Deforestation in Brazil : an empirical evaluation on the effectiveness of the Soy Moratorium
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- Master Thesis 
This dissertation is designed to explore the lamentable destruction that is taking place in the Amazon rainforest and further conduct an analysis with the aim of evaluating if abiding the Soy Moratorium of 2006 had any impact in curbing deforestation during the post-period of inception, 2006. The SoyM is a voluntary agreement purposing to hinder the demolition of forests related to soy plantation; this contract solely applies to the Amazon biome and calls all companies operating in the supply chain of the soy commodity to cease trading soybean resourced from deforested areas effectively after July 24, 2006. In order to discover the impact of the programme, we formulate a research question as follows, “did the Soy moratorium caused a reduction in deforestation in the Amazon biome?” That is to say, do companies that signed the policy truthfully adhere the principle and contribute in lessening deforestation? This question initiates the path to discover whether the Amazon biome experience less deforestation compared to neighbouring biomes following companies’ signage of the voluntary agreement. We investigate the entire Amazon biome encompassing 177 municipalities and use 206 municipalities from the Cerrado biome as a control, which are located at the geographical border between the two biomes: a total of 383 municipalities. This paper covers a time span of 14 years, from 2003 to 2016, and therefore the longitudinal dataset contains 5362 observations for each variable of interest. We employed a difference-in-differences approach, with both municipality and year fixed effect, to examine if the SoyM have generated a genuine causal effect in decreasing both soy and territorial deforestation in the Amazon biome. Applying mentioned strategic approach, we acquire two different results. First, a general broad approach, conducted on the assumption of the Cerrado biome as a control factor, produces an insignificant impact of the SoyM. Whereas, applying a more specific model, which also consider the role of signatory companies in a given municipality, the empirical results suggest that the SoyM had a significant causal effect in decreasing soy deforestation and territorial deforestation as well, in the Amazon biome.