Principal investigator: Eduarda Miller de Figueiredo
Article title: The Environmental Kuznets Curve and the Bolsa Floresta Program in the State of Amazonas: An Application of Spatial Econometrics
Article authors: Neuler André Soares de Almeida and Osmar Tomaz de Souza
Location of the intervention: Amazonas, Brazil
Sample size: 62 municipalities
Sector: Environment, Energy & Climate Change
Type of intervention: Bolsa Floresta – financial compensation for families living in Conservation Units
Primary variable of interest: Deforestation
Evaluation method: Others
Policy Problem
The Amazon region is extremely important within the national and global context. Beyond its size, its ecosystem is extremely relevant, raising questions about how to ensure the management of this environment while taking into account social, environmental, cultural, geographical, and demographic factors.
Due to global concern about deforestation in the Amazon, governments in the Legal Amazon region sought alternatives to address environmental degradation. The Amazonas Sustainable Foundation (FAS) emerged in 2007 as an institutional body aiming to curb the expansion of deforestation in the southern part of the state of Amazonas. This initiative arose through the Bolsa Floresta Program, which aims to financially compensate families living in State Conservation Units.
Implementation and Evaluation Context
The Environmental Kuznets Curve (EKC) hypothesizes a relationship between indicators of environmental degradation and economic development, given that as a country ascends to stages of economic growth, stronger pressures on the environment will occur. Thus, the expected behavior is that of an inverted "U"-shaped curve, supporting the hypothesis that in the early stages of development environmental degradation would occur anyway, but as income grew, incentives to improve environmental quality would emerge, reducing levels of environmental degradation (Bathattari and Hamming, 2004).
Figure 1. Environmental Kuznets Curve.
Source: Prepared by the authors.
Thus, several authors believe that countries go through stages of development where there are institutional changes and shifts in market forces. In the first stage, where a transition from an agricultural to an industrialized economy occurs, there will be strong pressures on the environment. The next stage is characterized by the maturation of society and industrial infrastructure, with high levels of pollution. From this point, technological improvements would increasingly reduce the generation of waste and other byproducts. Finally, in the last stage, any relationship between economic growth and environmental pressure would cease (Grossman and Krueger, 1995; Teixeira and Bertella, 2010). And it is these stages that underpin the Environmental Kuznets Curve.
Therefore, this research seeks to test the hypothesis of the Environmental Kuznets Curve for the State of Amazonas, observing the existence of any type of influence of the Bolsa Floresta Program on deforestation in that region in 2008.
Policy Details
The Bolsa Floresta Program seeks to reward and improve the quality of life of families who use and depend on the forest for their survival, contributing to the preservation and conservation of environmental resources in a sustainable way. According to Sorrentino et al (2005), the program is a public policy to mitigate the destruction of tropical forests through environmental education, which occurs with the inclusion of local communities in workshops on climate change and sustainability.
Figure 2Structure and schedule of Bolsa Floresta benefits.
The program is divided into four modalities, promoting associativism, income generation, sustainable production, and basic social services. The Bolsa Floresta Renda program increases family income with the intention of encouraging sustainable production practices, assisting in forest management and the sustainable exploitation of rivers, lakes, and streams.[1]The Social Forest Grant program provides a sum of money per Conservation Unit for improvements in education, health, communication, and transportation. In this way, environmental education will increase public interest in environmental issues, improving quality of life through environmentally sound practices. The third type is the Association Forest Grant, which promotes participatory management by strengthening community organization. And finally, the Family Forest Grant, which provides financial compensation to families willing to commit to environmental conservation.
Methodology Details
Through spatial econometrics, which deals with the interaction of spatial structures, the study will analyze the possibility of the Bolsa Floresta Program having positive or negative effects on deforestation in the State of Amazonas. Furthermore, the authors use Exploratory Spatial Data Analysis (ESDA) to characterize the spatial distribution, its patterns of spatial association, and identify atypical observations (outliers) and spatial instability.
The sample used in the study contains 62 observations, which are the municipalities of Amazonas, for the year 2008. This allowed the authors to analyze some influence of the Bolsa Floresta Program on deforestation rates in the State of Amazonas, since they started from the premise that, as this public policy is implemented, the number of municipalities contributing to the reduction of deforestation increases.
Initially, the regression model was estimated using the Ordinary Least Squares (OLS) method, using deforestation per km² as the dependent variable. The explanatory variables were: i) the logarithm of the ratio between the deforested area and its population; ii) the logarithm of the ratio between the municipality's GDP and its population; iii) the square of the logarithm of the municipal GDP.
Main results
The results demonstrated that 78% of deforestation in the state of Amazonas is explained by the explanatory variables and that the Bolsa Floresta variable is not significant; therefore, the variable related to public policy has no influence on deforestation.
The authors observed that the Environmental Kuznets Curve hypothesis was not proven. According to the results obtained in the study, deforestation starts at a high level, and as GDP increases, deforestation decreases until an inflection point, where it rises again. This indicates that continuous income growth does not guarantee continuous growth in environmental quality, considering the decrease in deforested area. Therefore, the authors argue that the Environmental Kuznets Curve is not sustainable in the long term. Thus, the inverted "U" shape would only be an initial stage in the relationship between economic growth and environmental pressure, following the results found by Grossman and Krueger (1995) and Teixeira and Bertella (2010).
With the Index of MoranA positive global spatial autocorrelation was observed between deforestation occurring in the municipality and its neighbors. In other words, deforestation does not occur randomly; it is influenced by deforestation occurring in other municipalities. And, according to the C statistic of GearyPositive global spatial autocorrelation was observed in the deforestation process among the municipalities of Amazonas.
Figure 3. Deforestation by municipality in km²
As can be seen in Figure 3, the darker regions show areas where deforestation levels are not yet very high, as these regions are more populated and less rural. In contrast, the lighter regions show locations where deforestation is occurring more rapidly.
In conclusion, the authors emphasize that the Bolsa Floresta Program was created in 2007, therefore, in the year of the study (2011), little time had passed since its implementation, thus explaining the lack of significance in the model.
Lessons in Public Policy
The granting of the Bolsa Floresta program did not influence the reduction of deforestation in the Amazonas state region. Furthermore, this region did not support the hypothesis of a relationship between environmental degradation indicators and economic development; therefore, the Environmental Kuznets Curve would not hold up in the long term.
ReferenceDE ALMEIDA, Neuler André Soares; DE SOUSA, Osmar Tomaz. Environmental Kuznets Curve and the Bolsa Floresta Program in the state of Amazonas: an application of spatial econometrics. ENCONTRO DE ECONOMIA DA REGIÃO SUL, v. 14, 2011.
[1] O creek It refers to first- or second-order Amazonian watercourses, narrow branches of rivers or channels that exist in large numbers in the Amazon basin, characterized by shallow depth and running almost entirely within the forest.
