Was von Thünen right? Cattle intensification and deforestation in Brazil

Francisco Pereira Fontes and Charles Palmer

No 261, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment

Abstract: This paper examines whether patterns of cattle intensification, deforestation and pasture expansion in the Brazilian state of Rondonia are consistent with the land rent framework, in which location and distance to markets are key determinants of rents. A panel dataset of household lots, collected between 1996 and 2009, is used to test the hypothesis that the further a household is from market the more likely it will extensify cattle production, deforest, and expand pasture in response to rising demand for beef and milk. Results from a fixed effects model suggest empirical support for the theory. Pasture area is significantly increasing while forest is significantly decreasing in lots located further away from the market relative to those closer to the market. Patterns of land use differ, however, depending upon the forest type and commodity considered. Primary forest may be ‘spared’ closer to market though perhaps at the cost of greater conversion of secondary forest. Households with greater endowments of forest tend to deforest more than those with smaller ones.

Date: 2017-01
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