The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon


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These transition probabilities are consistent with the well documented pattern of crop land often being left fallow after a few seasons owing to rapidly declining soil fertility. The sources and agents of deforestation 69 in particular to crop land 11 percent and to pasture 12 percent. Some care must be exercised before extrapolating these results into the future.

Most of those government incentives have now been repealed and property rights laws have evolved over time. Furthermore, the incentives for more intensive use of land close to settled areas and within easy reach of urban markets have increased substantially since the mids. With luck the Brazilian government will resume regular Agricultural Censuses and future analyses can document any changes in these land-use transition patterns.

While the land-use transition exercise is informative as a descriptive and, at this point, primarily historical device, it cannot tell us about the rate of clearing, nor does it provide any explanation of why particular patterns are observed. Thus, it is safer to talk about sources rather than causes of deforestation. The segregation of prime agents of deforestation in the Brazilian Amazon, as well as of their economic motivations and environmental consequences, are issues pervaded by controversy Mahar ; Myers ; Binswanger ; Almeida a; and Fearnside , among others.

Apart from insurmountable ideological and theoretical divergences, the settlement of disputes is impaired by the lack of empirical evidence 70 The Dynamics of Deforestation and Economic Growth on both deforestation and the related socio-economic processes and agents. Logging plays a small supporting role with growing importance in recent times. This chapter presents empirical evidence on the main sources of deforestation, as well as on the major actors of this process.

We assume that natural pastures, natural forests in farms, as well as areas under public domain are not cleared. Cattle ranching The dramatic growth of cattle herds in the Amazon has consistently been cited as one of the primary factors behind land clearing in the region. At the same time there is considerable controversy about the underlying causes of this growth, and correspondingly what the best policy response should be. Browder ; Hecht et al. More recently, however, a competing perspective has emerged arguing that, given the regional economic patterns in the Amazon, cattle ranching may very well be an economically rational activity see, in particular, Faminow There is no debate about the fact that cattle ranching, traditionally a socially prestigious activity in Latin America, has in the past received substantial government support.

It is also true that despite the widespread condemnation of cattle ranching and sharp reductions in subsidies, the number of cattle in the Brazilian Amazon has continued to increase rapidly. In fact, the total herd in Legal Amazonia almost doubled from 19 million heads in to 36 million in , as illustrated in table 4. The sources and agents of deforestation 71 Table 4. With more than 40 percent of the total cattle herd, Mato Grosso is by far the most important cattle state in Legal Amazonia.

This is, of course, owing to the vast areas of natural savannah and cerrado areas present in the southern part of this state. These cerrado areas have traditionally been considered marginal from an agricultural viewpoint and have thus principally been used for extensive cattle ranching. Over the sample period the number of cattle has grown at an average annual rate of 7.

As a result the stocking intensity has increased steadily from an average of 27 cattle per km2 in to 70 in see table 4.

In the remainder of this section we will take a closer look at the claims that cattle ranching is primarily due to government subsidies and land speculation. In addition we go beyond these primary culprits to discuss a range of other reasons that Amazonian farmers might invest in cattle.

Deforestation of the Brazilian Amazon - Oxford Research Encyclopedia of Environmental Science

Government subsidies The Superintendency for the Development of Amazonia SUDAM was the primary agency in charge of managing development incentives in the Amazon and they had a preference for cattle ranching projects, especially very large ones. Subsidized credit was available from FINAM Investment Fund for Amazonia to ranchers and farmers who held titles or other land documents recognized by the credit institution, and the subsidy element in the credit was large. Tax incentives and other subsidies accounted for 72 percent of the funds invested in Amazonian cattle ranches in Kohlhepp , p.

Not only the level of subsidized credit, but also the distribution of that credit drew criticism. Complex bureaucratic rules made it effectively impossible for less sophisticated rural farmers to even apply for many government loans. These subsidies to the relatively wealthier sectors exacerbated the existing rural income inequality, and while a direct line of causality from these policies cannot be inferred, Hoffman shows that between The sources and agents of deforestation 73 Table 4.


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In the early s an attempt was made to address some of the distributional problems by offering lower real rates of interest to smaller producers: 9 percent versus 12 percent for large producers FAO The characteristics of the rural credit policy, including both the levels of credit offered and their distribution, have been cited as causing economically irrational deforestation in the Amazon e. Browder ; Mahar In addition, credit had been concentrated in only a few regions. During the s, for example, only 20—25 percent of farmers had access to subsidized credit and less than 5 percent of the farmers received half of the total credit World Bank , quoted in Goldin and Rezende , p.

Among all the states in Legal Amazonia in only about 2 million cattle were in SUDAMapproved ranches, while about 17 million were not see table 4.

Population Growth and Deforestation: A Critical and Complex Relationship

Thus, by there were 36 million cattle in Legal Amazonia enjoying little or no direct government subsidies. Cattle ranching is seen as a relatively inexpensive way to occupy the land in the meantime. As Faminow , p. Financial land values must maintain a relation to the incomes that can be derived from their possession — they cannot be continuously delinked from the real economy. Later land price information indicates that land prices have generally remained stable or even fallen since the mids. Faminow , p. Some farmers did realize dramatic gains and speculators could have expected increasing land prices for some period, even if they never actually materialized.

