Economic Cycles and Land Speculation

From 1988 to 1991 deforestation declined by half, during a time of a deepening economic recession under president Fernando Collor that culminated with the government ceasing deposits in bank accounts in 1990, meaning that funds were no longer available for investment in deforestation (among other effects). Deforestation rose in the subsequent years as the economy recovered, reaching a record rate of 29,100 km²/year in 1995, as a consequence of the June 1994 Real Plan, a package of economic reforms that ended hyperinflation. Money that had been invested in the “overnight” (a 24-hour money market that could protect money from inflation) was suddenly available, and it was invested in deforestation, and not, for example, in recuperating degraded pastureland. Deforestation fell dramatically during the next two years, another consequence of the Real Plan. Because the plan had essentially halted inflation, generalized land speculation became unprofitable (though land purchases in areas where roads would be built or upgraded could still yield quick fortunes). Even under the inflation regime that has prevailed since the 1994 Real Plan, with much lower rates than those before this plan, clearing behavior is also frequently explained by speculative returns instead of solely by beef production (Carrero & Fearnside, 2011; Razera, 2005).

Land speculation is an important force in deforestation because the practical way to secure land holdings is to deforest to create cattle pasture. Under hyperinflation, land values in Amazonia increased faster than the rates inflation, and the increase in land value could yield much more profit than could raising cattle or other activities undertaken while they are in possession (either legally or illegally) of the land (Hecht, 1985, 1993; Hecht, Norgaard, & Possio, 1988). Land values in Amazonia and deforestation rates both fell by half after the implementation of Real Plan, an indication of how strong speculation had been as a driver. However, land speculation continues to be an important component in the profitability of extensive ranching (Bowman, Soares-Filho, Merry, Nepstad, Rodrigues, & Almeida, 2012). Following the decline after the 1995 peak, deforestation rates increased to a new peak of 27,772 km²/year in 2004, thanks to a strengthening economy and rising commodity prices. Beginning in 2005, there was a major decline in deforestation rates until 2012, after which the rate increased (with oscillations), reaching 7989 km²/year in 2016 (INPE, 2017a).

Commodities and Governance

Understanding the causes of the 2005–2012 decline in deforestation rates is essential to the policy lessons that can be derived from this experience. The Brazilian government has repeatedly claimed that the decline was the result of government actions, particularly the increases in inspections and fines for those who deforest illegally. In fact, the decline was brought about by a variety of factors, including governance measures, and it is these other factors that explain most of the decline. The decline occurred in two phases, the first from 2005 to 2007, and the second from 2008 to 2012. During the period up to 2007, deforestation rates tracked the prices of export commodities, such as soybeans and beef, making these the primary drivers during this period (Assunção, Gandour, & Rocha, 2015; see also Arima, Barreto, Araujo, & Soares-Filho, 2014; Hargrave & Kis-Katos, 2013). For the 1995–2007 period, more than 75% of the deforestation is explained by lagged prices of soy and beef (Arima et al., 2014). Most (70%) of the total 2005–2012 decline had occurred by 2007. From 2008 onward, commodity prices recovered, though deforestation continued to decline to 2012, indicating that something had changed. An event in 2008 that coincides with the change is a resolution of the Brazilian Central Bank (BACEN 3545/2008), which blocks loans from government banks for agriculture and ranching in properties with fines pending in the environmental agencies (Börner, Kis-Katos, Hargrave & König, 2015; Fearnside, 2015e). The fines themselves have little effect, since they can be appealed almost indefinitely and are rarely paid (e.g., Lima, Capobianco, & Moutinho, 2009). In contrast, the block on loans has immediate effect and there is no chance of appeal; it also has its greatest impact on the largest actors. Another key event in 2008 was that the federal environmental agency, the Brazilian Institute for the Environment and Renewable Natural Resources (IBAMA) initiated a blacklist of municipalities with high deforestation. The blacklisted municipalities had a significantly greater reduction in deforestation as compared to non-blacklisted municipalities over the 2009–2011 period (Arima et al., 2014), a trend that continued through 2012 (Cisneros, Zhou, & Börner, 2015). Blacklisted municipalities had additional requirements for obtaining licenses for legal deforestation, had more inspection effort focused on them by IBAMA, suffered restrictions on agricultural credit, and had additional impetus to hasten implantation of the Rural Environmental Register due to increased assistance from NGOs in registering properties and because of local desire to avoid reputational costs (Cisneros et al., 2015).

The strength of governance measures varies with election cycles, and there is a tendency to relax enforcement of environmental regulations prior to major elections, producing a significant relation between deforestation rates and elections (Rodrigues-Filho, Verburg, Bursztyn, Lindoso, Debortoli, & Vilhena, 2015). The mere anticipation of such relaxation can stimulate clearing, as was suggested by a dramatic surge in deforestation in Mato Grosso, in 2002, in the months prior to election of Brazil’s largest soybean producer as governor of the state, thus curtailing the state government’s deforestation control program (e.g., Fearnside, 2005b).

Fiscal Incentives

In the 1970s and 1980s, fiscal incentives offered by the Brazilian government were a major factor motivating deforestation by large ranchers (Binswanger, 1991; Mahar, 1979). Incentives included the right to invest in approved Amazonian ranches funds that would otherwise have been paid as taxes on the profits of enterprises elsewhere in the country, generous loans at interest rates far below the rate of inflation, and tax exemptions on the Amazonian income. Clearing forest was primarily a means of gaining access to these subsidies, rather than of earning income from beef production. The effect of incentives continued long after official discourse stressed that the incentive program had been ended. A 1991 decree halted approvals of new projects, but the already approved projects continue to receive the tax incentives (Fearnside, 2005a). Natural attrition, such as by bankruptcy, has reduced the impact of the incentives by reducing the number of eligible ranches.

Land Tenure

One of the most pervasive motives for deforestation is the establishment and maintenance of land tenure (Fearnside, 1979, 2001b). Much of the land in Brazilian Amazonia is in the public domain. Aside from occasional land distributions to small farmers in official settlement programs (such as those on the Transamazon Highway) and to large ranchers in areas that are sold through bidding (such as the Agriculture and Ranching District of the Manaus Free Trade Zone [SUFRAMA]), land enters the private domain by first being illegally invaded either by small squatters or by large grileiros (land thieves or “land grabbers”), and eventually the government recognizes the claims and grants title. The key to gaining title is showing “improvement” (benfeitoria) on the land, which means deforesting and planting something, cattle pasture being the cheapest option per hectare. But even if one has title to land, if it is left in forest, the owner can eventually expect to lose it, either through invasion by squatters or grileiros or by expropriation for a government settlement project.

