Conference Agenda

Assessing the determinants of deforestation requires the consideration of dynamic interactions in space and in time, which has often been neglected in previous research. In this vein, the present study contributes to the literature on deforestation in the Brazilian Cerrado by applying a dynamic spatial Durbin approach with fixed effects to a panel of 434 municipalities for the period from 2002 to 2016. This spatial econometric assessment relying on new satellite-based data for the under-explored Cerrado biome provides some guidance for the design of future environmental policies targeting this region of vital ecological importance. The main findings corroborate that dynamic spatial interactions matter. Moreover, soy acreage expansion in a municipality seems to directly drive the municipality’s deforestation, whereas releasing the pressure on native vegetation in the neighborhood. The value of agricultural production also plays a significant role as it is negatively associated with the level of forest clearance. Finally, while subsidized agricultural credits exert a direct positive effect on deforestation, environmental fines due to illegal deforestation – in the current design – do not seem to be statistically related to clearance of native vegetation in the Cerrado biome. This paper is currently being reassessed using updated annual satellite data, higher-resolution imagery, expanded geo-climatic datasets, and revised regulatory variables to better reflect geopolitical developments, such as Brazil’s renewed environmental policies under President Lula’s administration and the European Union’s Deforestation Regulation (EUDR), both of which have significant implications for land use and deforestation in the Cerrado.