Deforestation Rate in the Long-run: The case of Brazil

In this article we study the long-run average rate of forest conversion in Brazil. Deforestation results from the following trade-off: on the one hand, the uncertain value of benefits associated with forest conservation (biodiversity, carbon sequestration and other ecosystem services), on the other hand, the economic profits associated with land development (agriculture, ranching, etc.). We adopt as theoretical frame for studying land conversion the model by Bulte et al. (2002). We then derive, following Di Corato et. al. (2013), the associated long-run average rate of forest conversion. Then, we identify the parameters to be used in our model. The object of our simulation is Brazil and 27 regions. Our aim is to compute under several scenarios the time required to develop the remaining forested land in these regions. We provide potential future scenarios in terms of forest coverage for the next 20, 100 and 200 years. Our results suggest that the uncertain value of forest benefits plays a relevant role for deterring deforestation. These benefits, if growing at a sufficiently high rate, may significantly slow down the conversion process. In contrast, their volatility accellerate the process of deforestation. Our results show that some Brazilian regions are saturated earlier than others. In general, forestland currently available may be expected to be fully converted within a 200-year horizon