The question of who is deforesting is essential to formulating policies that will be effective in containing the process. Deforestation is done for different reasons and by different actors in different parts of the region and in different historical periods in any given location. For example, land along the Belém-Brasília Highway (BR-010), built in the late 1950s and early 1960s, was first occupied by small squatters, who were later expelled (often violently) and replaced by large ranchers (Foweraker, 1981; Valverde & Dias, 1967). Similar patterns unfolded in much of southern Pará beginning in the 1970s (Schmink & Wood, 1992). The Transamazon Highway (BR-230), built in the early 1970s, was settled through government colonization projects in which small farmers received 100-ha lots (e.g., Moran, 1981; Smith, 1982). Many of these lots were later acquired by wealthier actors, who then proceed to use them as medium to large ranches (e.g., Fearnside, 1986b). A similar process took place along the Cuiabá-Porto Velho (BR-364) Highway in Rondônia (Fearnside, 1984). In Amazonia as a whole, large (officially defined in Brazilian Amazonia as > 1000 ha) and medium-sized (101–1000 ha) actors have traditionally predominated in deforestation (Fearnside, 1993, 2008b); but the relative importance of small (≤ 100 ha) farmers has been increasing, as indicated by the decreasing average size of new clearings (Rosa, Souza, & Ewers, 2012), and the deforestation slowdown since 2005 has disproportionately affected the larger actors (Godar, Gardner, Tizado, & Pacheco, 2014). However, small farmers have demonstrated greater potential to stabilize their land use in a mosaic of agriculture, pasture, and natural forest, and avoiding the consolidation of small properties into large ranches represents a beneficial measure from the point of view of minimizing deforestation (Campos & Nepstad, 2006; Godar, Tizado, & Pokorny, 2012).

Money Laundering

Money from such sources as drug trafficking, truck hijacking, government corruption, and income sources not declared to tax authorities can be invested in Amazonian deforestation with minimal risk. If the same funds were invested in the stock market or urban real estate, the inconsistency in declared income would soon be discovered by tax authorities. Illegal money forms a sort of cloud over Amazonia that affects what happens on the ground, often defying traditional economic logic. The terra do meio, an area in Pará the size of Switzerland, has for many years been essentially outside of the control of the Brazilian government (Greenpeace, 2003; Taravella, 2008). The area has been dominated by drug traffickers, grileiros, and other illegal actors (Escada, Vieira, Amaral, Araújo, da Veiga, Aguiar et al., 2005; Fearnside, 2008b; Greenpeace, 2003; Instituto Socioambiental, 2016; Schönenberg, 2002). In 2005, following the assassination of Dorothy Stang (a defender of Amazonian social and environmental causes), a group contiguous of protected areas (known in Brazil as a “mosaic”) was created in the terra do meio, but the environmental agencies have yet to establish a physical base in the area, something that has been planned since 2002. An example of deforestation that is inexplicable by traditional economic logic is provided by a 6239-ha clearing (known as the “revolver” because of its shape) that suddenly appeared, in 2003, in the terra do meio (Venturieri, Aguiar, Monteiro, Carneiro, Alves, Câmara et al., 2004). The location was far from any roads and had been classified as one of the least-promising locations for profitable ranching in all of Amazonia, based on the calculated farm-gate price of beef (Arima, Barreto, & Brito, 2005, p. 50).

Logging

Logging is an important driver of deforestation, though its effect is delayed and hard to show statistically because in areas with active logging there is little deforestation, whereas in those where deforestation is in full swing, timber is no longer available for logging. Logging facilitates deforestation by providing clandestine “endogenous” roads that are subsequently used for entry of deforesters (Arima, Walker, Perz, & Caldas, 2005). It also provides much of the money that pays for the felling itself, in the cases of both large actors and small ones (Veríssimo, Uhl, Mattos, Brandino, & Vieira, 2002).

Mining

Mining is another driver of deforestation. Gold miners (garimpeiros), who are attracted to areas with alluvial deposits, can stay on later as squatters or invest proceeds in land or in clearing (MacMillan, 1995). Iron mining in the Carajás area justified a major government program to promote agriculture and ranching in the region and also feeds pig-iron smelters who draw wood from the surrounding region for charcoal (Fearnside, 1986a, 1989a). Bauxite mining, aside from the mine sites themselves, feeds an aluminum smelting industry that drives massive impacts from the hydroelectric dams that are built to supply the smelters (Fearnside, 2016d). The areas surrounding dams are associated with increased deforestation (Barreto, Brandão, Martins, Silva, Souza, Sales et al., 2011; Baretto, Brandão, Silva, & Souza, 2014; Fearnside, 2014a, 2014b).

Roads

Roads are the most powerful driver of deforestation (Kirby, Laurance, Albernaz, Schroth, Fearnside, Bergen et al., 2006; Laurance, Cochrane, Bergen, Fearnside, Delamônica, Barber et al., 2001; Pfaff, 1999; Pfaff, Robalino, Walker, Aldrich, Reis, Perz et al., 2007; Soares-Filho, Nepstad, Curran, Cerqueira, Garcia, Ramos et al., 2006). The construction or upgrading of a road increases migration to the area it accesses; increases the profitability of agriculture and ranching; and greatly increases land values, with consequent speculative deforestation and a turnover of landowners in favor of wealthier actors who deforest faster than the previous owners (Fearnside, 1987a, 1987b). Deforestation follows roads, and the presence of deforestation has a contagious effect, leading to further acceleration of deforestation along these routes (Rosa, Purves, Carreiras, & Ewers, 2014; Rosa, Purves, Souza, & Ewers, 2013). Roughly 80% of the forest loss in Brazilian Amazonia has been in the “arc of deforestation,” a crescent-shaped strip along the southern and eastern edges of the forest (Figure 3). New highways are bringing deforestation activity into the heart of the Amazon. The most critical case is the planned reconstruction of the abandoned Manaus-Porto Velho (BR-319) Highway, which would connect the arc of deforestation with central Amazonia, bringing the actors and processes from Rondônia to large areas in Amazonas and Roraima that have road access from Manaus, and open the large block of intact forest in the western portion of the state of Amazonas through planned side roads (Fearnside & Graça, 2006). The environmental impact statement for this planned highway presented Yellowstone National Park as the expected deforestation scenario, envisioning tourists driving through the area on a “park-highway” without cutting a single tree (see Fearnside, 2015d; Fearnside & Graça, 2009). The unreality of this portrayal of an Amazon frontier would be hard to exaggerate. Unrealistic “governance scenarios” like this are simply excuses that serve to justify the licensing of highways, which imply very real impacts.

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Figure 3. Deforestation through 2015 in Legal Amazonia and the Amazonia biome. The “arc of deforestation” is the heavily impacted crescent-shaped area along the eastern and southern edges of the forest (deforestation shown in red). Data from Instituto Nacional de Pesquisas Espaciais (2017a).

Soybeans

Soybeans have been a major force behind deforestation in Mato Grosso, and there have also been advances in some parts of Pará, particularly the Santarém area (Barona, Ramankutty, Hyman, & Coomes, 2010; Fearnside, 2001c; Morton, DeFries, Shimabukuro, Anderson, Arai, del Bon Espirito-Santo et al., 2006). Besides the direct conversion of forest for soy, the crop has a very important indirect impact. Soy advance into pasture in the cerrado (as well as into forest areas in northern Mato Grosso) has a prominent role in driving increased investment in clearing for ranches in Amazon rainforest areas in Pará (Arima, Richards, Walker, & Caldas, 2011; Richards, Walker, & Arima, 2014). The Chinese have played a key role in driving the conversion of forest and cerrado (Fearnside, Figueiredo, & Bonjour, 2013). This has primarily been through exports, but it has also been through land purchases and the financing of transport infrastructure. Transport infrastructure is the main limitation on the spread of soybeans from the most profitable areas in Mato Grosso, particularly to the west in Rondônia and Acre, as well as in the portions of northern Mato Grosso still dominated by pasture (Vera-Diaz, Kaufmann, Nepstad, & Schlesinger, 2008).

