Agricultural Intensification by Smallholders in the Western Brazilian Amazon From Deforestation to Sustainable Land Use

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1 Agricultural Intensification by Smallholders in the Western Brazilian Amazon From Deforestation to Sustainable Land Use Stephen A.Vosti, Julie Witcover, and Chantal Line Carpentier RESEARCH REPORT 130 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE WASHINGTON, D.C.

2

3 Contents iii

4 Tables iv

5 Figures v

6 vi FIGURES

7 Foreword I vii

8 viii FOREWORD

9 Acknowledgments T ix

10 x ACKNOWLEDGMENTS Dedication

11 Summary I xi

12 xii SUMMARY

13 SUMMARY xiii

14 Introduction B 1

15 2 CHAPTER 1

16 INTRODUCTION 3

17 4 CHAPTER 1

18 INTRODUCTION 5

19 6 CHAPTER 1

20 INTRODUCTION 7 Economic Development and Deforestation in the Western Brazilian Amazon

21 8 CHAPTER 1

22 INTRODUCTION 9

23 10 CHAPTER 1 Research on Deforestation and Agriculture in the Brazilian Amazon

24 INTRODUCTION 11

25 12 CHAPTER 1

26 INTRODUCTION 13 Objectives

27 14 CHAPTER 1 Methods

28 INTRODUCTION 15

29 16 CHAPTER 1

30 INTRODUCTION 17 Organization of the Report

31 Research Site and Sample Characteristics T Site Description 18

32 RESEARCH SITE AND SAMPLE CHARACTERISTICS 19 Figure 2.1 Map locating Theobroma and Pedro Peixoto in the states of Rondônia and Acre BOA VISTA RORAIMA AMAPÁ MACAPÁ Brazil MANAUS BELÉM SÄOWIS AMAZONAS PARÃ MARANHÄO TERESINA FORTALEZA RIO GRANDE DO NORTE NATAL PIAUÍ PARAÎBA PERNAMBUCO JOÄO PESSOA RECIFE ACRE BRANCO PORTO VELHO RONDÔNIA PALMAS TOCANTINS BAHIA ALGOAS MACEIO SERGIPE ARCAJU MATO GROSSO SALVADOR CULABÃ GOIÁS BRASÍLIA D.F. GOIÂNLA MINAS GERAIS MATO GROSSO DO SUL BELO HORIZONTE CAMPO GRANDE SÃO PAULO ESPÍRITO SANTO RIO DEJANEIRO VITÓRLA SÄO PAULO RIO DE JANEIRO PARANÁ CURITIBA SANTA CATARINA FLORINÓ POUS RIO GRANDE DO SUL PORTO ALEGRE Brazilian Amazon ACRE PORTO VELHO RIO BRANCO RONDÕ NIA Pedro Peixoto Theobroma

33 20 CHAPTER 2 Agriculture in the Study Area

34 RESEARCH SITE AND SAMPLE CHARACTERISTICS 21

35 22 CHAPTER 2 Figure 2.2 Land use trajectories and deforestation Fallow ~ 3 years Annuals Forest Area in t 0 Annuals/ perennials ~2 years Pasture ~ 15 years Mean SD N Perennials Area felled 4.67 hectares ~ 8 years Frequency 2.14 years Notes: The number of years noted below each land use box indicates time continuously in a given land use and not the time elapsed from t o

36 RESEARCH SITE AND SAMPLE CHARACTERISTICS 23

37 24 CHAPTER 2

38 RESEARCH SITE AND SAMPLE CHARACTERISTICS 25 Table 2.1 Evaluation of land use systems

39 26 CHAPTER 2

40 RESEARCH SITE AND SAMPLE CHARACTERISTICS 27 The Household Sample and its Characteristics Sample Selection

41 28 CHAPTER 2 Land Use and Deforestation

42 RESEARCH SITE AND SAMPLE CHARACTERISTICS 29 Figure 2.3 Land uses upon arrival, in 1993/94, and in 1995/96 % of land of average farm in land use categories Annuals Annuals/perennials Perennials Fallow Upon arrival Pasture Forest Figure 2.4 Land uses by farm vintage Proportion of land of average farm in land use categories in >17 Age of farm in years Forest Annuals Fallow Pasture Perennials Annual/perennial Notes: Vintage indicates the number of years the farm has been in existence.

