IDEAS home Printed from https://ideas.repec.org/p/spa/wpaper/2024wpecon33.html

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.repec.eae.fea.usp.br/documentos/Barros_Chimeli_33WP.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Abman, Ryan & Lundberg, Clark, 2024. "Contracting, market access and deforestation," Journal of Development Economics, Elsevier, vol. 168(C).
    2. Cisneros, Elías & Kis-Katos, Krisztina & Nuryartono, Nunung, 2021. "Palm oil and the politics of deforestation in Indonesia," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    3. Jennifer Alix-García & Daniel L. Millimet, 2023. "Remotely Incorrect? Accounting for Nonclassical Measurement Error in Satellite Data on Deforestation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(5), pages 1335-1367.
    4. Krishna, Vijesh V. & Kubitza, Christoph, 2021. "Impact of oil palm expansion on the provision of private and community goods in rural Indonesia," Ecological Economics, Elsevier, vol. 179(C).
    5. Cesar de Oliveira, Susan E.M. & Nakagawa, Louise & Lopes, Gabriela Russo & Visentin, Jaqueline C. & Couto, Matheus & Silva, Daniel E. & d'Albertas, Francisco & Pavani, Bruna F. & Loyola, Rafael & West, 2024. "The European Union and United Kingdom's deforestation-free supply chains regulations: Implications for Brazil," Ecological Economics, Elsevier, vol. 217(C).
    6. Brandão, Frederico & Schoneveld, George & Pacheco, Pablo & Vieira, Ima & Piraux, Marc & Mota, Dalva, 2021. "The challenge of reconciling conservation and development in the tropics: Lessons from Brazil’s oil palm governance model," World Development, Elsevier, vol. 139(C).
    7. Robin Burgess & Matthew Hansen & Benjamin A. Olken & Peter Potapov & Stefanie Sieber, 2012. "The Political Economy of Deforestation in the Tropics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1707-1754.
    8. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    9. Kenneth M. Chomitz & Timothy S. Thomas, 2003. "Determinants of Land Use in Amazônia: A Fine-Scale Spatial Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1016-1028.
    10. Kubitza, Christoph & Gehrke, Esther, 2018. "Why does a labor-saving technology decrease fertility rates? Evidence from the oil palm boom in Indonesia," EFForTS Discussion Paper Series 22, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    11. Sebastian Kraus & Robert Heilmayr & Nicolas Koch, 2024. "Spillovers to Manufacturing Plants from Multimillion Dollar Plantations: Evidence from the Indonesian Palm Oil Boom," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 11(3), pages 613-656.
    12. Monteiro de Carvalho, Carolina & Silveira, Semida & Rovere, Emilio Lèbre La & Iwama, Allan Yu, 2015. "Deforested and degraded land available for the expansion of palm oil for biodiesel in the state of Pará in the Brazilian Amazon," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 867-876.
    13. Ferreira, Susane Cristini Gomes & Azevedo-Ramos, Claudia & Farias, Hilder André Bezerra & Mota, Pedro, 2023. "Spillover effect of the oil palm boom on the growth of surrounding towns in the eastern Amazon," Land Use Policy, Elsevier, vol. 133(C).
    14. Frederico Brandão & George Schoneveld & Pablo Pacheco & Ima Vieira & Marc Piraux & Dalva Mota, 2021. "The challenge of reconciling conservation and development in the tropics: Lessons from Brazil's oil palm governance model," Post-Print hal-05177029, HAL.
    15. Andrew D. Foster & Mark R. Rosenzweig, 2003. "Economic Growth and the Rise of Forests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 601-637.
    16. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Pata, Ugur Korkut & Karlilar Pata, Selin & Nathaniel, Solomon Prince, 2026. "Forest protection, EKC and LCC dynamics in the world's largest forest nations," Forest Policy and Economics, Elsevier, vol. 188(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pereira, Leila & Pucci, Rafael & Soares, Rodrigo R., 2024. "Landing on Water: Air Interdiction, Drug-Trafficking Displacement, and Violence in the Brazilian Amazon," IZA Discussion Papers 17425, IZA Network @ LISER.
    2. Mukherjee, Abhiroop & Panayotov, George & Shon, Janghoon, 2021. "Eye in the sky: Private satellites and government macro data," Journal of Financial Economics, Elsevier, vol. 141(1), pages 234-254.
    3. Jack, B. Kelsey, 2017. "Environmental economics in developing countries: An introduction to the special issue," Journal of Environmental Economics and Management, Elsevier, vol. 86(C), pages 1-7.
