Environmental Economics and Policy Making in Developing Countries

Environmental Economics and Policy Making in Developing Countries

Current Issues

Edited by Ronaldo Seroa da Motta

The authors provide a comprehensive analysis of topics varying from the general problems of growth and conservation to specific applications such as; pollution costs, environmental taxation, deforestation and climate change. This volume also offers policymakers a comprehensive view of the challenges they face, and the legacies they leave, in order to convert environmental policy making into an actual programme of welfare improvement.

Chapter 9: Economic incentives and forest concessions in Brazil

Claudio Ferraz and Ronaldo Seroa da Motta

Subjects: development studies, development economics, economics and finance, development economics, environmental economics, environment, environmental economics


Claudio Ferraz and Ronaldo Seroa da Motta 9.1 INTRODUCTION The deforestation process in Brazil, mainly in frontier areas, is a result of economic and social factors, along with institutional failures. In the past, structural problems, such as highly concentrated income distribution and land tenure, worked in conjunction with policy failures, such as favourable credit and fiscal systems to agricultural activities and regional development programmes in frontier areas, to create a deforestation process driven mainly by the synergy between agricultural and logging activities. The association between these activities plays a crucial role in the deforestation trend by financing land clearing for agricultural purposes in exchange for timber extraction. Economic agents move to the frontier, clear the land, sell the timber and start an agricultural or cattle-raising activity expecting to get the title for the land. Such an exploitation pattern, identified as typical dynamic behaviour in open access areas, is a direct consequence of the lack of perception of scarcity associated with the forest value. Consequently, the privatisation of the forest and its land through the assignment of private individual rights, has been very harmful for sustainable purposes in the region.1 Some of these factors cannot be easily reverted since it would require longterm structural adjustments to alleviate social inequalities, accomplish a satisfactory land reform, create the proper incentives and enhance the planning capacity of human resources in governmental agencies. Because of these failures, regulation on sustainable logging practices and economic instruments such as funding mechanisms, forestry taxes and fiscal incentives...

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