43 30 CHAPTER 2 Table 2.2 Mean area felled in 1994 and 1996, primary and secondary forest

44 RESEARCH SITE AND SAMPLE CHARACTERISTICS 31 Land Quality and Production Activities

45 32 CHAPTER 2

46 RESEARCH SITE AND SAMPLE CHARACTERISTICS 33 Table 2.3 Crop yields, 1994

47 34 CHAPTER 2

48 RESEARCH SITE AND SAMPLE CHARACTERISTICS 35 Lot and Ownership History

49 36 CHAPTER 2

50 RESEARCH SITE AND SAMPLE CHARACTERISTICS 37 Household Characteristics Migration History

51 38 CHAPTER 2 Off-Farm Characteristics

52 RESEARCH SITE AND SAMPLE CHARACTERISTICS 39 Principal Findings

53 Multivariate Analysis T The Model 40

54 MULTIVARIATE ANALYSIS 41 Π = =

55 42 CHAPTER 3

56 MULTIVARIATE ANALYSIS 43

57 44 CHAPTER 3

58 MULTIVARIATE ANALYSIS 45

59 46 CHAPTER 3

60 MULTIVARIATE ANALYSIS 47 =

61 48 CHAPTER 3 Table 3.1 Factors Influencing deforestation and land use, Tobit estimates

62 MULTIVARIATE ANALYSIS 49 Table 3.1 Continued Regression Results

63 50 CHAPTER 3

64 MULTIVARIATE ANALYSIS 51

65 52 CHAPTER 3

66 MULTIVARIATE ANALYSIS 53

67 54 CHAPTER 3

68 MULTIVARIATE ANALYSIS 55

69 56 CHAPTER 3

70 MULTIVARIATE ANALYSIS 57

71 58 CHAPTER 3

72 MULTIVARIATE ANALYSIS 59 General Conclusions and Topics for Future Research

73 60 CHAPTER 3

74 MULTIVARIATE ANALYSIS 61

75 A Farm-Level Bioeconomic Model T Whole Farm Optimization Model: A Description 62

76 A FARM-LEVEL BIOECONOMIC MODEL 63 Figure 4.1 Bioeconomic structure of the model Economic endowment On-farm Financial Capital Land and equipment Subsistence food Technology know-how Human Family composition Literacy Biophysical endowment Forest Nitrogen stock Soil quality Weather Off-farm Output market Distance to market Input market Labor Others Credit market Land uses Stocks Capital Fences and pasture Food Livestock Opened land Seeds Stocks Forest Nutrients Soil quality

77 64 CHAPTER 4

78 A FARM-LEVEL BIOECONOMIC MODEL 65 Table 4.1 Farm and farm household initial conditions for the bioeconomic model

79 66 CHAPTER 4 Table 4.2 Three soil quality groups representative of Pedro Peixoto soils

80 A FARM-LEVEL BIOECONOMIC MODEL 67

81 68 CHAPTER 4 Table 4.3 First-year crop yields, by technology level and by soil quality

82 A FARM-LEVEL BIOECONOMIC MODEL 69 Figure 4.2 Yields for intercropped annual crops, using V1 technology Kilograms/hectare Number of years after the burn Rice Corn Beans Figure 4.3 Seasonal pasture carrying capacity under V1 and V2 management Animal unit/hectare Age of pasture (years) v1 (pasture only) dry v2 (pasture only) wet v1 (pasture only) wet v2 (pasture/kudzu) dry v2 (pasture only) dry v2 (pasture/kudzu) wet

83 70 CHAPTER 4 Model Baseline: A Test of the Sustainability of Small- Scale Agriculture at the Forest Margin

84 A FARM-LEVEL BIOECONOMIC MODEL 71

85 72 CHAPTER 4 Figure 4.4 Land uses, baseline scenario Years Primary forest Pasture Annual crops Perennial crops Secondary fallow Figure 4.5 Cattle herd dynamics and pasture carrying capacity, baseline scenario Animal units (dry season) Years Milk cows Beef cattle Calves Pasture carrying capacity

86 A FARM-LEVEL BIOECONOMIC MODEL 73 Figure 4.6 Extractive activities on small-scale farms, baseline scenario Brazil nuts (20 kg units), timber (meter 3 ) Years Brazil nuts Timber

87 74 CHAPTER 4 Figure 4.7 Labor hired in, by month, baseline scenario Person-days Year May June April Note : April, May, and June are the only months when labor is hired in.

