public Economics, Elsevier, vol. 215(C).
    10. Rudi Rocha & André Sant’Anna, 2020. "Winds of Fire and Smoke: Air Pollution and Health in the Brazilian Amazon," Working Papers 07, Instituto de Estudos para Políticas de Saúde.
    11. Bhattacharjee, Arnab & Aravena, Claudia & Castillo, Natalia & Ehrlich, Marco & Taou, Nadia & Wagner, Thomas, 2022. "Agroforestry Programs in the Colombian Amazon: Selection, Treatment and Exposure Effects on Deforestation," National Institute of Economic and Social Research (NIESR) Discussion Papers 537, National Institute of Economic and Social Research.
    12. Magalhães de Oliveira, Gustavo & Sellare, Jorge & Cisneros, Elias, Börner, Jan & Börner, Jan, 2024. "Mind your language: Political signaling and deforestation in the Brazilian Amazon," Discussion Papers 333334, University of Bonn, Center for Development Research (ZEF).
    13. Araujo, Rafael & Borges, Bruna & Costa, Francisco J M & Santos, Kelly, 2024. "Seeds of Disparity: the Gender Land Divide from Brazil's Agricultural Transition," SocArXiv dk4bc, Center for Open Science.
    14. Thiago Fonseca Morello Ramalho da Silva & Paula Carvalho Pereda & Ana Carolina M. Pessoa & Liana O. Anderson, 2024. "Unveiling the Dynamic Impact of Protected Areas: An Event Study Analysis to Assess Conservation Effectiveness," Working Papers, Department of Economics 2024_02, University of São Paulo (FEA-USP).
    15. Vieira, João Pedro & Dahis, Ricardo & Assunção, Juliano, 2023. "From Deforestation to Reforestation: The Role of General Deterrence in Changing Farmers' Behavior," SocArXiv vqpkm, Center for Open Science.
    16. Suhyun Jung & Cecilie Dyngeland & Lisa Rausch & Laura Vang Rasmussen, 2022. "Brazilian Land Registry Impacts on Land Use Conversion," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(1), pages 340-363, January.
    17. Rocha, Rudi & Sant’Anna, André Albuquerque, 2022. "Winds of fire and smoke: Air pollution and health in the Brazilian Amazon," World Development, Elsevier, vol. 151(C).
    18. Chenet, Hugues & Kedward, Katie & Ryan-Collins, Josh & van Lerven, Frank, 2022. "Developing a precautionary approach to financial policy: from climate to biodiversity," LSE Research Online Documents on Economics 115535, London School of Economics and Political Science, LSE Library.
    19. Júlia Graziela da Silveira & Sílvio Nolasco de Oliveira Neto & Ana Carolina Barbosa do Canto & Fernanda Figueiredo Granja Dorilêo Leite & Fernanda Reis Cordeiro & Luís Tadeu Assad & Gabriela Cristina , 2022. "Land Use, Land Cover Change and Sustainable Intensification of Agriculture and Livestock in the Amazon and the Atlantic Forest in Brazil," Sustainability, MDPI, vol. 14(5), pages 1-23, February.
    20. Silva, Jonathan Gonçalves da & Almeida, Roselaine Bonfim de & Carvalho, Leandro Vinicios, 2023. "An economic analysis of a zero-deforestation policy in the Brazilian Amazon," Ecological Economics, Elsevier, vol. 203(C).
    21. Abman, Ryan & Lundberg, Clark, 2022. "Market Access and Deforestation," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322251, Agricultural and Applied Economics Association.
    22. Tateishi, Henrique Ryosuke & Bragagnolo, Cassiano & Almeida, Alexandre Nunes de, 2021. "Forest, agriculture and land conversion: Environmental efficiency in Brazilian Amazon rainforest," Forest Policy and Economics, Elsevier, vol. 133(C).

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