Land-use policies and corporate investments in agriculture in the Gran Chaco and Chiquitano.

Abstract

Growing demand for agricultural commodities is causing the expansion of agricultural frontiers onto native vegetation worldwide. Agribusiness companies linking these frontiers to distant spaces of consumption through global commodity chains increasingly make zero-deforestation pledges. However, production and land conversion are often carried out by less-visible local and regional actors that are mobile and responsive to new agricultural expansion opportunities and legal constraints on land use. With more stringent deforestation regulations in some countries, we ask whether their movements are determined partly by differences in land-use policies, resulting in "deforestation havens." We analyze the determinants of investment decisions by agricultural companies in the Gran Chaco and Chiquitano, a region that has become the new deforestation "hot spot" in South America. We test whether companies seek out less-regulated forest areas for new agricultural investments. Based on interviews with 82 companies totaling 2.5 Mha of properties, we show that, in addition to proximity to current investments and the availability of cheap forestland, lower deforestation regulations attract investments by companies that tend to clear more forest, mostly cattle ranching operations, and that lower enforcement attracts all companies. Avoiding deforestation leakage requires harmonizing deforestation regulations across regions and commodities and promoting sustainable intensification in cattle ranching.