Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ags/midagr/138606.html
   My bibliography  Save this paper

Exchange Rates, Soybean Supply Response, and Deforestation in South America

Author

Listed:
  • Richards, Peter D.
Abstract
The advancement of South America’s agro-pastoral frontier has been widely linked to losses in biodiversity and tropical forests, with particular impacts on the Brazilian cerrado, the Atlantic Forest, and the Amazon. Here I consider an important, yet largely overlooked, driver of South America’s soybean expansion, namely the devaluation of local currencies against the US dollar in the late 1990s and early 2000s. Much interest has emerged in recent years over the environmental implications of soybean production in Brazil, with evidence of both direct incursions into moist tropical forest by soybean producers and of potential indirect effects, via the displacement of existing ranching operations. In this research I utilize historical trends in soybean prices, exchange rates, and cropland dedicated to soybean production in Bolivia, Paraguay, and Brazil to estimate the impact of currency devaluations on area of production. The results suggest that approximately 80,000km2, or 31 percent of the current extent of soybean production in these countries, emerged as a supply area response to the devaluation of local currencies in the late 1990s. The results also indicate that the more recent depreciation of the dollar and appreciation of the Brazilian real have counteracted a recent rise in global soybean prices, in the process sparing an estimated nearly 90,000 km2 from new cropland, 40,000 km2 of this in the Amazon alone.