88 A FARM-LEVEL BIOECONOMIC MODEL 75 Figure 4.8 Family labor hired out, by month, baseline scenario Person-days Year May June July August September October November December January February March

89 76 CHAPTER 4 Figure 4.9 Labor use, by activity and month, for year 10 of the 25 year baseline scenario Person-days Annual crop Extraction Note : Month 1 is May and month 12 is April. Months Perennial crop Deforestation Pasture Dairy Figure 4.10 Net value of total output by source, baseline scenario 1996 reals 14,000 12,000 10,000 8,000 6,000 4,000 2, , Year Annual crop production Net labor receipts (sold-hired) Deforestation costs Dairy and livestock Note : Net value is the value of total output minus variable costs.

90 A FARM-LEVEL BIOECONOMIC MODEL 77 Figure 4.11 Farm profits and savings by year, baseline scenario 1996 Reals 12,000 10,000 8,000 6,000 4,000 2, ,000-4, Number of years Profits Savings

91 78 CHAPTER 4 Responses to Changes in Factor Endowments and Critical Model Constraints

92 A FARM-LEVEL BIOECONOMIC MODEL 79 Figure 4.12 Land uses with poor-quality soils Hectares Number of years Primary forest Perennial crops Pasture Secondary fallow Annual crops

93 80 CHAPTER 4 Figure 4.13 Land uses with good-quality soils Hectares Number of years Primary forest Perennial crops Pasture Secondary fallow Annual crops

94 A FARM-LEVEL BIOECONOMIC MODEL 81 Table 4.4 Farmgate prices, 1994 and 1996

95 82 CHAPTER 4 Technology and Policy Experiments Using the Model Figure 4.14 Land uses, baseline simulations using 1996 prices Hectares Years Primary forest Pasture Annual crop Perennial crop Secondary fallow Degraded pasture

96 A FARM-LEVEL BIOECONOMIC MODEL 83 Table 4.5 Summary of sensitivity analysis for the linear programming model

97 84 CHAPTER 4 Figure 4.15 Land uses with the 50 percent rule strictly enforced Hectares Number of years Primary forest Pasture Annual crops Perennial crops Secondary fallow

98 A FARM-LEVEL BIOECONOMIC MODEL 85 Figure 4.16 Land uses with annual payments of R$ 100 per hectare of forest Hectares Number of years Primary forest Pasture Annual crops Perennial crops Secondary fallow

99 86 CHAPTER 4 Figure 4.17 Trade-offs between forest payments and forest retained in year 25 Forest payments (R$/ha/year) 200 R$115, R$106, R$98, R$82, Forest remaining on small-scale farm (hectares) Notes: Forest payments reflect scenarios in which different per hectare payments are made annually to farmers for each hectare of land retained in forest that year (for example, 150 represents a payment scheme of R$150 per hectare of forest retained in each year, over 25 years; total real annual payments do vary for a given payment scheme, since farmers hold fewer hectares of forest as time goes on). Forest remaining on smallscale farm represents the stock of forest retained on farms at the end of each 25-year model scenario. Values are the net present value of the total farm income stream (inclusive of scenario-specific forest payments) over the 25-year scenario period.

