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The Environmental Impacts of Soybean Expansion and Infrastructure Development in Brazil’s Amazon Basin

Author

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  • Vera-Diaz, Maria del Carmen
  • Kaufmann, Robert K.
  • Nepstad, Daniel C.

Abstract

For decades, the development of transportation infrastructure in the Brazilian Amazon has been the government’s main social and economic development policy in the region. Reductions in transportation costs have not only opened the agricultural frontier to cattle ranching and logging but have also caused more than two-thirds of Amazonian deforestation. Currently, soybean cultivation is a new economic force demanding improvements to roads in the region. Profitable soybean crops have spread over the Mato Grosso’s cerrados and now head toward the core of the Amazon rain forest. One of the main constraints for soy expansion into the Amazon has been the poor condition of roads. In this study, we analyze the effect Amazon transportation infrastructure programs have on soybean expansion by lowering transport costs. The analysis is based on spatial estimates of transportation costs for the soybean sector, first using current road networks and then projecting changes based on the paving of the Cuiabá-Santarém road. Our results indicate that paving the Cuiabá-Santarém road would reduce transportation costs by an average of $10 per ton for farmers located in the northern part of Mato Grosso, by allowing producers to reroute soybean shipments to the Santarém port. Paving the road also would expand the area where growing soybeans is economically feasible by about 70 percent, from 120,000 to 205,000 km2. Most of this new area would be located in the state of Pará and is covered largely by forests. A Cost-Benefit analysis of the road project indicates that the investments in infrastructure would generate more than $180 million for soybean farmers over a period of twenty years. These benefits, however, ignore the project’s environmental impacts. If the destruction of ecological services and products provided by the existing forests is accounted for, then the Cuiabá-Santarém investment would generate a net loss of between $762 million and $1.9 billion. This result shows the importance of including the value of the natural capital in feasibility studies of infrastructure projects to reflect their real benefits to society as a whole.

Suggested Citation

  • Vera-Diaz, Maria del Carmen & Kaufmann, Robert K. & Nepstad, Daniel C., 2009. "The Environmental Impacts of Soybean Expansion and Infrastructure Development in Brazil’s Amazon Basin," Working Papers 179072, Tufts University, Global Development and Environment Institute.
    • Handle: RePEc:ags:tugdwp:179072
    DOI: 10.22004/ag.econ.179072
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    References listed on IDEAS

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    Cited by:

    1. Rada, Nicholas, 2013. "Assessing Brazil’s Cerrado agricultural miracle," Food Policy, Elsevier, vol. 38(C), pages 146-155.
    2. Daniel Furlan Amaral & Joaquim Bento de Souza Ferreira Filho, André Luis Squarize Chagas, Marcos Adami, 2020. "Expansion Of Soybean Farming Into Deforested Areas In The Amazon Biome In Mato Grosso, Parã And Rondã”Nia States: The Role Of Public Policies And The Soy Moratorium," Working Papers, Department of Economics 2020_12, University of São Paulo (FEA-USP).
    3. Rada, Nicholas E., 2013. "ASSESSING BRAZIL’s CERRADO AGRICULTURAL MIRACLE: AN UPDATE," Revista de Economia e Agronegócio / Brazilian Review of Economics and Agribusiness, Federal University of Vicosa, Department of Agricultural Economics, vol. 11(01), pages 1-38.

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