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Determinants of Amazon Deforestation: The role of Off-Farm Income

Claudio Araujo (), Jean-Louis Combes and José Gustavo Feres
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José Gustavo Feres: IPEA - Instituto de Pesquisa Econômica Aplicada - Brésil

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Abstract: This paper aims at assessing the determinants of Amazon deforestation, with an emphasis on the role played by off-farm income. We first present a microeconomic model which relates off-farm income to deforestation patterns. We then test the empirical implications by using data on the 2006 Brazilian Agricultural Census. Our results suggest that an increase in off-farm income tends to reduce deforestation. This may be explained by the fact that greater off-farm opportunities tends to increase the opportunity cost of farm labor. Results also show that smallholders are less responsive to the increase in the returns of off-farm activities than large ones, which is in line with our hypothesis of labor market imperfections regarding off-farm activities.

Keywords: pseudo-panel; off-farm income; farm household; deforestation (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-dev, nep-env and nep-lam
Date: 2014-11-19
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01084611
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