Pioneering study assesses efficiency of forest coverage and carbon stocks in Brazilian Amazon

Professors Francisco Costa and Marcelo Sant’Anna of Fundação Getulio Vargas’ Brazilian School of Economics and Finance (FGV EPGE) and FGV EPGE doctoral student Rafael Araújo recently carried out an unparalleled study to estimate how far the Brazilian Amazon is from its efficient level of forest coverage and carbon stocks. The paper is called “Efficient Forestation in the Brazilian Amazon: Evidence from a Dynamic Model.”

The study found that if land use trends seen in the last few decades continue, an area twice the size of France will be deforested in an economically inefficient manner. Thus, the results point to the need for radical change in economic incentives to mitigate inefficient carbon emissions related to land use in the Amazon. Policies that discourage deforestation based on the amount of carbon stored in the forest, such as zoning or payment for environmental services, demonstrate great potential to reverse the current situation.

Although the logistics of implementing such policies are not simple, the authors understand that Brazil has demonstrated that it can use technology to enforce environmental compliance and there is willingness on the part of the international community to help finance this.

Regarding market policies, the authors suggest discouraging the main driver of deforestation in the region, cattle ranching. Technologies such as cattle tracking and a beef moratorium in the Amazon are viable options in this direction. Discouraging crop farming in the region, on the other hand, does not seem such a promising alternative.

The paper can be consulted here.