Table 4. The table shows the tremendous variation The sources and agents of deforestation 75 Table 4. In general, there were large gains to be reaped between and , while the opportunities have been much more limited and less certain since then. Land purchases may also have been used as a means to secure subsidized credit.

Thus, when credit terms become more favorable, the value of such titled land increases and the interest rate subsidies are therefore partly capitalized into land values. Figure 4. The fourfold increase in land prices in the s is well explained by the negative real interest rates, booming exports, and high domestic demand for agricultural goods. The gradual demise of credit subsidies combined with high real interest rates and recession during the late s then led to the decline of land prices.

In you could buy roughly 2 hectares of land in the North for every hectare you sold in the South. By this ratio had increased to about 10 Schneider , tables 4. The dramatic increase in land prices in the South and Center-West was brought about by the introduction of soybeans, which allowed a big increase in land productivity. The effect of this change in relative land prices was to push land-extensive activities like cattle ranching away from the South and the Center-West towards the cheaper land in the Amazon.

While land-price dynamics acted to push cattle towards the Amazon, the expansion of local markets provided an important pull factor. The urban population in Legal Amazonia increased from 2. The model we estimate econometrically in chapter 6 lends support to the hypothesis of urban demand being an important pull factor for cattle production. Both level and growth of urban GDP are strong in-sample predictors of future herd growth at the municipality level. This is all consistent with the idea that local demand for cattle products is a driving force behind herd expansion.

The relative cost of serving the local versus international or national markets is also favorable towards cattle ranching. One of the advantages The sources and agents of deforestation 77 of selling meat and milk locally is that it does not require much marketing expertise or overhead costs. Exporting sustainably harvested chocolatecovered nuts to rich foreigners, on the other hand, requires a professional marketing and distribution organization. There are numerous other reasons why cattle ranching is attractive to farmers in the Amazon. First, cattle are a highly liquid investment and can readily be sold when a crisis or opportunity occurs.

Second, cattle can reach the market even when roads are impassable by trucks. Third, sales can be delayed without major losses.


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Fourth, the marginal costs of establishing pasture after cropping is low for small-holders. Fifth, ranching is a low-risk operation compared with crop farming. Sixth, cattle produce milk, skins, manure, and offspring as very useful by-products. And eighth, cattle raising is not labor-intensive, an important consideration in rural Amazonia where the shortage of labor is a perennial complaint Smith et al.

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Small- and large-scale agriculture After cattle ranching, annual crops rice, maize, beans, potatoes, sugarcane, soybeans, manioc, corn, wheat, tobacco, and others take up the second biggest share of cleared land; about 10 percent. They are primarily cultivated by small farmers who practice slash-and-burn agriculture: they burn a piece of forest and grow annual crops for one—three years until the nutrients from the ashes are used up or washed away. A fallow period of about ten years is then usually required before the land can be used for crops again Toniolo and Uhl This fallow period is rarely applied, however.

Since pasture land is typically two—three times more valuable than uncleared forest Schneider , p.

Is Brazil's president responsible for the Amazon burning?

In that way he can both make a reasonable return on his annual crops in the initial period when fertility is high and the land relatively pest-free because of burning, as well as a capital gain from the 78 The Dynamics of Deforestation and Economic Growth sale of the land. The capital gain can then be reinvested in new forest and the cycle continued. Often farmers are inexperienced in their new environment, and many farmers experience crop failure.

The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon

Even if the farmer gets a good harvest he may have problems selling it at a reasonable price owing to the thin markets in frontier areas. While the area dedicated to annual crops increased rapidly during the s, it stagnated during the s and s. In addition to research on soil improvement, EMBRAPA has also worked on improving the varieties of soybeans and making them more adaptable to the cerrado soils. Lopes ; Schuh Soybean production involves major economies of scale at both the sector level and at farm level.

To produce soybeans competitively, a large and modern system of processing, transportation, storage, research, and marketing is needed.

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The sources and agents of deforestation 79 Perennial crops have been actively promoted by government extensions as the best agricultural alternative for the region Schneider , p. These crops cacao, coffee, black pepper, cotton, bananas, oranges, passion fruit, etc. In particular, they are usually better adapted to the region and therefore less susceptible to pests.

They are also often less perishable and therefore imply smaller losses induced by the generally inadequate transport and storage facilities available. Finally, the value of output per hectare is higher and sustainable over a longer period, and they protect the soil better against erosion.


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However, for the typical small farmer who cares little about sustainability as long as new sources of inexpensive land remain abundant, perennial crops have several disadvantages relative to annual crops. First, the initial investment required is about ten times larger Almeida and Uhl In addition it takes more than one season to get a positive return, and thus requires more commitment and carries even greater risk.

Finally, contrary to basic annual staples like rice, beans, and corn you cannot live on them if the need arises. The area devoted to perennial crops increased rapidly between and Since then the area in perennial crops has remained stable at a little below 1 million hectares. Silvicultural plantations planted forest are also being encouraged as an appropriate form of development for the Amazon region Fearnside , p.

The Jari project is the most famous silvicultural experiment, and also the largest with a concession of 1. It has commonly been portrayed as a failure and an undesirable development model for the Amazon Uhl et al.

The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon
The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon

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