International finance has played a significant role in speeding the advance of soy. In 2002 and 2003 the International Finance Corporation (IFC), the arm of the World Bank that finances private companies, granted Grupo André Maggi (Brazil’s largest soy company) two US$30 million loans. The IFC classified the loans as Category B (low environmental risk), thus not requiring any environmental-impact assessment or subsequent monitoring of impacts. This IFC classification allowed Rabobank (of the Netherlands) to grant Maggi two loans totaling US$330 million (Greenpeace, 2006, p. 18). Financing from the Brazilian government’s National Bank for Social and Economic Development (BNDES) has also been a major force in the advance of soy (Greenpeace, 2006).

It should be noted that gross domestic product (GDP) is not a good predictor of deforestation. Statements associating GDP with clearing give the false impression that deforestation is an inevitable consequence of economic progress. The fraction of Brazil’s economy contributed by new clearing on the Amazon frontier is minimal, although the large areas of soybeans in previously cleared areas are a significant contributor. The questionable nature of a link to GDP is shown by “decoupling” of deforestation rates from agricultural production during the 2005–2012 deforestation slowdown (Lapola, Martinelli, Peres, Ometto, Ferreira, Nobre et al., 2014; Nepstad, Irawau, Bezerra, Boyd, Stickler, Shimada et al., 2013; Nepstad, McGrath, Stickler, Alencar, Azevedo, Swette et al., 2014).

Cattle Ranching

Cattle production (as opposed to ulterior motives) is becoming more prominent in the mix of deforestation motives in Amazonia. This is behavior that following the traditional economic logic, in which actors deforest to earn profits from the sale of products from agriculture and ranching (Faminow, 1998; Margulis, 2004; Mattos & Uhl, 1994; Mertens, Poccard-Chapuis, Piketty, Laques, & Venturieri, 2002). Forest conservation ultimately requires addressing the “underpinnings of the cattle economy itself” (Walker, Moran, & Anselin, 2000). Cattle ranching is even accelerating in the extractive reserves, created to maintain forests by supporting traditional populations of rubber tappers and Brazil-nut gatherers; ranching has proliferated in these areas and is replacing the economy based on nontimber forest products (Salisbury & Schmink, 2007). Rubber extraction is not economically viable without subsidies (Jaramillo-Giraldo, Soares Filho, Ribeiro, & Gonçalves, 2017).

Export in general has become a more prominent predictor of deforestation at the municipality (county) level (Faria & Almeida, 2016). The increase in beef exports is especially significant because of the great potential for expansion (McAlpine, Etter, Fearnside, Seabrook, & Laurance, 2009). Brazilian exports of frozen beef were barred from virtually all international markets because of the presence of foot-and-mouth disease (Fearnside, 1987a). Brazilian Amazonia was thereby protected from the “hamburger connection” (Myers, 1981) that has driven much of the deforestation in Central America, an area that is free of the disease. Beginning in 1998, states in Brazil were successively certified as free of foot-and-mouth disease, starting with the non-Amazonian states in the south (Kaimowitz, Mertens, Wunder, & Pacheco, 2004). This had an indirect impact on Amazonia in that beef produced in southern Brazil could be exported; whereas people in São Paulo, for example, could eat beef from Pará. All nine states in Brazilian Amazonia have, since 2015, been classified as having, at most, a medium risk, in addition to being without clinical cases of the disease; but Amazonas, Roraima, and Amapá have not been classified as “disease free,” which would allow direct exports from these states (Pithan e Silva, 2016). Brazil is the world’s largest exporter of beef, some of which is even exported as live cattle. In 2015 and 2016, accords with Russia, the United States, and China opened these markets to Brazilian beef. The full opening of the Chinese market is particularly significant, since its potential scale is essentially infinite from the perspective of Brazilian producers. In addition to dominating beef exports to China, Brazil is also China’s main supplier of leather. China is the world’s largest manufacturer of shoes. In 2008, the value of Brazil’s leather exports totaled US$1.9 billion, as compared to US$5.1 billion for beef (Greenpeace, 2009, p. 61).

The Brazilian government’s generous subsidies for ranching in the 1970s and 1980s came during the “economic miracle” period, and their later curtailment was coincident with a severe recession. As in the case of soybeans, international finance has contributed to speeding up of the current “modern” period of livestock production and processing. In March 2007, the IFC made a US$90 million loan to Bertin (Brazil’s largest slaughterhouse company at the time), which supplied beef to Burger King, among many other outlets (Greenpeace, 2009; Rich, 2013). Brazilian government financing from BNDES has also been important in advancing the modern livestock industry in Amazonia.

Population Growth

Increasing population has a significant effect on Brazil’s Amazonian deforestation (Laurance, Albernaz, Schroth, Fearnside, Bergen, Venticinque et al,, 2002). However, interpreting the relationship is more complicated than might be thought. Studies that look at political units, such as countries, states, or municipalities, or at arbitrary geographic units, such as grid cells, will find results on population change and deforestation rate that go in both directions and will conclude that there is no relationship between these two variables. The first step to make sense of such data is removing the urban population from the analysis. While the urban population has an effect, it is very distinct from the effect of the direct deforestation actors. Then, there must be a breakdown by the different rural actors who are present before and after the land-use transformation under study, such as deforestation in a given period. These data do not exist for Brazil. The only solution is to obtain detailed information from case studies in specific locations. It is important that the locations chosen be “typical” of large areas of deforestation. The places being converted to cattle pastures in Brazilian Amazonia represent an obvious priority.

Two key questions affecting the relationship of population and deforestation are (a) who are the actors, such as ranchers versus small farmers, and (b) what population and land use is being replaced. If the situation is one of small farmers replacing “unoccupied” forest, then a greater population (of small farmers) translates into more deforestation. If it is ranchers who are replacing “unoccupied” forest, then the same relationship applies, although the number of people will be lower and the amount of deforestation per capita will be much greater. If the situation is one of ranchers replacing small farmers, then the human population will decrease and the rate of deforestation per capita will increase, resulting in a negative relationship between population change and deforestation rate.

One theory regarding population is that increasing rural-urban migration will result in the abandonment of large areas that are currently used for agriculture and ranching, leading to the establishment of secondary forests and a recovery of biodiversity (Wright & Muller-Landau, 2006). Unfortunately, other than existence of significant rural-urban migration (Parry, Day, Amaral, & Peres, 2010), this theory bears little resemblance to events in Amazonia (Fearnside, 2008c). Those who migrate to cities are usually riverside inhabitants, who do very little deforestation. Were larger actors to give up their operations and move to cities, their land would be sold to others who would continue to use the cleared areas (sometimes with intervals under secondary succession). Cattle pasture requires very little labor once established, and a small population can occupy a very large area.

