Conference Agenda

This paper examines whether pasture recovery can effectively curb deforestation in Brazil, using a structural dynamic model to analyse land-use decisions. The model incorporates both the extensive margin, where improved pasture quality is linked to lower conversion rates, and the intensive margin, where increased productivity incentivizes greater land conversion. By disentangling these effects, I empirically assess their net impact on deforestation and carbon emissions. Employing detailed data on pasture degradation, land-use changes, and livestock systems, I estimate model parameters and evaluate two counterfactual policy scenarios. The first examines a pasture recovery policy, while the second assesses a carbon tax that internalizes the social cost of emissions. The results indicate that while pasture recovery reduces deforestation, a significant portion of its benefits is offset by increased economic incentives for land conversion. In contrast, even modest carbon taxes achieve substantial reductions in deforestation and emissions. These findings underscore the limited effectiveness of pasture recovery as a stand-alone solution and suggest that policy approaches integrating carbon pricing may offer greater potential for mitigating deforestation and achieving climate goals.