Impact of foot-and-mouth disease status on deforestation in Brazilian Amazon and cerrado municipalities between 2000 and 2010

Deforestation in the Brazilian Amazon released approximately 5.7 billion tons of CO2 to the atmosphere between 2000 and 2010, and 50-80% of this deforestation was for pasture. Most assume that increasing demand for cattle products produced in Brazil caused this deforestation, but the empirical work to-date on cattle documents only correlations between cattle herd size, pasture expansion, cattle prices, and deforestation. This paper uses panel data on deforestation and foot-and-mouth disease (FMD) status-an exogenous demand shifter-to estimate whether changes in FMD status caused new deforestation in municipalities in the Brazilian Amazon and cerrado biomes during the 2000-2010 period. Results suggest that, on average, becoming certified as FMD-free caused a temporary spike in deforestation in the 2 years after a municipality became FMD-free, but caused subsequent deforestation to decline relative to infected municipalities during the 2000-2010 period.