Differential Land Efficiency and the Environmental Consequences of Agricultural Productivity Growth

Does improving agricultural productivity spare forests or accelerate their demise? We offer a new perspective on this debate by emphasizing the relative agricultural suitability of forest versus available vacant land for conversion. We develop a parsimonious framework in which land differs in agricultural efficiency across alternative expansion margins, showing that productivity gains translate into deforestation only when forests constitute the most cost-effective source of additional effective land. We test this prediction using a quasi-experimental design based on Tanzania’s National Agricultural Input Voucher Scheme (NAIVS), which promoted modern seed and fertilizer adoption. Combining high-resolution satellite data on forest loss with spatial data on soil nitrogen to proxy relative suitability, we find that the program increased deforestation only in villages where vacant land was substantially less productive than forest land. Our results highlight the central role of land quality heterogeneity in shaping the environmental consequences of agricultural productivity growth, offer a complementary explanation for land-sparing versus expansionary outcomes, and point to a role for directed agricultural innovation in mitigating deforestation without constraining productivity growth.