Plantação de milho ao lado de uma pastagem.

This paper studies the impact of technological change in agriculture on land use in Central Brazil from 1960 to 1985. It explores technological innovations that adapted soybeans to the region to estimate the effect of these innovations on land use. Following the technological innovations, municipalities more suitable for soybean cultivation experienced increases in cropland and decreases in native pastures. The rise in cropland was smaller than the decline in native pastures and, as a consequence, deforestation increased less in municipalities more suitable for soybean cultivation. Increases in fertilizer adoption and tractor use accompanied the changes in land use, suggesting that technological innovations induced substitution from investments in forest clearing for investments in agricultural intensification. These results are consistent with a model in which farmers are capital constrained and in which crop cultivation is more capital-intensive than cattle grazing.