Comparing market instruments for forest conservation in Brazil using farm-level census data

Almost 40 per cent of Brazil's native vegetation is located on over five million private properties. This study assesses the potential of agricultural land taxes and tradable forest certificates for conserving Brazil's fragmented native vegetation across commercial farms, using micro census data from 2006 and 2017. We explore the variability of optimal tax rates and market prices for forest certificates, revealing a supply-demand imbalance in the Amazon and high sensitivity of conservation outcomes to changes in farmland opportunity costs, especially in productive areas. Despite a more positively skewed distribution of opportunity costs by 2017, market outcomes remained unaffected. Notably, expanding the market to include the Amazon's agricultural frontier microregions could achieve 45 per cent of the conservation target. Our analysis underscores the interplay between market-based conservation mechanisms and regional agricultural economics, highlighting the need for tailored approaches to optimize conservation efforts.