| dc.description.abstract | In this paper, I use municipal soy trade data covering the years 2010 to 2015 to
investigate the export market for Brazilian soy and what the expansion of soy exports
leads to in terms of land use. The soy data were acquired from the Trase database and
offer an unprecedented opportunity to map the international demand for soy to the
municipal production and land use in Brazil. To the best of my knowledge, no equally
detailed agricultural trade flow data has been available for research studies before this,
lending originality to this study. For the econometric analysis, I use a fixed effects
instrumental variable approach, with trade-weighted world income as an instrument
for soy demand, to estimate the effect of soy demand on agricultural land use and
deforestation. Unsurprisingly, I find a strong positive link between the Brazilian soy
export market and the land use of exporting soy farms. This expansion of land has
necessarily replaced other forms of land use. This paper is primarily an investigation
of what alternative land uses have been restricted as a consequence of soy exports
increasing. The main finding is that there is a significant negative elasticity between
the land use of non-soy crops and the international soy demand. This implies that
a significant share of the land use expansion of soy happens at the expense of other
agricultural land use. However, I find no conclusive evidence that deforestation has
been hastened by the increasing international demand for soy. This non-finding can
be caused by either lacking power in statistical tests, by the effect of soy expansion
on deforestation only being indirect due to displacement of other crops which again
replace forests, or by Brazilian policies restricting the expansion of soy farming into
forested territories being successful in curbing the negative externalities of soy farming.
I also discuss the dominant role of China in the importing market, with a short analysis
of what a trade war between the US and China would entail for Brazil. | nb_NO |
