Did the Soy Moratorium reduce deforestation in the Brazilian Amazon? : a counterfactual analysis of the impact of the Soy Moratorium on deforestation in the Amazon Biome

Abstract

This paper investigates the impact of the Soy Moratorium (SoyM) on deforestation in the Brazilian Amazon biome. We study 39 municipalities in Mato Grosso that are divided by the natural biome border between the Amazon biome that was affected by the SoyM and the Cerrado biome, which was not affected by the SoyM during 2003-2013. To quantify the impact of the SoyM on deforestation, we perform a Difference in Difference analysis that we estimate with a fixed effects model. Using the Cerrado as the counterfactual, we are able to compare the difference between the actual change in deforestation in the Amazon to what the change in deforestation would have been without the implementation of the SoyM. The results from our DID analysis suggest that the SoyM had a significant impact on deforestation in the Amazon only after it was enforced with satellite monitoring from 2008. We find that deforestation in the Amazon decreased by an additional 24.6 percent compared to the Cerrado as a result of satellite monitoring, which his is equivalent to 430 km² of preserved forest cover and roughly 4.8 million tons of carbon were saved from being released in the atmosphere. However, from our graphical RD analysis we do not observe a discontinuity around the biome border, which does not support our findings from the DID analysis.