The deforestation effects of trade and agricultural productivity in Brazil

This paper quantifies the relative footprint of trade and agricultural productivity on deforestation across Brazilian municipalities between 2000 and 2017. Using remote-sensing data, we identify distinct effects of these two phenomena on land use. Greater exposure to new genetically engineered soy seeds is associated with faster deforestation through cropland expansion. We find no significant association between local exposure to Chinese demand and deforestation, but exposure to trade with China mitigates the deforestation impacts from the new soy technology. Our findings suggest that, when considered together, productivity gains altering municipalities’ comparative advantage played a more significant role in driving deforestation across Brazil than Chinese demand alone.