The Forest Code opportunity cost between 1995/1996 and 2006, its evolution and its determinants

Author(s)

Samuel Alex Coelho Campos

• Document type: Doctoral Thesis
• Press: Piracicaba.
• Institution: Universidade de São Paulo (USP). Escola Superior de Agricultura Luiz de Queiroz (ESALA/BC)
• Defense date: 2015-07-07

Examining board members

Carlos Jose Caetano Bacha; Mirian Rumenos Piedade Bacchi; José César Cruz Júnior; Adriana Estela Sanjuan Montebello; Humberto Francisco Silva Spolador

• Advisor: Carlos Jose Caetano Bacha

Abstract

Agricultural production is subject to various restrictions, such as the legal restrictions imposed by the Forest Code. This restricts the area used for agricultural production, which implies cost to agricultural producers. However, this cost can vary between manufacturers because of the features of the property and producer. In this context, the aim of this study is to estimate the opportunity cost of the area occupied by the Legal Reserve and its determinants. To do this, the producers of São Paulo and Mato Grosso were confronted in the years 1995/1996 and 2006. The opportunity cost was estimated using the methodology proposed by Zhou, and Ang Poh (2006) and the determinants of opportunity cost was estimated through a spatial econometric model. The results indicated that the technical efficiency and environmental technical efficiency of producers were small in this period in both states. The state of Mato Grosso stood out for its low production efficiency in 1995/96, in which no producer was efficient. Both states showed improvement when considering the environmental performance, highlighting Mato Grosso. This state increased its efficiency by 13 percentage points on average. However, it also showed the lowest performance compared to São Paulo. The analysis of income, use of inputs and deforestation indicated that inefficient producers do not necessarily use more of all inputs for lower production. However, inefficient producers had a larger cattle herd, the largest area for agricultural production and larger area of Legal Reserve incorporated into the production process. It is noteworthy that the technically efficient producers achieve higher agricultural income but used larger area of legal reserve, when compared to producing environmentally efficient technique. This result indicates the existence of opportunity cost. Estimates indicated that the state of Mato Grosso was the one who had the highest total cost (R $ 48.353 million in 2006), although the state of São Paulo has presented the higher cost per hectare (R $ 412.62). The analysis of the opportunity cost indicated that producers with high (low) opportunity costs tend to be close, forming spatial groups. This indicated the need to incorporate the spatial element in the estimation. The results indicated the existence of different effects between the states as the determinants of opportunity cost. In Mato Grosso, the area and the cost had positive relationship, and the smaller producers would bear a proportionately higher cost of the larger producers. For São Paulo, the area is associated with a reduction in the opportunity cost at increasing rates. The results also indicated that agricultural production in Mato Grosso would be more sensitive to changes in financing and investment. Analysis of the indirect effects indicated the existence of spatial spillovers, highlighting the use of terraces, population density, courses, existence of settlements in the counties and most important of temporary crops in the occupied area. (AU)

• FAPESP's process: 13/19995-2 - Opportunity cost of the Forest Code between 1995/1996 and 2006, its evolution and its determinants
• Grantee: Samuel Alex Coelho Campos
• Support Opportunities: Scholarships in Brazil - Doctorate