Modeling the Opportunity Costs of Reducing Legal Deforestation and the Implications for Forest Policy in Mato Grosso, Brazil

Ruohong Cai, Ruben Lubowski, Tiago Reis, Marcelo Stabile and Andrea Azevedo

No 236637, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: In recent decades, global society has paid growing attention to tropical deforestation as it contributes significantly to global warming. One promising way of addressing the issue is to create economic incentives to protect forests. In this study, we estimate the opportunity costs of reducing legal deforestation in Mato Grosso of Brazil, based on an econometric model using fine resolution spatial data and administrative data on properties registered in the rural land registry. We find that, inside the properties that have rights to legally clear forest area, most projected demand for deforestation will fit within the legal limitations, making it essential to establish additional positive economic incentives for forest protection. Also in these properties, for the period of 2014-2030, total incentives of about US$ 279 million could reduce 77% of projected legal deforestation, from 278,257 ha to 64,287 ha. Certain incentives could come from the properties with forest restoration requirements under Brazil’s forest code, since we found that our modeled incentives can only cover about 7% of the forest restoration requirement in those properties through passive land abandonment. As a result, active reforestation or purchasing the Environmental Reserve Quota from properties with legal deforestation allowance may become attractive alternatives.

Keywords: Land Economics/Use; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 24
Date: 2016-08
New Economics Papers: this item is included in nep-agr, nep-env and nep-lam
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:236637

DOI: 10.22004/ag.econ.236637

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