The determinants of forest area in Brazil: Ethanol production, exports of crops and livestock, and asymmetric impact of temperature change

This paper evaluates the long-run impact of fuel ethanol production, exports of crops and livestock, and the asymmetric impact of temperature change on the forest area in Brazil. We use the non-linear autoregressive distributed lag model and annual data between 1990 and 2022. An increase in ethanol production or in exports of crops and livestock importantly reduces the forest area in Brazil, in the long-run. We demonstrate that while positive temperature change does reduce forest area in the long-run, falling temperatures do not guarantee the regeneration of lost forests. A temperature change increase of 1°C leads in the long term to a significant and very worrying reduction in the forest area of Brazil, of almost 9.8%. Some policy recommendations are drawn: i) To reduce GHG emissions, Brazil should encourage R&D and innovation in energy efficiency and renewable energy (e.g., solar, wave), especially in second-generation or third-generation biofuels production, through appropriate competitive credits and subsidies; ii) Brazil should encourage agricultural research to increase agricultural yields and the use of aeroponics for vegetable culture or smart agriculture, because this will lead to less pressure on agricultural lands and therefore on deforestation; iii) A strategy to preserve or even to recover the Brazilian Amazon forest should be established combined with a strategy for developing green tourism. Jel classifications: C22; F18; O13 ; O54 ; Q15 ; Q23 ; Q54.