One way to curb land grabbing in the Amazon? Steer interest away from land

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Motosserra e árvores caídas na Amazônia Motosserra e árvores caídas na Amazônia

Land grabbing – which consists of invading plots of land, and then clearing forests to claim it – has occurred in Brazil since colonial times. It is what settlers did to quickly populate the country and put as much land under production as possible. The practice has long been associated with illegality: it is known as grilagem (from grilo – cricket in Portuguese), supposedly because forged land titles would be put in drawers with crickets to make them look authentic before being presented to authorities.  

Land grabbing is one of the leading drivers of deforestation in the Brazilian Amazon, particularly where property rights are weak. Undesignated public land is especially vulnerable: despite covering about one tenth of the Amazon, it represents one quarter of its total deforestation. And while land grabbing is a feature of frontier regions all over the world, and its impact on deforestation well documented, replicating the global experience of frontier expansion in the Amazon risks generating permanent environmental and economic damage given the region’s exceptionally valuable biodiversity, its role in carbon storage, its importance for regulating rainfall throughout South America, and the imminent risk of tipping points.  

Experience suggests that, when the appropriate monitoring and enforcement mechanisms are in place, strengthening land governance by converting undesignated lands into protected areas can be an effective way to curb deforestation. However, the political cost of strengthening the environmental protection status of land in the Amazon is high and existing protections are sometimes even removed for political gain. Even when monitoring is good and enforcement effective, other forces can limit the impact of good land and forest management policies. This occurs because land grabbing is profitable and, like the other illegal activities that occur in the Amazon, it is hard to stop it as long as demand for land remains strong.  

Land demand in the region is closely tied to the profitability of agricultural activities. Recent work suggests that land prices in Brazil are positively correlated with the real effective exchange rate – a measure of Brazil’s external competitiveness. This is intuitive: agriculture is Brazil’s biggest export sector and when external competitiveness rises, farmers want to produce more. Greater demand for land causes land prices to rise; to offset these increases, farmers often resort to deforestation

Indeed, the exchange rate is more closely correlated with deforestation than land prices, suggesting that incorporating more land is relatively easy. This is a common characteristic of frontier regions and an enabler of deforestation. In this sense, land grabbing and the vast destruction of natural capital associated with deforestation are inherent features of the economics of agricultural frontiers. This can only be stopped for good if, along with monitoring and enforcement, the economic incentives for incorporating more land are changed.  

Putting “grileiros” out of business, while promoting development 

Changing the incentives for “grileiros” to incorporate more land requires a combination of policies that influence both the supply and the demand for land.  

On the supply side, it is important to implement policies that reduce the land available for grabbing. Designating public forests into protected areas (indigenous land or conservation units), improving the monitoring of protected areas, and punishing individuals engaging in illegal deforestation are all options to “close the frontier”, increasing the costs of land grabbing in the Amazon. Indeed, such policies helped Brazil to reduce land grabbing and the violence associated to this process in the 2000s. 

On the demand side, it is important to promote an economic model less reliant on land-based activities in the region in order to reduce land demand and therefore incentives for land grabbing. Land demand in the Amazon is closely tied to low-productivity cattle ranching. This activity is only profitable when land, capital and labor are cheap. It is no surprise that higher demand for labor and capital often drives out low-productivity cattle ranching and reduces deforestation. Hence, increasing productivity and thereby increasing the demand for labor and capital in other sectors is key to reduce land demand and put “grileiros” out of business.  

Implementing an economic model less reliant on land-based activities is fundamental to increase productivity. This model will require stronger focus on productivity in urban sectors across Brazil, promoting urban activities that are relatively detached from the forest both inside and outside of the Amazon would contribute to put low-productivity ranchers out of business, reducing land demand and incentives for land grabbing. In addition, stronger agricultural productivity in Brazil’s more consolidated agricultural regions could also reduce pressure on Amazonian land while meeting global food demand. This increase in productivity in urban areas, while critical, will take time.  For the urgent, near conservation needs, effectiveness of monitoring and enforcement will remain critical, matched by steps toward the medium-term urban productivity shift. 

Promoting these supply and demand strategies with a focus on short- and medium-term results is essential to open a path to development in the Amazon that reconciles standing forests, respect for the rule of law, and higher incomes.  


Marek Hanusch

Lead Economist and Program Leader in the World Bank’s Practice Group for Equitable Growth, Finance and Institutions

Arthur Bragança

Arthur Bragança, Senior Economist from Environment, Natural Resources, and Blue Economy Global Practice, World Bank

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