research
09-05 "The Environmental Impacts of Soybean Expansion and Infrastructure Development in Brazil’s Amazon Basin"
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Abstract
For decades, the development of transportation infrastructure in the Brazilian Amazon has been the government’s main social and economic development policy in the region. Reductions in transportation costs have not only opened the agricultural frontier to cattle ranching and logging but have also caused more than two-thirds of Amazonian deforestation. Currently, soybean cultivation is a new economic force demanding improvements to roads in the region. Profitable soybean crops have spread over the Mato Grosso’s cerrados and now head toward the core of the Amazon rain forest. One of the main constraints for soy expansion into the Amazon has been the poor condition of roads. In this study, we analyze the effect Amazon transportation infrastructure programs have on soybean expansion by lowering transport costs. The analysis is based on spatial estimates of transportation costs for the soybean sector, first using current road networks and then projecting changes based on the paving of the Cuiabá-Santarém road. Our results indicate that paving the Cuiabá-Santarém road would reduce transportation costs by an average of 10pertonforfarmerslocatedinthenorthernpartofMatoGrosso,byallowingproducerstoreroutesoybeanshipmentstotheSantareˊmport.Pavingtheroadalsowouldexpandtheareawheregrowingsoybeansiseconomicallyfeasiblebyabout70percent,from120,000to205,000km2.MostofthisnewareawouldbelocatedinthestateofParaˊandiscoveredlargelybyforests.ACost−Benefitanalysisoftheroadprojectindicatesthattheinvestmentsininfrastructurewouldgeneratemorethan180 million for soybean farmers over a period of twenty years. These benefits, however, ignore the project’s environmental impacts. If the destruction of ecological services and products provided by the existing forests is accounted for, then the Cuiabá-Santarém investment would generate a net loss of between 762millionand1.9 billion. This result shows the importance of including the value of the natural capital in feasibility studies of infrastructure projects to reflect their real benefits to society as a whole.