The Dynamics Of Land-Use In Brazilian Amazon

This paper studies the dynamics of land-use in the Brazilian Amazon using a structural vector autoregressive (SVAR) model. The heterogeneity in the data is controlled by mean of fixed effect panel specification. Meanwhile, spatial autocorrelation is also diagnosed by a statistical methodology that allows to us to split the model in subsamples (clusters) of more homogenous municipalities in order to re-estimate the model on separate clusters. The clustering analysis shows that there are three clusters whose land-use patterns are strongly different in an economical point of view. The first cluster identifies the pioneer fronts; dedicated to logging, natural resources exploitation and slash-and-burn cultures, the second cluster have grown a more diversified agriculture while the third cluster presents most developed, intensive agriculture oriented municipalities. Another distinctive feature of this article pertains to the assessment of the contemporaneous causal order that exists among distinct land-uses. This permits to evaluate the succession dynamics that derive from unexpected innovations in the process of soil occupation by means of impulse response functions (IRFs). The IRFs applied for cluster 1 lead to the following results: (1) the new demand for cropping requires to clear new areas of forest. This extra cleared land will be transformed in pasture land or fallow in the long term. This process can be considered a necessary outcome of the slash-and-burn agriculture, a common practice in the Amazon; (2) Contrary to other studies we do not find evidence that cattle ranching is the primary driver of deforestation; (3) the impact of a shock of pasture land on itself is virtually null at the beginning but it augments substantially over time not requiring to clear extra areas of forest land but rather competing with crop land, and (4) it seems that if not for all the Amazon Basin, at least in this cluster, cattle ranching and cropping could be competitive activities.