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

Claudio Araujo (1) , Jean-Louis Combes (1) , José Gustavo Feres (2)

1 CERDI - Centre d'Études et de Recherches sur le Développement International
2 IPEA - Instituto de Pesquisa Econômica Aplicada

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.

Mots clés: deforestation; farm household; off-farm income; pseudo-panel

Domaines: Economies et finances

Claudio Araujo, Jean-Louis Combes, José Gustavo Feres. Determinants of Amazon Deforestation: The role of Off-Farm Income. 2014. ⟨halshs-01084611⟩