Transportation Infrastructure and Deforestation in the Amazon

We examine the effects of transportation infrastructure on deforestation in the Amazon. We build an inter-regional trade model in which agricultural commodities can be produced either in cleared lands or in forest lands. The model delivers a closed-form expression connecting deforestation and market access. Using panel data on the evolution of the transportation network and land use we estimate sizable effects of infrastructure on deforestation. Model simulations indicate that ignoring transportation infrastructure’s effects beyond the projects surroundings underestimates deforestation impacts by one quarter. We also show how our framework can be used to evaluate the deforestation induced by individual projects, an essential input for public policies.