Cornhusker Economics April 25, 2018Agricultural Production and Forest Preservation in the Brazilian Amazon

Brazil has become a strong competitor in world soybean production. In 2014, Brazil produced 28% of the world’s soybeans, while the United States produced 34%. Brazil increased its production sharply during the 1990s and 2000s, partly due to the expansion into the Amazon forest region. Soybean was one of the main commodities that led to this expansion. In 2016, the Legal Amazon region produced 33% of the Brazilian soybean production compared to 15% in 1990 (Figure 1).

From 1990 to 2009¹ , the northward expansion of agriculture resulted in deforestation of an area almost two times the size of the state of Nebraska, around 130 thousand square miles. The destruction of the forest resulted in average emissions of 750 million tons of CO₂ per year², attracting attention as a significant contributor to greenhouse gases and thus to the climate change we are experiencing.

Source: Brazilian Institute of Geography and Statistics (available at www.sidra.ibge.gov.br).

Since 2005, the Brazilian government has been implementing policies that have led to a decrease in deforestation rates. In spite of that, deforestation rates are still at a dangerous level. In 2016, 3,047 square miles were cut in this region. A further reduction in deforestation and related CO₂ emissions would benefit the entire world, but Brazilian farmers would have to forego the benefits they obtain from production on newly deforested acres. Our research has studied the amount of this income foregone.

 The results of our study are reported in “Tradeoff between agriculture and forest preservation in the Brazilian Amazon”³. This research identifies the agricultural income foregone as a result of preserving one hectare of forest rather than converting it to agriculture. We found that on average across the region, $796.81/hectare ($323/acre) in agricultural income would have to be given up every year to keep one hectare preserved in forest. This agricultural income foregone translates to about $16.42 per ton of CO₂ that would remain sequestered in the forest rather than released into the atmosphere. These cost estimates vary across the Amazon (Figure 2), and are highest in the state of Mato Grosso, located at the southern portion of the region. This highly productive state produced 27% of Brazilian soybeans in 2016, and was also responsible for 34% of Legal Amazon deforestation from 1990 to 2016.

Could agricultural innovations help to decrease deforestation in this region?

This study reports that agricultural innovations have led to an ability to increase total agricultural production at the rate of 4.9% a year, with no additional inputs, while simultaneously decreasing deforestation at the same rate. There are three implications. First, these innovations contributed to forest preservation. Second, by boosting agricultural productivity these innovations are also increasing the opportunity cost to preserve the forest, since more agricultural production must be foregone. Third, this rate of productivity gain will mean that Brazil's competitiveness as a soybean producer will continue to grow. Soybean yields almost doubled between 1990 and 2015, from 26 bu/ac to 45 bu/ac, while in the US yield increased from 34 to 48 bu/ac.

¹This information is available at http://www.obt.inpe.br/prodes/dashboard/prodes-rates.html#.

² This information is available at http://www.inpe.br/noticias/arquivos/pdf/Emissoes_CO2_2009.pdf.

³Details of this research are reported in "Tradeoff between agriculture and forest preservation in the Brazilian Amazon", at http://www.locus.ufv.br/handle/123456789/10580.

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Felipe de Figueiredo Silva
Ph.D. Candidate in Agricultural Economics
University of Nebraska-Lincoln
felipe.silva@huskers.unl.edu

Richard K. Perrin
Jim Roberts Professor
Department of Agricultural Economics
University of Nebraska-Lincoln 

Lilyan E. Fulginiti
Roy Frederick Professor
Department of Agricultural Economics
University of Nebraska-Lincoln
fulginiti1@unl.edu