Brazil, an important agricultural producer, has more than half of its territory covered by tropical forests. This brings about a challenge for the country to cope with - an eventual trade-off between agricultural expansion and forest preservation. Nonetheless, it is not clear if that is indeed a trade-off, as the Amazon has benefited food production through the supply of environmental services, e.g. its humidity that boost the rains regime across the country (Nobre, 2014).
However, both policymakers and society as a whole are not having precise information about the real costs and consequences of halting deforestation. For example, most Brazilians do not know that more than 54 million hectares of their country is composed by undesignated lands, which means public lands. Thus, as those areas are unknown by most of the population they have being easily converted by land grabbers into crops, pasturelands and/or other usage. That is one of the main sources of the deforestation on going in Brazil, which has not been tackled by its government. Thus, such lack of information may explain the little support that environmental issues have received by civil society in Brazil.
In this way, we try to fill this gap by assessing the economic impacts of halting deforestation in the Brazilian Amazon, through a computable general equilibrium (CGE) model extended for land-use changes (LUC) and its greenhouse gas (GHG) emissions (Horridge, 2012). The objective is to produce data about deforestation to inform the society and assist policymakers in establishing public policies. For this, we applied a shock of zero-deforestation in the Amazon Biome, considering a conservative growth of agriculture, by 0.5%, in 2020-2030 in the Cerrado, the Brazilian savannah.
What may happen if Brazil halt deforestation in the Amazon?
One of the main results shows that deforestation control focused on the Amazon Biome may increase domestic GHG emissions, because of the displacement of deforestation to other regions. Thus, all the efforts to curb the clearing of natural vegetation in the Amazon may be offset by the increase of deforestation in the Cerrado. Furthermore, halting deforestation just in the Amazon may not work as climate policy as the emissions may also be displaced to the Cerrado, following the path of deforestation.
Nonetheless, the costs for Brazil to do the transition to a low carbon economy is not high, especially considering the impacts on its economy as whole. This is because economic activities may be displaced to other regions and intensify the economic growth in such areas. For example, farming may grow in the Cerrado region, which in turn is the most important area of food production in Brazil.
However, regionally the policy may intensify inter-regional asymmetries, with negative impacts on the GDP, consumption levels, and other macroeconomic variables. States of the Amazon region are the ones negatively affected by the policy, as it implies to fix land supply, and the most important economic activities of such states are land-intensive. So, keeping land supply fixed there means an expressive restriction on the more abundant production factor in those states. Nonetheless, the burden over regions are bigger, as they are less developed compared to states of South and Southeast of Brazil. Consequently, the policy may boost the inequality within the country.
How will Brazil aim for zero-deforestation in the Amazon? And what we can learn from it?
Brazil was the locus of several experiments established to curb deforestation. So, it knows the way to preserve its natural resources, as most of the results of different public policies are well known by its policymakers. Thus, what can we learn from its experience? As the deforestation is a complex phenomenon, it requires a holistic solution, as the one implemented by the Brazilian government in the mid-2000s. Such initiative was focused on land-use planning, through the strengthening of the enforcement and the adoption of economic instruments.
In the enforcement arena, new indigenous lands and national parks were created to stop the advance of the agricultural frontier towards the Amazon. Besides, monitoring was boosted through the joint effort of officials of federal policy and technicians of the environment ministry using data of a new system of satellite imagery.
In the economic arena, rural credit was used as an important instrument to curb deforestation as farmers related to the clearing of forest could not access it. Thus, tracking the supply chain of agricultural commodities traditionally linked to deforestation may be an alternative to cease new clearings. It may reveal activities and the locus of the deforestation, which may not receive any credit, especially the public one. In this way, those activities and regions could not keep the conversion of forests into pasture, crops or other uses, as it requires a large amount of money to be carried out.
Finally, we can also learn from the flaws of the Brazilian strategy. First, when new governments take power, the former policies are abandoned, even the successful ones. This is what happened to the current Brazilian environmental policy. Consequently, the zero-deforestation cause is constantly affected by institutional discontinuity. One alternative to tackle the institutional issue is to use the support of civil society to legitimate the environmental policy. But unfortunately, Brazil has been unsuccessful in this arena.
- Nobre, A. D. O futuro climático da Amazônia: relatório de avaliação científica. São José dos Cambos, SP: ARA, CCST-INPE: INPA, 2014.
- Horridge, J. M. The TERM Model and Its Database. In: WITTWER, G. (Ed.). Economic Modeling of Water: The Australian CGE Experience. Dordrecht: Springer, 2012. p. 13-35.