What Drives Indirect Land Use Change? How Brazil's Agriculture Sector Influences Frontier Deforestation

From 2000-2005 high returns to soybeans set off an unprecedented expansion of agricultural production across Brazil. The expansion occurred concurrently to a sharp rise in deforestation, leading academics and policy makers to question the extent and means by which the growing agricultural sector was driving regional forest loss. In this article we consider and question the underlying drivers of indirect land use change, namely the potential impact of soybean expansion on beef prices and of land use displacement, via migration. We then present field level results documenting the displacement process in northern Mato Grosso and western Pará States of the Amazon. Our results question the extent to which tropical Amazon deforestation is attributable to land use displacement; however, we argue that the agricultural sector may drive deforestation through other channels, namely through regional land markets.