Dispelling the Myths
Chapter 4: Deforestation and the Rules of Land Allocation
INTRODUCTION 4.1. The Amazon frontier has always been a source of optimism, and it has traditionally elicited strong emotional connotations of economic opportunity, liberty, and hope for a better future. With low population densities and rich endowments of land and other valuable resources, the region has spawned the country’s principal migrations, and it continues to do so today. To understand why land is cleared and, further, why it is probably being cleared excessively, then one must understand the rules of land allocation in the region. These rules are important because they strengthen the market distortions discussed in Chapter 3, leading to a situation of excess deforestation. This chapter is organized in ﬁve sections. Section 4.2 discusses how the rules of land allocation have encouraged deforestation. Section 4.3 argues that these rules render inadequate the standard models that attempt to explain deforestation based on the premise of rent maximization. Section 4.4 discusses the economic behavior of farmers in the Amazon, particularly with regard to the practice of extensive agriculture. Section 4.5 summarizes and concludes the chapter. 4.2. THE RULES OF LAND ALLOCATION The majority of the land in Brazil’s 5-million-square-kilometer Legal Amazon has, until recently, been in the public domain either under the federal or state governments. Land is incorporated into private property in many ways. Legally, public land can pass to large private owners through occasional offers of land for sale through sealed tenders, while small plots are sold to colonists in government-sponsored settlement areas. In the early 1970s, the...
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