Land inequality and deforestation in the Brazilian Amazon

This paper investigates the relationship between land concentration and deforestation in the Brazilian Amazon. It develops a conceptual framework in which an individual may have three alternatives: to be a farmer in an already established place, to be a rural worker, or to migrate to the agricultural frontier in order to deforest. This model implies that land inequality affects deforestation positively. Based on data from municipalities with positive deforestation from 2002 to 2011, a model has been estimated to test this theoretical prediction. By making use of an instrumental variable, results show that there is statistical evidence to support the existence of a direct relationship between land inequality and deforestation. Results are stronger for the period 2002-2005. This might be due to command and control policies which have significantly increased the cost of clearing land since the mid-2000s.