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Does Credit Affect Deforestation? Evidence from a Rural Credit Policy in the Brazilian Amazon

Does Credit Affect Deforestation? Evidence from a Rural Credit Policy in the Brazilian Amazon

January, 2013

Does Credit Affect Deforestation – Executive Summary – English(675.97kb)
Does Credit Affect Deforestation – Technical Paper – English(2.31MB)
Does Credit Affect Deforestation – Executive Summary – Portuguese(675.13kb)
Does Credit Affect Deforestation – Executive Summary – Bahasa(672.46kb)
Does Credit Affect Deforestation – Executive Summary – Spanish(674.82kb)

The deforestation rate in the Brazilian Amazon decreased sharply in the second half of the 2000s. A previous CPI study titled Deforestation Slowdown in the Legal Amazon: Prices or Policies? found that government conservation policies helped avoid approximately half of the deforestation that would have happened in the absence of such policies.

Does Credit Affect Deforestation? takes a closer look at one of these policies, Resolution 3,545, which placed conditions on farmers seeking rural credit concessions in the Brazilian Amazon Biome. Our analysis suggests that Resolution 3,545 helped curb deforestation in the Brazilian Amazon Biome. We estimate that the resolution prevented approximately BRL 2.9 billion (USD 1.4 billion) in loans from 2008 through 2011. This reduction in credit in turn prevented over 2,700 km2 of forest area from being cleared, which represents a 15% decrease in deforestation in the biome during the period.

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