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Determinants of Amazon deforestation: the role of off-farm income

Published online by Cambridge University Press:  06 September 2018

Claudio Araujo Open the ORCID record for Claudio Araujo [Opens in a new window] ,
Jean-Louis Combes  and
José Gustavo Féres
Claudio Araujo*
Affiliation:
Université Clermont Auvergne, CNRS, CERDI, Clermont-Fd, Pôle Tertiaire, 26 avenue Léon-Blum, 63000, France
Jean-Louis Combes
Affiliation:
Université Clermont Auvergne, CNRS, CERDI, Clermont-Fd, France
José Gustavo Féres
Affiliation:
Instituto de Pesquisa Econômica Aplicada (IPEA) and Escola Brasileira de Economia e Finanças (FGV EPGE), Rio de Janeiro, Brazil
*
*Corresponding author. E-mail: [email protected]
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Abstract

This paper aims at assessing the determinants of Amazon deforestation, emphasizing the role played by off-farm income. Initially an economic model is provided which relates off-farm income to deforestation patterns. Subsequently, empirical implications are tested using data from the 2006 Brazilian Agricultural Census. Estimation results suggest that higher off-farm incomes are associated with reduced deforestation rates. In fact, higher off-farm incomes might increase the opportunity cost associated with agricultural activities. The latter option becomes less attractive and farmers dedicate less time to farm activities, thereby reducing deforestation pressure. Results also show that smallholders respond less to the increase in the returns from off-farm activities when compared to largeholders, which matches our hypothesis of labor market imperfections regarding off-farm activities.

Type
Research Article
Information
Environment and Development Economics , Volume 24 , Issue 2 , April 2019 , pp. 138 - 156
Copyright
Copyright © Cambridge University Press 2018 

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