Opportunity cost of environmental preservation: the case of the Brazilian Amazon

• Grant number: 11/13892-1
• Support Opportunities: Scholarships in Brazil - Scientific Initiation
• Start date: November 01, 2011
• End date: October 31, 2012
• Field of knowledge: Applied Social Sciences - Economics - Agrarian and Natural Resource Economics
• Principal Investigator: André Luis Squarize Chagas
• Grantee: Luíza Cardoso de Andrade
• Host Institution: Faculdade de Economia, Administração e Contabilidade (FEA). Universidade de São Paulo (USP). São Paulo , SP, Brazil

Abstract

This project intends estimate the opportunity cost incurred by the private economic agents that no longer overthrow the new forest areas for economic exploitation, ie, the cost that to the preservation of the forest means to them. To estimate this cost, will be used the income earned by agents located in areas in that occurred the expansion of agricultural frontier by deforestation, from 1975 to this date, as a proxy for expected income from the exploitation of recently deforested areas. For this, we assume that the earth has maximum profit, given their efficient use. Using data from the agricultural census 2006 for the region of the Legal Amazon, it is possible to identify where, in the yield curve, the producers are in today. The opportunity cost of non-expansion area will be then calculated as the difference between the income in today and what would be expected for the future, according to the estimated function.(AU)