Household Dynamics

Household processes among small farmers can result in deforestation that is independent of the profit-seeking motive, which can be used as a lever by incentive programs to change clearing behavior. These include household demographic changes and the economic circumstances of each family (Caldas, Walker, Arima, Perz, Aldrich, & Simmons, 2007). At the stage in the household life cycle when both labor capability and the demand for consumption to support dependents are at a maximum, deforestation advances at maximum speed and is unlikely to be influenced by outside policy interventions. Minimizing risks takes precedence over maximizing profits (Walker, Perz, Caldas, & Silva, 2002).

Extreme Degradation

Forest can be converted to nonforest (i.e., deforested) by extreme degradation rather than by clear-cutting. Degradation is becoming increasingly prevalent in Brazilian Amazonia and has not been affected by the forces that shifted deforestation rates to a lower plateau after 2004 (Souza et al., 2013). Logging is a major factor that even prior to the deforestation “slowdown” affected a larger area each year than the annual clear-cut (Asner, Knapp, Broadbent, Oliveira, Keller, & Silva, 2005). Logging has increased since the slowdown began, rather than decreasing in parallel with the deforestation (e.g., Silvestrini, Soares-Filho, Nepstad, Coe, Rodrigues, & Assunção, 2011), making the post-slowdown area that is subjected to logging each year far greater than the area that is deforested outright. Logging makes forests more susceptible to entry of fire because it leaves slash and unintentionally killed trees in the forest that can act as fuel, and also opens canopy gaps that allow sunlight and wind to enter, hastening the drying of the fuel bed (Cochrane, Alencar, Schulze, Souza, Nepstad, Lefebvre et al., 1999; Nepstad, Verissimo, Alencar, Nobre, Lima, Lefebvre et al., 1999; Uhl & Buschbacher, 1985). This sets in motion a positive-feedback process that successively degrades the forest by the repeated entry of fire (Barlow & Peres, 2006; Nepstad, Carvalho, Barros, Alencar, Capobianco, Bishop et al., 2001). Droughts are major factors in facilitating Amazonian forest fires, with or without logging (Alencar, Nepstad, & Diaz, 2006; Aragão & Shimabukuro, 2010; Barbosa & Fearnside, 1999; Barlow & Peres, 2008; Barlow, Peres, Lagan, & Haugaasen, 2003; Berenguer, Ferreira, Gardner, Aragão, de Camargo, Cerri et al., 2014; Vasconcelos, Fearnside, Graça, Nogueira, de Oliveira, & Figueiredo, 2013). Droughts also degrade forest by killing trees for lack of water, even in the absence of fire (Lewis et al., 2011; Nepstad, Tohver, Ray, Moutinho, & Cardinot, 2007; Phillips, Aragão, Fisher, Lloyd, Lopez-Gonzalez et al., 2009). Severe droughts are becoming more frequent in Amazonia, for various reasons (Marengo & Espinoza, 2016), and climate-change projections indicate the likelihood of substantial future increases in these events (e.g., Malhi, Roberts, Betts, Killeen, Li, & Nobre, 2008). Loss of biodiversity caused by anthropogenic disturbances may even double the losses caused by the deforestation itself, as shown by study in Pará that found median losses from perturbation to be larger than those from deforestation in three of the five areas of endemism in this state (Barlow, Lennox, Ferreira, Berenguer, Lees, MacNally et al., 2016). In addition to degradation from logging and fire, hunting threatens wildlife (Antunes, Fewster, Venticinque, Peres, Levi, Rohe et al., 2016) and removes animals essential for the reproduction and dispersal of trees (Peres, Emilio, Schietti, Desmoulière, & Levi, 2016).

The Post-slowdown Deforestation Surge

Following the 27,772-km²/year peak of deforestation in 2004, rates fell by 84% to 4571 km²/year in 2012. This engendered a dangerous illusion in Brasília that deforestation was under control and that the government could therefore build roads, dams, and other infrastructure without putting the forest at risk. Unfortunately, this was never the case. Deforestation rates have trended upward since 2012, and jumped by 29% in 2016. The underlying forces behind deforestation have increased each year, with ever more population, investment, and roads that give deforesters access to the forest. More international markets were opening for Brazilian beef during this period, and exports were expanding. The reversal of the deforestation decline in 2012 coincided with the enactment of a major weakening of Brazil’s Forest Code, reducing restrictions on clearing near rivers and on steep hillsides and pardoning vast areas of illegal clearing done by 2008, with significant environmental and social consequences (Metzger, Lewinsohn, Joly, Verdade, & Rodrigues, 2010; Soares-Filho, Rajão, Macedo, Carneiro, Costa, Coe et al., 2014). Most importantly, this demonstrated the extraordinary influence of the “ruralist” bloc (representatives of large landholders) and created an anticipation of future “amnesties.”

The 1965 Forest Code (Law 4771/1965), a package of regulations governing deforestation, was replaced by Law 12,651/2012. In 2011, the initial vote in the House of Deputies, where representation is proportional to population, approved the revision by a ratio of 7:1. Since 85% of Brazil’s population is urban, the vast majority of the electorate has no financial stake in being allowed to deforest more, especially in risk-prone locations. Opinion polls showed 80% of Brazil’s population opposing any changes in the Forest Code (Lopes, 2011). The power of money from soy and other agribusiness interests is believed to be the most logical explanation for the outcome (Fearnside & Figueiredo, 2016).

The most noteworthy at the time of the deforestation surge in 2016 was the political uncertainty during and after the trial of president Dilma Rousseff, who was forced to step aside when her trial began in March 2016, culminating in her formal impeachment in August 2016. The uncertainty in 2016 offered an opportunity for the rapid advancement of legislative initiatives to remove environmental restrictions, and this continued following the formal transfer of presidential powers (Fearnside, 2016b). Other factors may have contributed. The value of the Brazilian real relative to the US dollar decreased by 12% from January to May 2016 (the period when decisions regarding deforestation are usually made), increasing the attractiveness of exporting soy and beef. Beef prices rose by 5%, and soy prices rose by 12.5%. The May 2016 soy price was 18% above the May average for the preceding five years. These economic factors would have contributed to the 2016 surge, but the magnitude of the surge suggests that it also had roots in the spectacular rise in the political power of the ruralists, which had begun well before the end of the previous presidential administration (Fearnside, 2017d).

The similarities and differences in the changes in deforestation rates among the nine states in Legal Amazonia are revealing. Deforestation rates increased in all states except Amapá and Mato Grosso. Amapá is insignificant, since the state only accounted for 0.3% of the total deforestation in 2016. Deforestation in Mato Grosso in 2016 was 1508 km², though this was 5.8% less than in the preceding year. Mato Grosso has a substantial influence from soybeans, whereas in the other states the vast majority of clearing is for pasture. The importance of Mato Grosso relative to other Amazonian states has been decreasing, from 43.1% of the total deforestation in 2004 to 18.9% in 2016, reflecting the dwindling areas of remaining forest in places that are topographically favorable for mechanized agriculture. Other factors leading to decreased clearing in Mato Grosso include the predominance of large properties in this state; these properties are more sensitive to repression measures than are smaller ones (Godar et al., 2014). The distribution of the 2016 surge among Amazonian states suggests a continuation of trends to increased prominence of ranching relative to direct deforestation for soybeans, and of greater importance of smaller properties relative to larger ones.

