The Effect of Rural Credit on Deforestation: Evidence from the Brazilian Amazon. Issue 626 (22nd November 2019)

• Record Type: Journal Article
• Authors: Assunção, Juliano; Gandour, Clarissa; Rocha, Romero; Rocha, Rudi
• Is Part Of: Economic journal. Volume 130:Issue 626(2020)
• Page Start: 290
• Page End: 330
• Publication Date: 2019-11-22
• Subjects: Economics -- Periodicals; Économie politique -- Périodiques; 330.05
• DOI: 10.1093/ej/uez060
• Languages: English
• ISSNs: 0013-0133

Abstract

Abstract: In 2008, the Brazilian government made the concession of rural credit in the Amazon conditional upon stricter requirements as an attempt to curb forest clearings. This article studies the impact of this innovative policy on deforestation. Difference-in-differences estimations based on a panel of municipalities show that the policy change led to a substantial reduction in deforestation, mostly in municipalities where cattle ranching is the leading economic activity. The results suggest that the mechanism underlying these effects was a restriction in access to rural credit, one of the main support mechanisms for agricultural production in Brazil.