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Deforestation Slowdown in the Legal Amazon: Prices or Policies?

Deforestation Slowdown in the Legal Amazon: Prices or Policies?

March, 2012

Deforestation – Prices or Policies – Executive Summary – English(344.27kb)
Deforestation – Prices or Policies Working Paper(834.92kb)
Deforestacion – Precos ou Politicas – Sumario Executivo – Portuguese(425.23kb)
Deforestacion – Precios o Politicas – Sinopsis – Spanish(417.31kb)
Penebangan hutan di Amazon – Harga atau Kebijakan – Ringkasan Eksekutif – Bahasa(425.86kb)

Deforestation and biomass decay have accounted for approximately 17% 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. The region has long been the world’s most active agricultural frontier in terms of forest loss and CO2 emissions. In Brazil, the conversion of forest areas in the Amazon biome has contributed nearly half of the country’s total net CO2 emissions (MCT, 2010).

Identifying whether the deforestation slow-down 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 rates by using regression techniques to disentangle the impacts of the policies from those of other potential explanatory factors, such as agricultural price cycles and other possible drivers of deforestation.

Yet, the deforestation rate in the Brazilian Amazon experienced a substantial decrease during the second half of the 2000s, from a peak of 27,000 km2 in 2004 to 7,000 km2 in 2009. Two alternative explanations for this stand out. 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.

Our analysis shows that approximately half of the deforestation that was avoided in the Amazon in the 2005 through 2009 period can be attributed to conservation policies introduced in the second half of the 2000s.