Repression

Inspection and the punishment of illegal deforestation is an important part of any effort to control the process, because the lack of this form of action fosters an assumption of impunity, with far-reaching consequences. Monitoring capabilities are important to these efforts, and the advent of the DETER program, in 2004, provided an essential tool to allow reaction within a meaningful time period (Assunção, Gandour, & Rocha, 2013). Since 2003, Brazil’s command-and-control program is administered under the Plan of Action for Prevention and Control of Deforestation in Legal Amazonia (PPCDAm) (Ministério do Meio Ambiente, 2013). The program has had measurable effects (Arima et al., 2014).

Amazonian deforestation can be controlled, but the unfounded notion that it is under control and that therefore new roads, dams, and other infrastructure projects can be built without increasing deforestation is very dangerous. The official government interpretation—that the 2005–2012 decline proves that deforestation is under control—has been repeated countless times. However, falling commodity prices (rather than governance measures) account for nearly all the decrease in deforestation rates between 2005 and 2007, which represents 70% of the total through 2012, when the downward trend ended. Deforestation rates did not continue to decline after 2012, despite frequent official statements implying that the decline continued.

The effect of the repression program since 2008 rests on a fragile foundation: the 2008 Central Bank resolution linking government bank loans to an absence of pending fines (Fearnside, 2015e). This is because the ruralist bloc has enormous influence in the national legislature, and revoking the Central Bank resolution is one of its priorities. The effectiveness of the repression program could literally be removed at the stroke of a pen.

An example of the potential for the repression of deforestation to have an effect on clearing rates is provided by a state government program, from 1999 to 2001, in Mato Grosso (Fearnside, 2003b). At a time when deforestation was increasing in Amazonia as a whole, the trends in Mato Grosso turned from increases to decreases in municipalities in which significant amounts forest were still available for clearing (deforestation will tend to zero independent of any repression program in municipalities with little left to clear). However, after the election of Brazil’s largest soy entrepreneur as governor, in 2002, the program was gutted and entered a phase of “institutional subversion” (Rajão, Azevedo, & Stabile, 2012).

It is important that direct deforestation control measures, such as fining property owners who clear without the required licensing and restricting credit in municipalities (counties) that have been blacklisted for illegal deforestation, can have a significant effect (Tasker & Arima, 2016). The Brazilian foreign ministry’s long opposition to any form of international payment for avoiding deforestation was based on the belief of key individuals that controlling deforestation was impossible (Fearnside, 2012a). Indeed, the succession of “packages” of control measures implemented after each rise in clearing rates seemed to have no effect. Brazil changed its position in 2007, after the “slowdown” in deforestation was well underway.

Remove or Redirect Subsidies

Subsides take many forms besides the notorious fiscal incentives that massively subsidized large cattle ranches in the 1970s and 1980s. Low-interest loans are provided for actors of various sizes, including small farmers. A large subsidy, which often goes unrecognized, results from periodic “amnesties,” forgiving debts for farmers, both large and small, whose crops have failed because of weather events or other general misfortunes, thus transferring the risk of these agricultural activities to the taxpayers (e.g., Fearnside, 2001b). Of course, a wide array of other government expenditures provides transport infrastructure and other services in remote locations, generally with only a minimal return to the government in the form of taxes. In the case of small farmers, the fact that a substantial fraction of the economically disadvantaged portions of Brazil’s rural population depends on government bolsas (stipends), such as the family stipend (bolsa família), and on rural retirement benefits for elderly family members, represents a substantial subsidy that maintains families in agricultural activities even when they are unprofitable in their own right. Although they are closely tied to electoral politics, these income-redistribution programs are based on poverty-reduction objectives that apply to both rural and urban residents throughout the country as a matter of social justice. Government stipends maintain important deforestation actors, such as sem terras (organized landless workers). These actors have a key role in settlement establishment and deforestation (Simmons, Walker, Perz, Aldrich, Caldas, Pereira et al., 2010). Government settlement projects are heavily subsidized (Peres & Schneider, 2012). Even at the low levels of deforestation by small farmers, rural residents emit far more greenhouse gases than do urban residents, and the impact of the larger actors is very much greater (Fearnside, 2001a). Preventing rural-urban migration is seen as socially desirable, both by rural people who want to stay where they are and by urban residents who fear the social impact of burgeoning cities. However, municipality-level data in Amazonia indicate a positive effect of urbanization on well-being as measured by the human development index (HDI) (Caviglia-Harris, Sills, Bell, Harris, Mullan, & Roberts, 2016). The questions of how much rural subsidy is appropriate and of what types are extremely delicate ones.

Remove Ulterior Motives

Land speculation is a motive for deforestation that has essentially no benefit for the country and leads to substantial environmental damage. It needs to be stopped by government actions such as taxes and fines.

The present system of land-tenure establishment, which is based on deforestation, must end. Brazil has yet to make the transition from the centuries-old custom of the “regularization” of de facto possession of illegal land claims to one in which the population assumes as a matter of course that illegal occupation of land will not eventually result in a land title. A significant setback occurred in 2009, with Provisional Measure (MP) 158 (Law No. 11,952) creating the terra legal (legal land) program that legalizes claims up to 1500 ha (which can hardly be considered a small farm). Large illegal claims are often subdivided among the various members of an extended family to gain legal title within the limits of the program. The amount of land potentially to be legalized totals 67 million ha, or half the size of the state of Pará (Fearnside, 2013a). Most pernicious, the program leads to the logical assumption by present and future grileiros and squatters throughout the region that their claims will eventually be legalized by subsequent regularization programs. Achieving the goal of Amazonia becoming a landscape with defined and secure land tenure is essential for many reasons, including encouraging more sustainable behavior by landholders and assuring the rights of exclusion that must underlie any program for payment for environmental services, but a path to reaching this goal without provoking the perverse assumption of an eternally moving “line in the sand” has yet to be found. The “closing of the frontier” in 1890 in the western United States (Turner, 1893) has yet to have its parallel in Brazilian Amazonia, and a way must be found to achieve this by means other than simply running out of land (Fearnside & Graça, 2006).

Land-tenure establishment is handled by the National Institute for Colonization and Agrarian Reform (INCRA), which in recent years has acted almost entirely reactively, resettling squatters and sem terras (members of organized landless movements) in official settlement areas (Fearnside, 2001b). Settlements represented 13.5% of all deforestation up to 2011 in the 1911 settlements included in a study by Schneider and Peres (2015). In a study by Yanai, Nogueira, Graça, and Fearnside (2017) covering 3325 settlements, the settlements accounted for of 21% of the deforestation up to 2013. This process has no natural stopping point because the number of landless farmers in the country exceeds the capacity of the entire Amazon region if distributed in settlement areas (Fearnside, 1985). Caldas, Simmons, Walker, Perz, Aldrich, Pereira et al. (2010) expressed the implications most eloquently, “It is time to recognize past mistakes and adapt the land policy to the new reality in the Amazon that takes into consideration the environmental problems that current laws are causing. If we do not act now, the future of the poor in the region will not change; and the same cyclic processes of land occupation and degradation will occur until no forest will remain to support life in the region.”

