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The Impacts of Palm Oil Expansion on Deforestation and Economic Activity in the Eastern Amazon

Author

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  • Pedro Henrique Batista de Barros

  • Ariaster Baumgratz Chimeli

Abstract

In recent years, the Brazilian government has designed policies to promote the palm oil industry and forest protection, limiting oil palm plantations to already degraded areas. As a consequence, oil palm crops have increased rapidly in the eastern Amazon region and contributed to a low-carbon energy transition. However, little is known about the effectiveness of these policies in avoiding oil palm-induced deforestation. This paper estimates the impact of oil palm plantations on deforestation and nightlight intensity, a proxy for less land-intensive economic activities that could contribute further to forest protection. We do so in two steps. First, we combined optical spectral bands from Landsat-8 and radar backscatter values from Sentinel-1 to produce a more accurate map of oil palm plantations with a random forest machine learning algorithm. Next, we used the maximum agro-climatically attainable palm oil yield from the Global Agro-Ecological Zoning (GAEZ) as an instrument for oil palm expansion between 2014 and 2020, and estimated the impact of the crop on deforestation and nightlights. Oil palms expanded mainly on pastures, but also contributed to deforestation. We do not find any evidence that the crop stimulates less land-intensive economic activities.

Suggested Citation

  • Pedro Henrique Batista de Barros & Ariaster Baumgratz Chimeli, 2024. "The Impacts of Palm Oil Expansion on Deforestation and Economic Activity in the Eastern Amazon," Working Papers, Department of Economics 2024_33, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2024wpecon33
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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