Patterns of frontier development: a dynamic model of resource extraction in the Brazilian Amazon

Developing countries are known to exploit their resource frontier to achieve growth objectives and reduce poverty. This can lead to long-term positive outcomes or – if resource exploitation is unsustainable – lose–lose outcomes that leave populations and ecosystems worse off. This paper introduces a dynamic model of resource exploitation to explain how regions may succumb to, avoid or escape this negative outcome. The theoretical model characterizes a frontier community that uses soil as an input into agricultural production. The model shows that there may be a critical point in the soil stock that determines whether agricultural activities lead to sustainable development or a collapse in local income. This suggests that, in the event of a resource collapse, temporary adjustments to the system may permanently rehabilitate the resource base and change a community's development pattern. Calibration of the model to several frontier states of the Brazilian Amazon points toward an overall outcome of steady development.