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Land Use and Transportation Costs in the Brazilian Amazon

  • Eustaquio Reis

    (IPEA)

  • Diana Weinhold

    (London School of Economics)

Transport infrastructure improvements are considered to be one of the most effective tools for stimulating economic activity; at the same time environmentalists have largely condemned most road building as being one of the greatest threats to tropical forests. In this paper we put forth some empirical evidence from the Brazilian Amazon that the relationship between roads and land clearing may be much more complex. In particular, we find that decreasing transport costs in areas that have established settlements is associated with lower rates of land clearing. Constructing roads into relatively pristine areas, however, has the expected effect of increasing agricultural land use and the rate of deforestation. Furthermore, our out of sample model evaluation exercises suggested that changes in land clearing tend to precede, rather than follow, changes in transport costs. Taken together our results suggest that intensifying road networks in settled areas of the Amazon region(as opposed to road building in virgin forest) may be a “win-win” strategy, both enhancing economic development and reducing environmental destruction.

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File URL: http://128.118.178.162/eps/urb/papers/0410/0410003.pdf
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Paper provided by EconWPA in its series Urban/Regional with number 0410003.

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Length: 32 pages
Date of creation: 05 Oct 2004
Date of revision:
Handle: RePEc:wpa:wuwpur:0410003
Note: Type of Document - pdf; pages: 32
Contact details of provider: Web page: http://128.118.178.162

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