The Cost of Forest Preservation in the Brazilian Amazon: The “Arc of Deforestation”
By: Silva, Felipe de Figueiredo; Fulginiti, Lilyan E.; Perrin, Richard K.
Silva, Felipe de Figueiredo; Fulginiti, Lilyan E.; Perrin, Richard K., The Cost of Forest Preservation in the Brazilian Amazon: The "Arc of Deforestation", Journal of Agricultural and Resource Economics, Volume 44, Issue 3, September 2019, Pages 497-512
We estimate the trade-off between agricultural production and forest preservation for the municipalities in Brazil's agricultural frontier, the so-called 'arc of deforestation,' using census and deforestation data for 2006. We use a nonparametric directional output distance function that allows us to identify the gradients of the production possibility frontier, which are the trade-offs of interest. We found that, on average, $979 is forgone in annual livestock, timber, and grain revenues to conserve 1 hectare of forest. This translates, ceteris paribus, to an average present value of costs to permanently sequester CO2 of $16.36/t, higher than most previous estimates.