Amazon deforestation driven more by domestic demand than export market, study finds

The Brazilian Legal Amazon (BLA) – which includes the entire Amazon basin located in Brazil and large adjacent tracts of the Cerrado, spanning nine states – covers more than 5 million square kilometers (km²) in area and corresponds to almost 60% of the country’s land mass. Almost a quarter of this area (23%) has been deforested and more than a million km² are degrading, so that the region risks reaching an ecological tipping point where ecosystems collapse and billions of tonnes of carbon are released into the atmosphere.

Some areas of the BLA, including the border areas of the Cerrado and the so-called “Arc of Deforestation,” are now net emitters of carbon. Conservation of virgin forest areas and rehabilitation of degraded areas are urgently needed, and members of the international community are taking action in this regard.

Foreign demand for raw materials is often considered the main cause of deforestation. While it is important, domestic markets exert much greater pressure, according to a study by Eduardo Haddad and colleagues published in the journal Nature and sustainability.

“Deforestation is often assessed from a supply perspective, meaning that the analysis focuses on productive sectors that promote the replacement of forest with other land uses, such as crop cultivation and livestock. The methodology we used allowed us to observe the phenomenon of deforestation also from a demand perspective, identifying the sources of economic stimuli that induce productive sectors to engage in deforestation.

“Based on this criterion, our study shows that 83.17% of deforestation is due to demand outside the Amazon and only 16.83% to demand from the region. Breaking down this 83.17%, we found that demand from other regions of Brazil represented 59.68% and foreign demand 23.49%,” Haddad said.

Haddad is a full professor at the School of Economics, Administration, Accounting and Actuarial Science of the University of São Paulo (FEA-USP) and a consultant to multilateral development finance organizations such as the World Bank, the Inter-American Development Bank (IDB), the Organization for Economic Co-operation and Development (OECD), the United Nations Development Program (UNDP) and the Joint Africa Institute (JAI).

The methodology used in the study is based primarily on the input-output matrix model developed by the Russian-born American economist Wassily Leontief (1906-1999). The model represents the relationships between economic sectors in a matrix format, showing how inputs from one industry produce outputs for consumption or use as inputs by another industry, and how changes in the production of goods or services affect the demand for inputs.

“In Brazil, the most recent input-output matrix was produced by IBGE (the national statistics office) in 2015. It has not been updated since then, due to mathematical complexity and limited access to data for millions of companies and their business structures. Using the 2015 data would be inadequate if the structure of the Brazilian economy had not changed very little in the meantime.

“The 2010s were the worst decade for GDP in 120 years, with growth averaging just 0.3 percent per year. We used the 2015 input-output matrix adapted for BLA, combined with sectoral and regional data on deforestation and greenhouse gas emissions, to measure the direct and indirect impact of domestic and foreign demand for BLA inputs and outputs, focusing on deforestation-intensive sectors such as agriculture,” Haddad explained.

Changes in land use

The Amazon has undergone enormous changes over the past half-century. Technical innovations, infrastructure investments, and political changes have facilitated the expansion of soybean cultivation from the central Cerrado to large portions of the BLA.

Local soybean production, which was less than 200 tons in 1974, or just 0.02% of the national total, reached 50 million tons in 2022, or 41.5% of the total. Livestock production has experienced similarly dizzying growth, from 8.9 million head of cattle in 1974 (9.5% of the national total) to 104.3 million in 2022 (44.5% of the total).

“The expansion of cattle ranching was mainly driven by the growth in consumption of beef, dairy products and leather goods in other regions of Brazil. Along with rising per capita income and rapid urbanization, meat consumption increased faster than the world average after the 1960s.

“Of the 1.4 million hectares deforested to make way for pastures, 61.63% responded directly or indirectly to domestic demand outside the Amazon and 21.06% to foreign demand. Deforestation to make way for crops followed a different trend, with 58.38% responding to export demand and 41.62% to domestic demand,” Haddad said.

The study indicates that deforestation in Brazil has been geographically concentrated in the BLA, affecting different biomes. In 2015, the BLA accounted for 65.7% of total deforestation nationwide. Cattle ranching was the main immediate cause (with 93.4% of the regional total), followed by agriculture, mainly soy, corn and cotton (6.4%), and mining (0.2%). Infrastructure construction and intensive urbanization were among the anthropogenic factors directly related to the removal or degradation of the original vegetation cover in the Amazon rainforest and Cerrado biomes.

“Illegal activities such as grilagem (misappropriation of public lands through falsification of property titles) are very relevant in this context. A recent study shows that half of the deforestation observed in the BLA in the last two decades took place on public lands illegally occupied by grileiros. Disputes over land ownership last for decades and do not prevent most illegal areas or illegal deforestation on private properties from participating in both the land market and the production process,” Haddad said.

This latest study shows that the economic demand of the most developed regions of Brazil (Southeast, Center-West and South) is an even more important factor in deforestation in the Amazon than the export market. This result constitutes an important contribution to policy development and civil society action to conserve or regenerate these areas.

Furthermore, as land-use changes due to cattle ranching and monoculture remain the main sources of CO₂ In Brazil, controlling deforestation and degradation is imperative if the country is to meet its greenhouse gas emission reduction goals.

Haddad is the first author of the study, whose last author is Carlos Afonso Nobre. Other co-authors are Inácio Fernandes de Araújo Junior, Rafael Feltran Barbieri, Fernando Salgueiro Perobelli, Ademir Rocha and Karina Simone Sass.