Amazon: 1% increase in assessments reduces deforestation by 0.5% – 05/08/2023 – Environment

Deforestation fines have the greatest impact and the most significant role in reducing deforestation in the Amazon, compared to other political and economic factors, such as the prices of commodities associated with the loss of forest area (soybeans, meat and timber).

The conclusion is from a study published this Monday (8) by the Research Center for Macroeconomics of Inequalities (Made), hosted by USP (University of São Paulo), and conducted by researchers from UFMG (Federal University of Minas Gerais) and from UFS (Federal University of Sergipe).

With the intention of evaluating the relationship between deforestation and the increase in economic complexity in the municipalities of the Amazon, the researchers were surprised to find that the only significant variable in all econometric models and in the various specifications was environmental inspection.

“The tests also indicate that a 1% increase in IBAMA assessments [Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis] reduces deforestation by 0.5% in the same year”, estimates the study, based on econometric models that bring together 16 databases on the Legal Amazon for the period from 2006 to 2021.

In the period, deforestation in the region rose 15% and covered more municipalities, while the average economic complexity index fell, reaching the worst level of the historical series in 2021: -0.57. In the same year, Brazil’s index was 1.38.

In addition to the index, the models included data such as: deforested areas; areas protected by law; produced quantity of commodities; mining data; soy, milk, cattle, wood and forest products prices and per capita GDP.

Previous studies have already shown that the increase in commodity prices encourages deforestation. However, the new work points out that this relationship varies according to the local reality —the effect is greater, for example, in areas where economic activity is already expanding— and depends on the signal given by public policy.

“Higher prices for forest products (mainly timber) increase the value of investment in the forest and may lead to more sustainable forest or timber uses. mediated by the performance of the environmental police and other protection policies”, observes the study.

João Romero, a researcher at the Center for Development and Regional Planning (Cedeplar) at UFMG and one of the authors of the study, points out that “inspections always have a positive effect in reducing deforestation.” “Both in the average effect, and in any subsample”, he adds.

He explains how the empirical tests made from the models work. “For example, deforestation is falling in a municipality. Is it because its production is falling? Is it a time of crisis? Or is it because inspection has increased? As we insert and remove some factors [ao rodar o modelo], we see which had a more robust effect. It’s a case of oversight.”

Productive diversification also has a controversial effect on deforestation. Initially, the complexity of the economy increases deforestation —especially in low-complexity municipalities. In regions where the economy is more developed and diverse, the link with deforestation is less and less, and it tends to fall as the economic complexity index increases.

“The tests indicate that an increase of 0.1 in complexity tends to increase deforestation by 9.5% in the present period and reduce it by 3.5% in the future period”, calculates the study, in an average for the entire the Amazon.

“There are these two sides that fight. At the beginning of the region’s economic trajectory, you have an increase in the environmental footprint, to later have an improvement. But there are studies today that show that this may not be true, because there are resources that can be used in alternative activities to those that deforest”, explains researcher Fabricio Silveira, who also signed the study for Cedeplar/UFMG.

The 0.1 increment in the economic complexity index would be a very significant feat for the economy, warn the authors. In the analyzed period, the standard deviation is only 0.03.

“The average complexity of municipalities in the region presents a volatile trajectory around an annual average of -0.514”, says the study. As the annual variations of deforestation, employment and income have very different paths, the potential association between them is hidden, says the research.

The conclusion of the research is that the increase in economic complexity “does not necessarily reflect a reorganization of local productive activity towards green sectors”,

“How does one municipality manage to associate economic growth with the improvement of the environmental footprint, while another worsens? We saw this variation, in thousands of cases”, points out Silveira.

“Many times, it is the intervention of the local Ibama, or the environmental police, who can fine less in a place. Or the municipality has a branch of a bank that provides financing for activities that favor [o desmatamento]. There are small points that favor these trajectories”, he says.

The authors therefore suggest a new research front to identify economic alternatives in the region “that can combine environmental preservation with increased complexity”.

_{The Planeta em Transe project is supported by the Open Society Foundations.}