    4. Lina O Anderson & Samantha De Martino & Torfinn Harding & Karlygash Kuralbayeva & Andre Lima, 2016. "The Effects of Land Use Regulation on Deforestation:," OxCarre Working Papers 172, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    5. Pedro Acioly Teixeira & Marcio Issao Nakane, 2025. "Second Leg Home Advantage: A study on the Brazilian soccer cup," Working Papers, Department of Economics 2025_02, University of São Paulo (FEA-USP), revised 24 Mar 2025.
    6. Barros, Pedro Henrique Batista de & Chimeli, Ariaster Baumgratz, 2025. "Can economic development and forest conservation coexist? Revisiting growth and deforestation in the Brazilian Amazon," World Development, Elsevier, vol. 195(C).
    7. Valentin Guye, 2025. "Indirect Land use Change Mechanisms: Tests from Biofuel Mandates and Pantropical Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(12), pages 3329-3365, December.
    8. He, Guojun & Xie, Yang & Zhang, Bing, 2020. "Expressways, GDP, and the environment: The case of China," Journal of Development Economics, Elsevier, vol. 145(C).
    9. Michler, Jeffrey D. & Al Rafi, Dewan Abdullah & Giezendanner, Jonathan & Josephson, Anna & Pede, Valerien O. & Tellman, Elizabeth, 2026. "Impact evaluations in data-scarce environments: The case of stress-tolerant rice varieties in Bangladesh," Journal of Development Economics, Elsevier, vol. 179(C).
    10. repec:osf:socarx:6y7vk_v1 is not listed on IDEAS
    11. Costa, Francisco & Szerman, Dimitri & Assunção, Juliano, 2025. "The environmental costs of political interference: Evidence from power plants in the Amazon," Journal of Public Economics, Elsevier, vol. 242(C).
    12. Patrick Lehnert & Michael Niederberger & Uschi Backes-Gellner & Eric Bettinger, 2020. "Proxying Economic Activity with Daytime Satellite Imagery: Filling Data Gaps Across Time and Space," Economics of Education Working Paper Series 0165, University of Zurich, Department of Business Administration (IBW), revised Sep 2022.
    13. Yuan, Haishan, 2025. "Fishing bans in Chinese waters: Effectiveness and spillovers," Journal of Environmental Economics and Management, Elsevier, vol. 133(C).
    14. Muradian, Roldan & May, Peter, 2026. "Innovations and Dilemmas in Global Forest Governance - The Tortuous Pathway toward a Deforestation-free World: Introduction to the Special Issue," Ecological Economics, Elsevier, vol. 241(C).
    15. Julio A. Berdegué & Tatiana Hiller & Juan Mauricio Ramírez & Santiago Satizábal & Isidro Soloaga & Juan Soto & Miguel Uribe & Olga Vargas, 2019. "Delineating functional territories from outer space," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-24, December.
    16. Abhiroop Mukherjee & George Panayotov & Janghoon Shon, 2019. "Eye in the sky: private satellites and government macro data," HKUST IEMS Working Paper Series 2019-68, HKUST Institute for Emerging Market Studies, revised Oct 2019.
    17. Shreya Biswas & Upasak Das & Sandhya Garg, 2024. "Growing with greener pastures: Examining the role of graduate politicians on forest cover in India," IEG Working Papers 463, Institute of Economic Growth.
    18. Harding, Torfinn & Herzberg, Julika & Kuralbayeva, Karlygash, 2021. "Commodity prices and robust environmental regulation: Evidence from deforestation in Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    19. Eduardo Souza-Rodrigues & Adrian L. Torchiana & Ted Rosenbaum & Paul T. Scott, 2020. "Improving Estimates of Transitions from Satellite Data: A Hidden Markov Model Approach," Working Papers tecipa-672, University of Toronto, Department of Economics.
    20. Jeffrey D. Michler & Anna Josephson & Elinor Benami & Patrick Behrer & Michael J. Cecil & Sydney Gourlay & Robert Heilmayr & Ella Kirchner & Gina Maskell & Kunwar Singh, 2026. "Treatment Geometry and Causal Identification with Earth Observation Data," Papers 2607.19908, arXiv.org.
    21. David Wuepper & Wyclife Agumba Oluoch & Hadi Hadi, 2025. "Satellite Data in Agricultural and Environmental Economics: Theory and Practice," Agricultural Economics, International Association of Agricultural Economists, vol. 56(3), pages 493-511, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spa:wpaper:2024wpecon33. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Pedro Garcia Duarte The email address of this maintainer does not seem to be valid anymore. Please ask Pedro Garcia Duarte to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/deuspbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.