Breaking Erysichthon's curse: Unlocking economic growth while sparing forests in Brazil

Reminiscent of Erysichthon—condemned to an insatiable hunger that ultimately consumed him—economies may pursue higher income with a similar hunger, depleting the natural capital on which they depend without delivering gains sufficient to escape middle-income status and risking large and irreversible losses. This paper terms this pattern Erysichthon's Curse and examines how it manifests in Brazil. The analysis identifies a structural imbalance, marked by weak productivity growth in manufacturing and services, so that growth fails to generate broad-based income gains while continuing to place pressure on expansion into natural forests, particularly in the country's nine Amazonian states. To explore these dynamics, the paper uses a spatial computable general equilibrium model of Brazil with land-use change and greenhouse gas emissions. The results show that productivity gains in land-intensive sectors in the Amazonian states increase deforestation and emissions, with more nuanced effects at the national level. By contrast, productivity gains in manufacturing and services generate substantial, economy-wide increases in real wages, reduce land rents, curb deforestation, and lower net emissions. Breaking Erysichthon's Curse requires not less growth, but a rebalancing of growth toward patterns that sustain income gains without depleting natural capital. Productivity-enhancing policies can complement environmental and agricultural measures by reducing incentives for land conversion, enabling sustainable intensification, and supporting higher real wages through stronger productivity in urban sectors that are central to Brazil's largely urban population.