A Model of Amazon Deforestation, Trade and Labor Market Dynamics
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World Bank, Washington, DC
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This paper develops a dynamic spatial
equlibrium model of Amazon deforestation, accounting for
trade and labor markets dynamics. It uses this model to
study the impact of local sectoral shocks and policies on
deforestation. Conditional on the assumptions on key
parameters, the analysis suggests the following: 1) an
increase in external commodity demand increases
deforestation; 2) agricultural productivity gains within the
Amazon region likely increase deforestation (but reduce
deforestation in the rest of the world) 3) manufacturing
productivity in urban centers in the Amazon region decreases
deforestation, especially if manufacturing firms have short
rural value chains and if complemented by investments in
education and training and measures to attract skills; 4)
reducing transport costs increases deforestation unless it
sufficiently supports higher export competitiveness of urban
production; and 5) industrial policy focused on raising
urban productivity, especially in sectors with short rural
value chains, can reduce deforestation. The paper then
discusses how policies aimed at increasing local sectoral
productivity in the Amazon region could complement other
measures specifically aimed at protecting the forest. Among
such measures are incentivizing governments to designate
undesignated public forests, enforcing forest protection
laws (command and control), incentivizing afforestation, and
creating alternative livelihoods for farmers in rural and
urban areas.
Palabras clave
MACROECONOMICS AND GROWTH, AMAZON DEFORESTATION, SKILLS TRAINING, MANUFACTURING AND ENVIRONMENTAL SUSTAINABILITY, STRUCTURAL POLICY AND REFORM, GREEN GROWTH, ENVIRONMENTAL SUSTAINABILTY, CLIMATE CHANGE MITIGATION, SPACIAL EQUALIBRIUM MODEL OF DEFORESTATION