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Department of Agricultural Economics: Faculty Publications
Amazon forest; Agriculture; CO2 emissions; Deforestation; Trade-off
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Full-Text Articles in Social and Behavioral Sciences
The Opportunity Cost Of Preserving The Brazilian Amazon Forest., Felipe De Figueiredo Silva, Richard Perrin, Lilyan E. Fulginiti
The Opportunity Cost Of Preserving The Brazilian Amazon Forest., Felipe De Figueiredo Silva, Richard Perrin, Lilyan E. Fulginiti
Department of Agricultural Economics: Faculty Publications
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.