Soy Moratorium

On July 24, 2006, three months after the release of the Greenpeace (2006) report “Eating Up the Amazon,” Cargill and other major soy exporters of were convinced to sign a “soy moratorium” that committed them to not buy soy grown in the Amazon on land deforested after 2006 (a cutoff that was relaxed to 2008 in 2013). The moratorium was successively renewed, and in 2016 it was made permanent. It has had a measurable effect in reducing new forest clearing for soy (Adario, 2016; Gibbs, Rausch, Munger, Schelly, Morton, Noojipady et al., 2015). However, the soy moratorium cannot be credited with the overall decline in deforestation rates in Amazonia (the “slowdown”), as has sometimes been implied. The departure of overall deforestation rates from what is explained by commodity prices only began in 2008, not in 2006. The direct conversions affected by the moratorium are only a portion of the impact of soy. The moratorium does not include the cerrado, where soy expansion continues unfettered. The displaced deforestation from pastures converted to soy (either in the cerrado or in the Amazon forest) causes increasing clearing of Amazon forest for pasture, not only by means of the invisible hand of the economy, as ranchers respond to price signals, but also directly by the migration of ranchers themselves to rainforest areas. When an area becomes more profitable to use as soy than as pasture, as happened, for example, in Mato Grosso, ranchers do not switch to become soy planters. Instead, the ranchers (who represent a distinct cultural group in Amazonia; see Hoelle, 2015) will sell their land to a buyer with a soy-planting background (often arriving from non-Amazonian states such as Rio Grande do Sul), and the rancher will use the proceeds of the sale to buy a much larger area of cheap land in Pará on which to establish a new ranch.

Another limitation is that significant markets exist outside the exporting companies that participate in the soy moratorium. Since 2013 the main destination for Brazilian soy has been China, where purchases are little influenced by environmental impacts in other parts of the world. There are also domestic markets, including the market for soy oil in Brazil’s biodiesel program (Fearnside, 2009b).

Cattle Agreement

In June 2009 Greenpeace released a report entitled “Slaughtering the Amazon” (Greenpeace, 2009), and four months later, the “cattle agreement” was signed by major slaughterhouses: JBS (Friboi), Bertin, Minerva, and Marfrig. There were actually two agreements: in July 2009, a term of adjustment of conduct was signed; and in October 2009, a zero deforestation agreement (G4). The agreements have been found to have had an effect in reducing deforestation despite problems with “laundering” cattle (Gibbs, Munger, L’Roe, Barreto, Pereira, Christie et al., 2016). “Laundering” cattle occurs when a nonparticipating ranch moves its cattle to a participating ranch, from which the cattle are sold to one of the signatory slaughterhouses. Improbably high cattle production per hectare of pasture is a sign that ranches are acting as intermediaries. This is a “common and accepted practice” and is not prohibited by the cattle agreement (Gibbs et al., 2016, p. 8). The monitoring system tracks only properties, not individual cows (which would need to be identified by ear tags, for example). The cattle agreement is most relevant for beef being exported to other countries, although the adherence of Brazil’s largest supermarket chain (Pão de Açucar) in 2016 is an important milestone in the domestic market (Charoux, 2016). Earlier, 35 Brazilian supermarket chains had discontinued beef purchases from offending slaughterhouses, and similar commitments had been made by some leather buyers (Arima et al., 2014, p. 467). As with soybeans, the fact that China is the major destination for beef undermines any possibility of pressure from consumers there affecting adherence.

An example of the problems with the cattle agreement is provided by JBS (which gets its name from the initials of its founder, João Batista Sobrinho), which, including the fusion of Friboi and Bertin, which it acquired on October 27, 2009, is the world’s largest processer of cattle products. Shortly before the cattle agreement, Greenpeace reported a large number of cattle purchases by Bertin from ranches that had been embargoed (Greenpeace, 2009). After the cattle agreement, the federal prosecutor’s office found a similar pattern of violation by JBS (Greenpeace, 2011); in 2012, JBS recommitted to the cattle agreement.

Protected Areas

Creating and defending protected areas is an important component of any strategy for containing deforestation. Protected areas in Brazil include both indigenous lands, which are under the National Foundation of the Indian (FUNAI), and “conservation units,” which are under the Ministry of the Environment (Ministério do Meio Ambiente [MMA]) if federal, or under equivalent state-level agencies if created by the state governments. Since advent of the National System of Conservation Units (SNUC), in 2000, conservation units are classified into categories as “integral protection” and “sustainable use” (Ministério do Meio Ambiente, 2015). The integral protection category is for various kinds of parks and reserves that exclude human residents; the sustainable use category includes forests for timber management, “extractive reserves” for rubber tappers and other collectors of nontimber forest products, and “sustainable development reserves” with riverside dwellers and other traditional residents. Overlap sometimes occurs between indigenous territories and conservation units, leading to conflicts among government agencies and between the resident populations and the agencies. A case in point is a national forest (for timber management) that was created on the Tapajós River without considering the needs of the Munduruku indigenous residents, who are struggling to have the area declared as an indigenous land (Fearnside, 2015b).

Protected areas have a significant effect on preventing deforestation (Ferreira, Venticinque, & de Almeida, 2005; Ricketts, Soares-Filho, da Fonseca, Nepstad, Petsonk, Anderson et al., 2010; Veríssimo, Rolla, Vedoveto, & Futada, 2011; Walker, Moore, Arima, Perz, Simmons, Caldas et al., 2009). Location with respect to the arc of deforestation is important in this effect (Nolte, Agrawal, Silvius, & Soares-Filho, 2013), and the defensibility of the sites chosen should be an essential criterion in selecting areas (Peres & Terborgh, 1995). The category of the protected area, together with its administration at the state or federal level, affects reserve effectiveness in preventing deforestation (Vitel, Fearnside, & Graça, 2009). Locational effects and political pressures can obscure these differences (Pfaff, Robalino, Sandoval, & Herrera, 2015). Indigenous lands have the best record in excluding deforestation (Nepstad, Schwartzman, Bamberger, Santilli, Ray, Schlesinger et al., 2006). In the case of the Amazon Protected Areas Program (ARPA), which beginning in 2002 created and fortified a series of conservation units to meet an objective of protecting 600,000 km²of Amazonian forest, the reserves have been shown to imply a reduction in deforestation (Nepstad et al., 2006; Soares-Filho, Moutinho, Nepstad, Anderson, Rodrigues, Garcia et al., 2010).

Sites can be selected to create barriers in order to block the advance of deforestation. For example, in 2004, a 30,000 km² “mosaic” of protected areas was created by the state of Amazonas to block entry of deforestation from Mato Grosso. Another example is the “armored zone” (zona blindada) along the proposed BR-319 (Manaus-Porto Velho) Highway. This is supposed to act, in a way similar to the armor on a tank, to prevent deforestation from perforating the barrier of reserves that are parallel to the highway. Although the reserves themselves may resist deforestation, planned side roads cutting through them would simply take deforesters into unprotected areas beyond the line of “armor” (Fearnside, Graça, Keizer, Maldonado, Barbosa, & Nogueira, 2009). Reserves are needed in the large area that would be exposed to this migration to the west of the Purus River (Graça, dos Santos M. A., Jr., Rocha, Fearnside, Emilio, Menger et al., 2014). Similarly, new reserves are needed in Roraima in areas that would receive migrants from the arc of deforestation as a result of opening the BR-319 (Barni, Fearnside, & Graça, 2015).