Suggested Citation

  • Richards, Peter D., 2012. "Exchange Rates, Soybean Supply Response, and Deforestation in South America," Graduate Research Master's Degree Plan B Papers 138606, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midagr:138606
    DOI: 10.22004/ag.econ.138606
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/138606/files/RichardsPlanB.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.138606?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Taimur Baig & Ilan Goldfajn, 1999. "Financial Market Contagion in the Asian Crisis," IMF Staff Papers, Palgrave Macmillan, vol. 46(2), pages 1-3.
    2. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "What caused the Asian currency and financial crisis?," Japan and the World Economy, Elsevier, vol. 11(3), pages 305-373, October.
    3. Kanlaya J. Barr & Bruce A. Babcock & Miguel A. Carriquiry & Andre M. Nassar & Leila Harfuch, 2011. "Agricultural Land Elasticities in the United States and Brazil," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 449-462.
    4. Arcand, Jean-Louis & Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont, 2008. "Deforestation and the real exchange rate," Journal of Development Economics, Elsevier, vol. 86(2), pages 242-262, June.
    5. Torre Ugarte, Daniel de la & Sanford, Scott & Skinner, Robert A. & Westcott, Paul C. & Lin, William W., 2000. "Supply Response Under The 1996 Farm Act And Implications For The U.S. Field Crops Sector," Technical Bulletins 33568, United States Department of Agriculture, Economic Research Service.
    6. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    7. Marc Nerlove, 1956. "Estimates of the Elasticities of Supply of Selected Agricultural Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 38(2), pages 496-509.
    8. Chambers, Robert G., 1981. "Interrelationships Ben= Monetary Instruments And Agricultural Commodity Trade," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279318, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Cheryl J. Wachenheim & Jeremy W. Mattson & Won W. Koo, 2004. "Canadian Exports of Livestock and Meat to the United States," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 55-71, March.
    10. S. E. Grigsby & C. A. Arnade, 1986. "The Effect of Exchange Rate Distortions on Grain Export Markets, The Case of Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 434-440.
    11. Darius M. Adams & Ralph J. Alig & DBruce A. McCarl & John M. Callaway & Steven M. Winnett, 1999. "Minimum Cost Strategies for Sequestering Carbon in Forests," Land Economics, University of Wisconsin Press, vol. 75(3), pages 360-374.
    12. Robert G. Chambers, 1981. "Interrelationships between Monetary Instruments and Agricultural Commodity Trade," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(5), pages 934-941.
    13. Kost, William E., 1976. "Effects Of An Exchange Rate Change On Agricultural Trade," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 28(3), pages 1-8, July.
    14. Masuda, Tadayoshi & Goldsmith, Peter D., 2009. "World Soybean Demand: An Elasticity Analysis and Long-Term Projections," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49490, Agricultural and Applied Economics Association.
    15. G. Edward Schuh, 1976. "The New Macroeconomics of Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(5), pages 802-811.
    16. David Tilman & Kenneth G. Cassman & Pamela A. Matson & Rosamond Naylor & Stephen Polasky, 2002. "Agricultural sustainability and intensive production practices," Nature, Nature, vol. 418(6898), pages 671-677, August.
    17. Barr, Kanlaya Jintanakul, 2011. "Agricultural Land Elasticities in the United States and Brazil," Staff General Research Papers Archive 34893, Iowa State University, Department of Economics.
    18. G. Edward Schuh, 1974. "The Exchange Rate and U. S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(1), pages 1-13.
    19. Steven M. Helfand & Gervásio Castro de Rezende, 2004. "The Impact of Sector‐Specific and Economy‐Wide Policy Reforms on the Agricultural Sector in Brazil: 1980–98," Contemporary Economic Policy, Western Economic Association International, vol. 22(2), pages 194-212, April.
    20. Pfaff, Alexander S. P., 1999. "What Drives Deforestation in the Brazilian Amazon?: Evidence from Satellite and Socioeconomic Data," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 26-43, January.
    21. Sergio Margulis, 2004. "Causes of Deforestation of the Brazilian Amazon," World Bank Publications - Books, The World Bank Group, number 15060.
    22. Andersen,Lykke E. & Granger,Clive W. J. & Reis,Eustaquio J. & Weinhold,Diana & Wunder,Sven, 2002. "The Dynamics of Deforestation and Economic Growth in the Brazilian Amazon," Cambridge Books, Cambridge University Press, number 9780521811972, October.
    23. Schuh, G. Edward, 1976. "The New Macroeconomics Of Agriculture," 1976 Annual Meeting, August 15-18, State College, Pennsylvania 284009, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Keles, Derya & Choumert-Nkolo, Johanna & Combes Motel, Pascale & Nazindigouba Kéré, Eric, 2018. "Does the expansion of biofuels encroach on the forest?," Journal of Forest Economics, Elsevier, vol. 33(C), pages 75-82.
