Agricultural Economics Department


Date of this Version



Silva, F. de F., R.K. Perrin, and L.E. Fulginiti. 2019. “The opportunity cost of preserving the Brazilian Amazon forest.” Agricultural Economics, 50(2): 219- 227.


We estimate the trade-off between forest preservation and agricultural production for the Legal Amazon region, using census and deforestation

data for municipalities in 2006.We use a directional distance function to represent the production possibility frontier, and then calculate the shadow

price of reducing deforestation in terms of agricultural income foregone. Results indicate that, on average, to preserve 1 ha of forest, $797 in annual

agricultural GDP must be foregone. Using a discount rate of 10% and average forest carbon density of 132 tons per hectare, these results imply an

average shadow price of $16 per ton of CO2 permanently sequestered.