Poverty alleviation and deforestation in Brazil: empirical evidence from the Bolsa Escola/familia program : a difference-in-difference analysis of how increased income affects deforestation in brazilian municipalities
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- Master Thesis 
In this thesis we estimate the effect of poverty alleviation on local deforestation in Brazil. We identify impacts of increased income among low-income families by studying the world’s largest conditional cash transfer program, Bolsa Escola/Familia. We use municipality-level panel data on deforestation and program beneficiaries for the first years of the program (2001- 2004). Through a difference-in-difference approach we estimate the average treatment effect on the treated (ATT). The results show that deforestation fell by 7,6% in municipalities with many beneficiaries, amounting to an estimated 1 million hectares of preserved forest in these locations. A back-of-the-envelope calculation suggest that these benefits are valued at approximately USD 4 650 million over these four years, which is almost three times the program costs. Furthermore, we estimate that increasing the share of beneficiary families by 10% on average leads to a reduction in deforestation by 1,7%. These findings suggest that the Bolsa program have reduced the local pressure on forests by providing low-income Brazilian families with greater financial stability. The thesis thus contributes to existing literature by providing new empirical evidence that poverty alleviation can be beneficial for the environment.