A Macroeconomic Perspective of Deforestation in Brazil's Legal Amazon

Ferreira Filho, Joaquim Bento De Souza; Hanusch, Marek

A Macroeconomic Perspective of Deforestation in Brazil's Legal Amazon

Autores

Ferreira Filho, Joaquim Bento De Souza

Hanusch, Marek

Editor

World Bank, Washington, DC

Descripción

Despite policy efforts in recent decades, deforestation remains a pervasive phenomenon in Brazil. Yet deforestation is not only affected by forest governance. It is also driven by global demand for commodities and the relative competitiveness of agriculture, which in turn depends on macroeconomic factors impacting product and factor prices. These macroeconomic mechanisms remain largely unexplored. This paper explores the role of economic productivity in shaping deforestation. It uses an economic model with an empirically founded land use extension to study the macro-structural drivers of land use patterns in Brazil’s Legal Amazon. It demonstrates that productivity gains in the Legal Amazon’s agriculture sector increase deforestation, while such gains in non-land intensive sectors (such as manufacturing) reduce deforestation by attenuating the relative competitiveness of agriculture. Higher productivity in other parts of Brazil also reduces incentives for forest conversion in the Legal Amazon. The paper points to the economic forces that forest protection efforts need to counter, while calling for complementary structural reforms to overcome “Brazilian disease” in the longer-term: addressing the legacy of import substitution industrialization and moving up the value chain will shift economic drivers beyond commodities, thus also reconciling development with standing forests.

Palabras clave

MACROECONOMICS AND GROWTH, STRUCTURAL POLICY AD REFORM, ENVIRONMENTAL SUSTAINABILITY, GREEN GROWTH, CLIMATE CHANGE MITIGATION, DEFORESTATION, CO2 EMISSIONS, ENVIRONMENTAL POLICY, LAND USE PATTERS