Agricultural Trade and Deforestation: the Role of New Roads

Abstract

In this paper, we study how new roads affect the spatial patterns of agricultural production and consequently impact deforestation and development outcomes, focusing on the historical experience of Brazil. We find that the expansion of Brazil's road network since the 1990s can account for a tenth of the total amount of deforestation that the country has experienced, with significant variation across regions. Perhaps surprisingly, our results suggest that the increase in agricultural income attributable to road construction has been more limited. Focusing on complementarities with technical change, we examine how improved market access combined with new agricultural technologies impacted land conversion.

Keywords: Trade Frictions, Natural Resources, Spatial Economics, Roads, Deforestation

JEL Classification: F18, O13, R12, Q10