The determinants of reforestation in Brazil

This article analyses the main determinants of reforestation in Brazil during the 1980s and 1990s. In the year 2000 Brazil had the sixth largest planted forests area in the world. The planted forests in Brazil saw a huge increase from 1960 to 1985. Since then, however, that stock has decreased, but the demand for roundwood continues to increase. That situation will result in a scarcity of roundwood from reforestation in Brazil in few years. The expected roundwood scarcity motivates an econometric study to compare market forces and economic policies in stimulating the reforestation in Brazil. Considering the main firms reforesting in Brazil, it can be pointed out that small and medium farmers have been planting forests while private or public programmes are present. Otherwise, large wood-based firms consider factors other than prices (such as their future demand for roundwood) to be more important in their planting decisions. Those results cast doubts about the efficiency of the market price system in solving the future scarcity of roundwood in Brazil.