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Deforestation Slowdown in the Brazilian Amazon: Prices or Policies?

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Published: March, 2012

Revised: March, 2015

Deforestation and biomass decay, in large part originating from the clearing of tropical forests, have contributed almost a fifth of global greenhouse gas emissions (IPCC, 2007). This raises concerns about the extent of forest clearings in the Amazon, the planet’s largest rainforest tract and a region that has long been the world’s most active agricultural frontier in terms of forest loss and CO2 emissions. In Brazil, the conversion of forest area and land use change has accounted for over 75% of the country’s total net CO2 emissions (MCT, 2010).

Yet, the pace of forest clearings in the Brazilian Amazon slowed down substantially during the second half of the 2000s, falling from a peak of 27,000 km2 in 2004 to 7,000 km2 in 2009. Figure 1 reveals two potential explanations for this deforestation slowdown. On the one hand, falling agricultural prices may have inhibited the clearing of forest areas for the expansion of farmland. On the other hand, conservation policies introduced after two policy turning points in 2004 and 2008 may have contributed to the curbing of deforestation. Indeed, Figure 1 shows that the adoption of policies following these turning points coincide with sharp subsequent decreases in the deforestation rate.

Identifying whether the deforestation slowdown was due to economic circumstances or resulted from conservation policies introduced during that period could provide critical input for policymakers in Brazil and in other countries. We assess the contribution of Brazil’s policies to decreased deforestation using regression techniques to disentangle the impacts of policies from those of other potential explanatory factors, such as agricultural prices and other possible drivers of deforestation.

Brazilian deforestation rates fell from 27,000 km2 in 2004 to 7,000 km2 at the end of the decade. Results indicate that the conservation policies associated with the policy turning points were effective at curbing Amazon deforestation, helping avoid an estimated 73,000 km2 of Amazon forest clearings from 2005 through 2009. This is equivalent to approximately 2.7 billion tons of stored CO2, which our estimates value at 13.2 billion US dollars.

This study was published in the Journal of Environment and Development Economics in 2015.