    2. Bragança, Arthur Amorim, 2018. "The Economic Consequences of the Agricultural Expansion in Matopiba," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 72(2), June.
    3. Renzo Alvarez & Amin Shoja & Syed Uddin & Hakan Yilmazkuday, 2019. "Daily exchange rate pass-through into micro prices," Applied Economics Letters, Taylor & Francis Journals, vol. 26(6), pages 440-445, March.
    4. Damien Arvor & Marion Daugeard & Isabelle Tritsch & Neli Aparecida Mello-Thery & Hervé Thery & Vincent Dubreuil, 2018. "Combining socioeconomic development with environmental governance in the Brazilian Amazon: the Mato Grosso agricultural frontier at a tipping point," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(1), pages 1-22, February.
    5. Gollnow, Florian & Hissa, Leticia de Barros Viana & Rufin, Philippe & Lakes, Tobia, 2018. "Property-level direct and indirect deforestation for soybean production in the Amazon region of Mato Grosso, Brazil," Land Use Policy, Elsevier, vol. 78(C), pages 377-385.
    6. Mosciaro, María Jesús & Seghezzo, Lucas & Texeira, Marcos & Paruelo, José & Volante, José, 2023. "Where did the forest go? Post-deforestation land use dynamics in the Dry Chaco region in Northwestern Argentina," Land Use Policy, Elsevier, vol. 129(C).
    7. Avery S. Cohn & Juliana Gil & Thomas Berger & Heitor Pellegrina & Chantal Toledo, "undated". "Patterns and Processes of Pasture to Crop Conversion in Brazil: Evidence from Mato Grosso State," Mathematica Policy Research Reports 8ce99775615f42b98ff43f530, Mathematica Policy Research.
    8. Ermgassen, Erasmus Klaus Helge Justus zu & Ayre, Ben & Godar, Javier & Bastos Lima, Mairon G. & Bauch, Simone & Garrett, Rachael & Green, Jonathan & Lathuillière, Michael J & Löfgren, Pernilla & MacFa, 2019. "Using supply chain data to monitor zero deforestation commitments: an assessment of progress in the Brazilian soy sector," AgriXiv xb3nk, Center for Open Science.
    9. Bowman, Maria S., 2016. "Impact of foot-and-mouth disease status on deforestation in Brazilian Amazon and cerrado municipalities between 2000 and 2010," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 25-40.
    10. Junquera, Victoria & Meyfroidt, Patrick & Sun, Zhanli & Latthachack, Phokham & Grêt-Regamey, Adrienne, 2020. "From global drivers to local land-use change: Understanding the northern Laos rubber boom," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 109, pages 103-115.
    11. Ceddia, Michele Graziano & Gunter, Ulrich & Pazienza, Pasquale, 2019. "Indigenous peoples' land rights and agricultural expansion in Latin America: A dynamic panel data approach," Forest Policy and Economics, Elsevier, vol. 109(C).
    12. Apeti, Ablam Estel & N’Doua, Bossoma Doriane, 2023. "The impact of timber regulations on timber and timber product trade," Ecological Economics, Elsevier, vol. 213(C).
    13. Morello, Thiago Fonseca & Piketty, Marie-Gabrielle & Gardner, Toby & Parry, Luke & Barlow, Jos & Ferreira, Joice & Tancredi, Nicola S., 2018. "Fertilizer Adoption by Smallholders in the Brazilian Amazon: Farm-level Evidence," Ecological Economics, Elsevier, vol. 144(C), pages 278-291.
    14. Clark Lundberg & Ryan Abman, 2022. "Maize price volatility and deforestation," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 693-716, March.
    15. Silva, Felipe & Fulginiti, Lilyan E. & Perrin, Richard K., 2016. "Did technical change in agricultural production decrease the emission of pollutants on the Amazon Forest during 1990-2009?," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230092, Southern Agricultural Economics Association.
    16. Peter Richards, 2018. "It’s not just where you farm; it’s whether your neighbor does too. How agglomeration economies are shaping new agricultural landscapes," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 87-110.
    17. Chouaib Jouf & Laté Lawson, 2021. "European farmers’ responses to higher commodity prices: cropland expansion or forestlands preservation?," EconomiX Working Papers 2021-10, University of Paris Nanterre, EconomiX.
    18. Peter Richards & Heitor Pellegrina & Leah VanWey & Stephanie Spera, 2015. "Soybean Development: The Impact of a Decade of Agricultural Change on Urban and Economic Growth in Mato Grosso, Brazil," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-18, April.
    19. Liu, Xiaoxuan & Yu, Le & Cai, Wenjia & Ding, Qun & Hu, Weixun & Peng, Dailiang & Li, Wei & Zhou, Zheng & Huang, Xiaomeng & Yu, Chaoqing & Gong, Peng, 2021. "The land footprint of the global food trade: Perspectives from a case study of soybeans," Land Use Policy, Elsevier, vol. 111(C).
    20. Mann, Michael L. & Kaufmann, Robert K. & Bauer, Dana Marie & Gopal, Sucharita & Nomack, Mallory & Womack, Jesse Y. & Sullivan, Kerry & Soares-Filho, Britaldo S., 2014. "Pasture conversion and competitive cattle rents in the Amazon," Ecological Economics, Elsevier, vol. 97(C), pages 182-190.