100 A FARM-LEVEL BIOECONOMIC MODEL 87 Figure 4.18 Land uses when sustainable managed forestry is allowed Hectares Number of years Primary forest Pasture Annual crops Perennial crops Secondary fallow

101 88 CHAPTER 4 Figure 4.19 Land uses with model constrained to low-level technologies Hectares Years Primary forest Pasture Annual crop Perennial crop Secondary fallow Degraded pasture

102 A FARM-LEVEL BIOECONOMIC MODEL 89 Figure 4.20 Land uses with a 50 percent subsidy on fertilizer Hectares Years Primary forest Pasture Annual crop Perennial crop Secondary fallow Degraded pasture Figure 4.21 Land uses with a 100 percent subsidy on fertilizer Hectares Years Primary forest Pasture Annual crop Perennial crop Secondary fallow Degraded pasture

103 90 CHAPTER 4

104 A FARM-LEVEL BIOECONOMIC MODEL 91 Figure 4.22 Land uses with managed forestry permitted and a 50 percent fertilizer subsidy, 1994 prices Hectares Years Primary forest Pasture Annual crops Perennial crops Secondary fallow

105 92 CHAPTER 4 Figure 4.23 Land uses with managed forestry permitted and a 50 percent fertilizer subsidy, 1996 prices Hectares Years Primary forest Pasture Annual crops Perennial crops Secondary fallow

106 A FARM-LEVEL BIOECONOMIC MODEL 93 Figure 4.24 Land uses with managed forestry permitted and a 50 percent fertilizer subsidy, 1996 prices and relaxation of labor market constraints Hectares Years Primary forest Pasture Annual crops Perennial crops Secondary fallow

107 94 CHAPTER 4 Model Assumptions, Their Implications, and Future Research

108 A FARM-LEVEL BIOECONOMIC MODEL 95

109 96 CHAPTER 4

110 A FARM-LEVEL BIOECONOMIC MODEL 97

111 98 CHAPTER 4

112 A FARM-LEVEL BIOECONOMIC MODEL 99

113 100 CHAPTER 4

114 Conclusions R 101

115 102 CHAPTER 5

116 CONCLUSIONS 103 General Conclusions

117 104 CHAPTER 5 Smallholder Land Use Patterns: Current Patterns, Key Determinants, and Future Scenarios

118 CONCLUSIONS 105

119 106 CHAPTER 5

120 CONCLUSIONS 107 Specific Agricultural and Extractive Activities

121 108 CHAPTER 5 Policy Instruments, Policy Targets, and Policy Implementation

122 CONCLUSIONS 109 Relevance for Other Forest Margins Settings

123 110 CHAPTER 5

124 Regression Variable Statistics and Comprehensive Regression Results T 111

125 112 APPENDIX A Table A.1 Descriptive statistics for variables used in the regression analysis

126 REGRESSION VARIABLE STATISTICS AND COMPREHENSIVE REGRESSION RESULTS 113 Table A.1 Continued

127 114 APPENDIX A Table A.1 Continued

128 REGRESSION VARIABLE STATISTICS AND COMPREHENSIVE REGRESSION RESULTS 115 Table A.2 Factors Influencing land use, Tobit estimates and block F-tests

129 116 APPENDIX A Table A.2 Continued

130 The Farm-Level Bioeconomic Model T Π 117

131 118 APPENDIX B Table B.1 Important indexes in the bioeconomic linear programming model Π ΣΣ ΣΣ = = + = = + Economic Restrictions

132 THE FARM-LEVEL BIOECONOMIC MODEL 119 Table B.2 Relevant variables in the bioeconomic linear programming model Π

133 120 APPENDIX B Table B.3 Technical coefficients in the bioeconomic linear programming model

134 THE FARM-LEVEL BIOECONOMIC MODEL = + < + = + = + < + + = = +

135 122 APPENDIX B Table B.4 Adult male equivalents for production activities Agronomic Restrictions

136 THE FARM-LEVEL BIOECONOMIC MODEL 123 = + = + = +

137 124 APPENDIX B Figure B.1 A hypothetical nutrient response function Max b Yield c 0=3 0=2 0=1 N 1 N 2 N 3 Nutrient Availability + <

138 THE FARM-LEVEL BIOECONOMIC MODEL 125 < = <

139 References 127

140 128 REFERENCES

141 REFERENCES 129

142 130 REFERENCES

143 REFERENCES 131

144 132 REFERENCES

145 REFERENCES 133

146 134 REFERENCES

147 REFERENCES 135

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