Brazil and Deforestation

Brazilian deforestation is strongly correlated to the economic health of the country: the decline in deforestation from 1988-1991 nicely matched the economic slowdown during the same period, while the rocketing rate of deforestation from 1993-1998 paralleled Brazil's period of rapid economic growth. During lean times, ranchers and developers do not have the cash to rapidly expand their pasturelands and operations, while the government lacks funds to sponsor highways and colonization programs and grant tax breaks and subsidies to forest exploiters.

In many cases, especially during periods of high inflation, land is simply cleared for investment purposes. When pastureland prices exceed forest land prices (a condition made possible by tax incentives that favor pastureland over natural forest), forest clearing is a good hedge against inflation.

Such favorable taxation policies combined with government subsidized agriculture and colonization programs encourage the destruction of the Amazon. Low taxes on income derived from agriculture and tax rates that favor pasture over forest overvalues agriculture and pastureland and makes it profitable to convert natural forest for these purposes when it normally would no be so.

In addition, the system of property rights is also at fault. While large landowners lay claim to the most productive of Amazon floodplain soils, smaller farmers and squatters are forced to seeks out a marginal patch of land. Each squatter acquires the right (known as an usufruct right) to continue using a piece of land by living on a plot of unclaimed public land and "using"