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
Abstract
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.