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Agricultural Productivity and Forest Conservation: Evidence from the Brazilian Amazon

26 Pages Posted: 7 Sep 2017  

Nicolas Koch

Mercator Research Institute on Global Commons and Climate Change; University of Hamburg

Erasmus K.H.J. zu Ermgassen

University of Cambridge

Johanna Wehkamp

Mercator Research Institute on Global Commons and Climate Change

Francisco Oliveira

University of Cambridge

Gregor Schwerhoff

Mercator Research Institute on Global Commons and Climate Change

Date Written: September 3, 2017

Abstract

A mix of public policy and market interventions in the mid-2000s led to historic reductions in deforestation in the Brazilian Amazon. The collateral impact of these forest conservation policies on agricultural production is still poorly understood, though evidence is sorely needed given the economic importance of agriculture in Brazil and many other forest-rich countries. We construct a ten-year panel dataset for agriculture and deforestation in the Brazilian Amazon (2004-2014), and use two complementary difference-in-difference strategies to estimate the causal effect of one of Brazil’s flagship anti-deforestation strategies, the priority list (Municípios Prioritários), on agricultural production and productivity in three sectors: beef, dairy, and crop production. We find no evidence for trade-offs between agriculture and forest conservation. Rather, reductions in deforestation in priority municipalities were paired with increases in cattle production and productivity (cattle/hectare), consistent with a model where policy-induced decreases in the value of clearing new land cause credit-constrained farmers to shift investments from deforestation to capital investments in farming. The policy had no effect on dairy or crop production. Our results suggest that in regions with large yield gaps and where technologies for increasing yields are readily available, efforts to constrain agricultural expansion through improved forest conservation policies may induce intensification.

Keywords: Deforestation, Agriculture, Productivity, Brazil, Amazon

JEL Classification: Q12, Q15, Q23, Q24, Q28

Suggested Citation

Koch, Nicolas and zu Ermgassen, Erasmus K.H.J. and Wehkamp, Johanna and Oliveira, Francisco and Schwerhoff, Gregor, Agricultural Productivity and Forest Conservation: Evidence from the Brazilian Amazon (September 3, 2017). Available at SSRN: https://ssrn.com/abstract=3031416

Nicolas Koch (Contact Author)

Mercator Research Institute on Global Commons and Climate Change ( email )

Torgauer Straße 12-15
Berlin, 10829
Germany

University of Hamburg ( email )

Von-Melle-Park 9
Hamburg, 20146
Germany

Erasmus Zu Ermgassen

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Johanna Wehkamp

Mercator Research Institute on Global Commons and Climate Change ( email )

Torgauer Straße 12-15
Berlin, 10829
Germany

Francisco Oliveira

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

Gregor Schwerhoff

Mercator Research Institute on Global Commons and Climate Change ( email )

Torgauer Straße 12-15
Berlin, 10829
Germany

HOME PAGE: http://www.mcc-berlin.net/ueber-uns/team/schwerhoff-gregor.html

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