Agricultural Economics Department


Date of this Version



Silva, F. de F., L. E. Fulginiti, and R. K. Perrin.The Cost of Forest Preservation in the Brazilian Amazon: The “Arc of Deforestation”, Journal of Agricultural and Resource Economics 44(3):497–512.

doi: 10.22004/ag.econ.292328


Copyright 2019 Western Agricultural Economics Association


We estimate the trade-off between agricultural production and forest preservation for the municipalities in Brazil’s agricultural frontier, the so-called “arc of deforestation,” using census and deforestation data for 2006. We use a nonparametric directional output distance function that allows us to identify the gradients of the production possibility frontier, which are the trade-offs of interest. We found that, on average, $979 is forgone in annual livestock, timber, and grain revenues to conserve 1 hectare of forest. This translates, ceteris paribus, to an average present value of costs to permanently sequester CO2 of $16.36/t, higher than most previous estimates.