• Can policies slow down deforestation?

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    Disentangling the effect of specific large scale policies from other changing parameters of the environment, including things such as prices in directly or indirectly related markets or behavior of economic agents, is a challenging task. Since the mid-2000s, the deforestation rate in the Brazilian Amazon has plummeted and this declining trend is showing no sign of reversal yet, as shown in this Nature News entry:

    The numbers just keep going down: deforestation in the Brazilian Amazon has fallen 23% over the past year, according to an initial — and highly uncertain — analysis released Thursday by the Brazilian government.
    Although the preliminary figures are based on coarse satellite data that are also subject to huge variability owing to cloud cover, they serve as an initial indicator that deforestation is likely to hit a fourth consecutive record low in the season that ran from August 2011 through July 2012. The latest official figures, released in December, show deforestation dropping to 6,238 square kilometres last year.
    (…)
    Just as a thought experiment: if these numbers were to hold up, it would represent a 75% drop below Brazil’s official baseline of 19,500 square kilometres annually (the average from 1996–2005).

    A recent paper by Assunção, Gandour and Rocha, precisely tries to determine the share of the reduction in deforestation attributable to the policies enacted since 2005.

    The main issue is to factor in the effect of fluctuations in agricultural prices. For example, I have witnessed on several occasion in the past few years in Paraguay the fact that rising soybean prices generate strong incentives to clear idle forested land for cultivation. The higher the price, the more incentives are generated to go for one time gains by planting even on intermediate quality or smaller parcels, which at the margin is likely to increase deforestation. Once these price effects are taken into account, the paper finds that new policies (these included “the strengthening of command and control strategies; the extensive expansion of protected territory; and the adoption of conditional credit policies”) accounted for about half of the observed reduction.


    Deforestation and biomass decay have accounted for approximately 17% of global greenhouse gas emissions (IPCC, 2007). This raises concerns about the extent of forest clearings in the Amazon, the planet’s largest rainforest tract. The region has long been the world’s most active agricultural frontier in terms of forest loss and CO2 emissions. In Brazil, the conversion of forest areas in the Amazon biome has contributed nearly half of the country’s total net CO2 emissions (MCT, 2010).
    Identifying whether the deforestation slow-down was due to economic circumstances or resulted from conservation policies introduced during that period could provide critical input for policymakers in Brazil and in other countries. We assess the contribution of Brazil’s policies to decreased deforestation rates by using regression techniques to disentangle the impacts of the policies from those of other potential explanatory factors, such as agricultural price cycles and other possible drivers of deforestation.
    Yet, the deforestation rate in the Brazilian Amazon experienced a substantial decrease during the second half of the 2000s, from a peak of 27,000 km2 in 2004 to 7,000 km2 in 2009. Two alternative explanations for this stand out. On the one hand, falling agricultural prices may have inhibited the clearing of forest areas for the expansion of farmland. On the other hand, conservation policies introduced after two policy turning points in 2004 and 2008 may have contributed to the curbing of deforestation. Indeed, Figure 1 shows that the adoption of policies following these turning points coincide with sharp subsequent decreases in the deforestation rate.
    Our analysis shows that approximately half of the deforestation that was avoided in the Amazon in the 2005 through 2009 period can be attributed to conservation policies introduced in the second half of the 2000s.

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