Legal Reserve Requirements in Brazilian Forests: Path Dependent Evolution of De Facto Legislation

Why would a poor and largely pro-developmental country such as Brazil, that has so much of its territory covered in forest, adopt one of the most restrictive land use requirements in the world when it comes to cutting the forest to give way to other economic uses? We describe the evolution of legal reserve legislation in Brazil, which currently requires that 20% of the area in a property (80% in the Amazon) be left in forest or its native vegetation. This legislation was put into place in 1934 with the objective of assuring the supply of wood for fuel. Over time this objective has become irrelevant, but the legislation remained in place, though non-constraining, until the late 1980s when growing environmental concerns led to increasing levels of enforcement. We show how the path dependent nature of the legislation interacted with the changing de facto impact of the law to create a situation where environmental interests were able to ratchet up changes in the laws that could never have been achieved if the point of departure had been the complete absence of legislation.