The creation of protected areas is, in many cases, a question of now or never. Once population moves into and claims an area, it becomes politically impossible to create protected areas. One of the choices that must always be made is whether to prioritize the creation of areas in the integral-protection category or in the sustainable-use category. Because it is much easier to obtain political and local support for creating sustainable-use areas, these often best serve the objective of obtaining large areas of protected forest within a time frame that avoids losing the option to create a protected area altogether (Fearnside, 2011). Depending on circumstances, creating integral-protection protected areas can also result in social injustices. However, it is also possible to go too far in the direction of reduced protection in order to garner support. The SNUC includes as one of its protected area types the “environmental protection area” (APA). There are almost no restrictions on APAs, in practice, including in urban areas. Creating APAs may result in maps with large areas colored in green, but it does little to actually protect the forest. Instead, it offers an easy escape for interest groups intent on averting protected-area restrictions because they can always demand that a proposed protected area be an APA instead of one of the types with more real protection (e.g., Câmara, 2000; Pádua, 2011).

Protected areas are not as protected as is often assumed (Table 1). Deforestation takes place within these areas, including indigenous areas (Fearnside, 2005b; Nogueira, Yanai, Vasconcelos, Graça, & Fearnside, 2017). There is also a tendency for the government to downgrade or downsize existing reserves, or even to revoke them completely (Bernard, Penna, & Araújo, 2014; de Marques & Peres, 2015). An example is provided by the protected areas that would be affected by planned dams in the Tapajós River basin (Fearnside, 2015a). Another is a proposed law by legislators from the state of Amazonas to revoke protection from 10,000 km² of the “mosaic” of conservation units in the deforestation hotspot in the southern part of the state (Instituto Socioambiental, 2017a, 2017b).

Since both the human and financial resources for protected areas are always very limited, one of the perennial dilemmas is whether to give priority to creating new areas or to invest in staffing and defending existing areas. So long as Brazilian Amazonia continues to have large areas of unprotected forest on government land, the better option is to maximize the creation of new areas, even if they are “paper parks” with only a token government presence. This is needed to obtain larger areas before the opportunities to do so are foreclosed. Even “paper parks” have a significant effect in inhibiting deforestation because their legal status makes it far less likely that potential invaders will be successful in gaining title to the land in the future, as compared to their invading forest in an area that is not legally protected.

Depending on whether a protected area is near or far from the deforestation frontier, its effect on deforestation will either be immediate or delayed. The priority for reserve creation will depend on the objectives that motivate the decision. It is often said that those who are primarily concerned with maintaining biodiversity and those who are primarily concerned with avoiding climate change share a natural alliance in that protecting tropical forest achieves both goals. However, this identity of interests can break down when choices must be made. If the priority is protecting biodiversity, the objective is likely to be seen in terms of a measure such as the number of species that will be maintained over a long time—theoretically permanently—making the creation of large, inexpensive reserves far from the frontier the best choice (Fearnside, 2003a; Fearnside & Ferraz, 1995). In terms of climate change, the priority is likely to be measured in terms of reduced emissions over a short time period, making reserves nearer to the frontier the best choice. The financial costs and other obstacles at each distance from the frontier will determine the ideal location, which is likely not to be at either extreme in terms of distance from the frontier. In practice, the type of protected area is associated with distance from the frontier, and sustainable-use areas are more likely to be closer to the frontier than are integral-protection areas, giving the former a greater short-term effect in avoiding deforestation (Pfaff, Robalino, Lima, Sandoval, & Herrera, 2014).

The 2015 Paris accords have fundamentally changed the criteria for choices based on climate benefits: the objective is expressed as keeping mean global temperature from rising above a value “well below” the benchmark of 2 °C over the preindustrial average, whereas the objective was previously expressed in terms of Article 2 of the Climate Convention, which specifies “stabilization” of greenhouse-gas concentrations at a level to avoid “dangerous interference with the global climate system.” Because stabilization can take many years, even centuries, this is an entirely different time scale. Assuming that diplomats and decision-makers are serious about complying with the Paris accords, what counts is what happens in the next 20 years. In terms of protected areas, relevant benefits will be from those near the frontier. The fact that many protected areas are far from the frontier means that their climatic benefit is decreased by the Paris accord relative to other forms of mitigation that yield quicker returns. Another factor decreasing the importance of protected areas is the effect of “leakage,” or the displacement of impacts, in this case deforestation, to locations beyond the boundaries of a mitigation project. Leakage from reserve creation is of two types: “in-to-out” leakage, in which deforesters leave the area to continue clearing forest elsewhere, and “out-to-out” leakage, in which potential squatters and grileiros choose areas elsewhere in the forest to invade because the reserve decreases their chances of gaining title. Deforestation that has been displaced by leakage will continue until the available forest is exhausted in the landscape outside the reserve, after which the climatic benefit that was lost through leakage will be recovered assuming that the reserve is effective in excluding deforesters (Fearnside, 2009a). The impact of leakage on decreasing the climatic value of a reserve increases with increasing value attributed to time, as through a discount rate. Reserves as a mitigation option therefore decrease in value with the Paris accords. By contrast, other options substantially increase in value, such as refraining from building hydroelectric dams, which are an energy source that has very high initial emissions and that emits methane, a short-lived gas with high impact while it remains in the atmosphere (Fearnside, 2015c, 2017c).

Contain Infrastructure Projects

An essential part of any plan to contain deforestation in Amazonia is to limit new infrastructure projects, such as roads and dams. This often goes unmentioned in plans for limiting deforestation, such as Brazil’s PPCDAm (Ministério do Meio Ambiente, 2013) and National Plan for Climate Change (Comitê Interministerial sobre Mudança do Clima, 2008). Vast plans for new infrastructure imply more, not less, deforestation—one cannot expect deforestation to decrease if new projects go ahead regardless of impacts. The pattern of assuming that unrealistic governance scenarios will play out in practice is a formula for environmental disaster (Fearnside, 2007; Fearnside & Graça, 2009).

Decisions on new infrastructure represent a key element that is in the control of the government. The decision to build a road, for example, is made by a handful of government authorities, as contrasted with the individual decisions of the thousands of actors who will determine the deforestation consequences once the road is built. The decision-making process for infrastructure projects is therefore critical. Decision-making is distinct from licensing, although licensing is also important. At present, the role of environmental licensing in Brazil is largely limited to suggesting minor changes in project design or compensation measures, not to comment on the existence or not of the infrastructure project in question. This system need to reformed to ensure that environmental and social costs and benefits are transparently assessed and democratically debated before the actual decision to build a project is made (e.g., Fearnside, 2014a). Among the changes needed to create a more rational decision-making system is to remove the underlying causes of the current bias in favor large, expensive projects regardless of their impacts. This requires making changes in the regulation of political campaign contributions (Fearnside, 2016d). It also requires revocation of the “security-suspension” laws stemming from Brazil’s military dictatorship period that allow any judicial decision to be overturned in the interests of the “public economy” (Fearnside, 2015c). Despite its problems, Brazil’s environmental licensing system is far better than the practices that were used before this system was implemented, in 1986; however, environmental licensing faces a series of immediate threats that could result in its being effectively abolished by the National Congress (Fearnside, 2016b; Ferreira et al., 2014).