    21. Silva, Felipe & Perrin, Richard K. & Fulginiti, Lilyan E., 2016. "Tradeoffs between forests and farming in the Legal Amazon Region of Brazil," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230040, Southern Agricultural Economics Association.
    22. Wies, Germán & Groot, Jeroen C.J. & Martinez-Ramos, Miguel, 2023. "In highly-biodiverse tropical landscapes, multiple-objective optimization reveals opportunities for increasing both conservation and agricultural production," Ecological Modelling, Elsevier, vol. 483(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ardeni, Pier-Giorgio & Rausser, Gordon C., 1990. "Alternative subsidy reduction paths: the role of fiscal and monetary policy linkages," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5074f3vq, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Sébastien Marchand, 2011. "Technical Efficiency, Farm Size and Tropical Deforestation in the Brazilian Amazonian Forest," Working Papers halshs-00552981, HAL.
    3. Weslem Faria & Alexandre Almeida, 2011. "Agricultural Expansion, Openness to Trade and Deforestation at the Brazilian Amazon: A Spatial Econometric Analysis," ERSA conference papers ersa11p1013, European Regional Science Association.
    4. Mann, Michael L. & Kaufmann, Robert K. & Bauer, Dana Marie & Gopal, Sucharita & Nomack, Mallory & Womack, Jesse Y. & Sullivan, Kerry & Soares-Filho, Britaldo S., 2014. "Pasture conversion and competitive cattle rents in the Amazon," Ecological Economics, Elsevier, vol. 97(C), pages 182-190.
    5. Devadoss, S., 1985. "The impacts of monetary policies on US agriculture," ISU General Staff Papers 198501010800008837, Iowa State University, Department of Economics.
    6. Liu, Zong-Shin, 1989. "Monetary policy, exchange rate, and effects on US wheat trade and domestic market in an imperfect competition framework," ISU General Staff Papers 1989010108000010216, Iowa State University, Department of Economics.
    7. Sébastien MARCHAND, 2010. "Technical Ef?ciency, Farm Size and Tropical Deforestation in the Brazilian Amazonian Forest," Working Papers 201012, CERDI.
    8. Araujo, Claudio & Bonjean, Catherine Araujo & Combes, Jean-Louis & Combes Motel, Pascale & Reis, Eustaquio J., 2009. "Property rights and deforestation in the Brazilian Amazon," Ecological Economics, Elsevier, vol. 68(8-9), pages 2461-2468, June.
    9. Petit, Michel, 1988. "Presidential Address," 1988 Conference, August 24-31, 1988, Buenos Aires, Argentina 183061, International Association of Agricultural Economists.
    10. Andino, Jose & Mulik, Kranti & Koo, Won W., 2005. "The Impact Of Brazil And Argentina'S Currency Devaluation On U.S. Soybean Trade," Agribusiness & Applied Economics Report 23486, North Dakota State University, Department of Agribusiness and Applied Economics.
    11. Richard E. Just & Gordon C. Rausser, 1989. "An Assessment of the Agricultural Economics Profession," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(5), pages 1177-1190.
    12. Pascale COMBES MOTEL & Jean-Louis COMBES & Catherine ARAUJO BONJEAN & Claudio ARAUJO & Eustaquio J. REIS, 2010. "Does Land Tenure Insecurity Drive Deforestation in the Brazilian Amazon?," Working Papers 201013, CERDI.
    13. Meyer, Kevin Michael, 2017. "Three essays on environmental and resource economics," ISU General Staff Papers 201701010800006585, Iowa State University, Department of Economics.
    14. Magrini, Emiliano & Morales-Opazo, Cristian & Balie, Jean, 2014. "Supply response along the value chain in selected SSA countries: the case of grains," 2014: Food, Resources and Conflict, December 7-9, 2014. San Diego, California 197193, International Agricultural Trade Research Consortium.
    15. Catherine Laroche-Dupraz & Marilyne Huchet-Bourdon & Anned-Linz Senadin, 2012. "Impact du taux de change sur la sécurité alimentaire des pays en développement," Post-Print hal-02746844, HAL.
    16. M. Huchet Bourdon & C. Laroche Dupraz, 2014. "National food security: a framework for public policy and international trade," FOODSECURE Working papers 17, LEI Wageningen UR.
    17. Sun, Shiu-Jen, 1985. "The impact of macroeconomic developments upon the U.S. farm sector," ISU General Staff Papers 1985010108000018099, Iowa State University, Department of Economics.
    18. Zobbe, Henrik, 2002. "On The Foundation Of Agricultural Policy Research In The United States," Staff Papers 28644, Purdue University, Department of Agricultural Economics.
    19. Dragan Miljkovic & Jungho Baek, 2019. "Monetary impacts and overshooting of energy prices: the case of the U.S. coal prices," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 32(3), pages 317-322, November.
    20. Guilherme DePaula, 2018. "Technology Adoption and the Agricultural Supply Response Function," Center for Agricultural and Rural Development (CARD) Publications 18-wp582, Center for Agricultural and Rural Development (CARD) at Iowa State University.

    More about this item

    Keywords

    Environmental Economics and Policy; International Development; Land Economics/Use; Political Economy;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:midagr:138606. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/damsuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.