Infrastructure Development Can Benefit the Environment: Electrification, Agricultural Productivity and Deforestation in Brazil

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dc.description.abstract A common forest protection strategy used in countries where legal enforcement of deforestation laws is weak aims to increase agricultural productivity and intensification, in order to reduce the pressure to clear forests for new land. We show that such productivity-enhancing strategies can have ambiguous effects on forest protection in theory: it can expand the scope of farming, which is detrimental to the forest, but it can also induce farmers facing factor-market constraints to switch away from environmentally destructive cattle grazing and into less-harmful crop cultivation. We examine these predictions using five waves of the Brazil Agricultural census, and by re-constructing the evolution of the electricity grid for Brazil for the period 1960-2000. We show that electrification increased crop productivity (partly through irrigation investments), and farmers’ land use decisions subsequently change. The productivity increase leads to farming expansion and frontier land conversion, but also shifts land use within farms away from land-intensive cattle ranching and into crop cultivation. The latter allows farmers to retain more native vegetation within rural settlements, and overall we estimate that electrification causes a net decrease in deforestation in Brazil. We address the endogeneity of infrastructure placement by developing a model that forecasts hydropower dam placement based on topographic attributes of each location, and produces hypothetical maps that show how the electrical grid would have evolved had infrastructure allocation been based solely on exogenous cost considerations. The maps isolate the exogenous portion of the panel variation in electrification, and we use them to instrument for the evolution of the actual electricity grid, while controlling for location fixed effects. en
dc.title Infrastructure Development Can Benefit the Environment: Electrification, Agricultural Productivity and Deforestation in Brazil en
dc.contributor.author Assunção, Juliano
dc.contributor.author Lipscomb, Molly
dc.contributor.author Mushfiq Mobarak, Ahmed
dc.date.accessioned 2015-10-15T03:34:09Z
dc.date.available 2015-10-15T03:34:09Z
dc.date.issued 2015-10-15
dc.identifier.uri http://hdl.handle.net/123456789/53092
lacea.language.supported en
dc.description Working paper
dc.language.iso en
dc.subject Electricity
dc.subject Hydro-Power
dc.subject Agriculture
dc.subject Productivity
dc.subject Deforestation
dc.subject Brazil
dc.subject Amazon
dc.type Working Paper

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