Abandon Myths That Divert Efforts to Contain Deforestation

A variety of myths tend to divert efforts to control forest loss in directions that fail to achieve this objective or that are counterproductive. One is the idea that “sustainable logging,” or “sustainable forest management,” will motivate long-term maintenance of the forest. It is simply assumed that what is called “sustainable forest management” is really sustainable (e.g., Ministério do Meio Ambiente & Ministério de Ciência, Tecnologia e Inovação, 2014). However, fundamental contradictions result in the behavior of the managers not being sustainable, no matter what their discourse or promises may be (Fearnside, 1989d, 2003a). This is because trees in tropical forests grow at rates that are limited by biology and have no relation to the rates at which money can be made in alternative investments. In practice, the trees are in competition with a wide range of other possible investments (including first-cycle forest-management projects elsewhere), and it is more profitable for the manager to exploit the potentially renewable resource as quickly as possible and then to invest the proceeds in an option with a faster return elsewhere (e.g., Clark, 1973, 1976). The first cycle, which is what is in course in virtually all forest-management projects in Brazilian Amazonia, is inherently more profitable than subsequent cycles because the large forest trees that have been growing for centuries at no cost to the manager are there for the harvesting; whereas the situation will change in a future equilibrium when the manager can only harvest what grows while the management area is being defended and maintained. In addition, based on the population biology of the trees, the current rules for management projects are unlikely to maintain forest indefinitely even if they are followed as is theoretically envisioned (Kageyama, 2000). Furthermore, the theoretical 30-year cycle in terra firme (unflooded upland) forests has been subverted by the inclusion of loopholes that imply a virtual zero probability of continuation after the first cycle. An example is provided by a project in Acre managing 12,000 ha (Fearnside, 2015f). Instead of dividing the area into 30 plots, one to be harvested in each year of the cycle, the manager was allowed to harvest the entire area in only six years. Theoretically, the land would have then sat unused for 24 years until the second cycle began. The chance of this happening was obviously slim, even less so given that the area was later sold for a settlement project. The chances are even lower in the case of small management projects (up to 100 ha under management) in the state of Amazonas, which allow the entire area to be harvested in the first year, to theoretically be followed by a 29-year wait for the start of another cycle.

Another myth that diverts efforts to contain deforestation is the notion that intensification of agriculture and ranching will cause actors to stop deforesting. There are good reasons for intensification, but land sparing is not one of them. The subsidies and marketing advantages that can be garnered from this discourse represent attractions for endorsing this path, which nevertheless goes against economic logic. The idea that people’s ambitions are limited by a “full-stomach” effect, when one stops expanding production once minimal requirements are met, does not apply to individuals who are integrated into modern economies, as are almost all actors in Amazonian deforestation. A number of authors have proposed land sparing through intensification by (Sánchez, Bandy, Villachica, & Nicholaides, 1982; Strassburg, Latawiec, Barioni, Nobre, da Silva, V.P., Valentim et al., 2014; Zarin, Harris, Baccini, Aksenov, Hansen, Azevedo-Ramos et al., 2016), but the prospects that this strategy will have the desired environmental result are poor (Fearnside, 1987c). Unfortunately, there is no evidence that the response to a productivity increase would be to restore forest. If pasture were to produce more, then the ranchers would simply export the excess—not keep the total production of their properties constant and reduce pasture areas. In fact, since the more highly productive pastures would presumably be more profitable than the present ones, the tendency would be to do just the opposite—expand the area of pasture by clearing more (Fearnside, 2002; Kaimowitz & Angelsen, 2008). Pasture area in Brazil is not restrained, either by a limited desire of ranchers to make more money or by global markets for beef.

Another diversion of efforts to contain Amazonian deforestation is investment in subsidizing what is known in Brazil as “recuperation of degraded areas,” that is, restoring tree cover in nonproductive areas that have already been deforested. This should not be a current priority because, under current conditions in Amazonia, it is much more expensive to recuperate a hectare of forest than to avoid a hectare of deforestation, and the benefits in terms of both carbon and biodiversity are much less (Fearnside, 2003a). Severe limits restrict the recuperation of degraded lands through sustainable uses such as agroforestry (Fearnside, 1995). One is the difference in scale between the extent of degraded pastures in Amazonia and the capacity of markets and input sources to support agroforestry. Another is the logic from the viewpoint of a farmer making decisions on agroforestry: if a hectare is planted in a degraded pasture, it will produce very little compared to what it would produce if another hectare of forest is cleared and planted.

Provide Alternatives

It is not enough to prohibit deforestation and punish violations—alternatives must be offered for supporting the small farmers who sustain themselves by clearing forest, for both subsistence and commercial production. However, there is no need to provide such alternatives for investors (Fearnside, 1989b). These larger operators can fend for themselves very well by switching to other types of investment without a need for subsidies with funds intended for environmental purposes.

The current economy of rural Amazonia is almost entirely based on destruction of the forest: selling timber and replacing forest with crops or pasture. Tapping the value of the environmental services of the forest as an alternative basis for the rural economy. Even though the environmental services, such as avoiding global warming, recycling water, and maintaining biodiversity, are worth much more to human society than the money gained from destroying the forest, the institutional mechanisms needed to transform these services into a monetary flow and to use this flow to support the rural population without provoking perverse social effects are lacking. Some progress has been made toward the goal of obtaining monetary flows through international negotiations under the Climate Convention, but the social side of this mechanism—how money would be used once obtained—is completely unresolved. Payment for environmental services (PES) is viewed as the most direct way of providing conservation incentives and avoiding perverse effects on equity (Börner, Wunder, Wertz-Kanounnikoff, Tito, Pereira, & Nascimento, 2010; Ferraro & Kiss, 2002). Land-tenure regularization is an unavoidable prerequisite for PES to function (Wunder, Börner, Tito, & Pereira, 2009), which creates both dangers and new opportunities to induce environmental compliance (Duchelle, Cromberg, Gebara, Guerra, Melo, Larson et al., 2014). In terms of cost effectiveness, command and control is still the cheapest option for reducing deforestation in Brazilian Amazonia, but PES, if directed to small actors, offers a way of reducing or avoiding negative social impacts (Börner, Marinho, & Wunder, 2015).

One cannot simply pay people for doing nothing or distribute money and goods to local communities without creating conflicts and destroying cultures. The recent disastrous case of compensation distributions to indigenous communities affected by the Belo Monte Dam offers a concrete example (Fearnside, 2017a, 2017b; Heurich, 2013). Subsidizing purchases of nontimber forest products from extractive reserves has been suggested as one possible support mechanism (Fearnside, 1989c). Current discussions of REDD+ (Reducing Emissions from Deforestation and Degradation) involve a series of controversies, including questions of how accounting for carbon benefits is done at both the proposal stage and later stages for verification and payment (Fearnside, 2012a, 2012b; Vitel, Carrero, Cenamo, Leroy, Graça, & Fearnside, 2013; Yanai, Fearnside, Graça, & Nogueira, 2012). Resolution of the various open questions regarding the quantification and institutional mechanisms for rewarding the environmental services of Amazonian forests, including their carbon benefits, remains a top priority for creating an alternative to deforestation on the scale and within the time frame that this alternative is needed (Fearnside, 2013b).