Deforestation and Efficiency: Insights From Forest Transition in the Brazilian Cerrado

ABSTRACT

This paper estimates technical efficiency (TE) and environmental efficiency (EE) of agricultural production at the municipal level of the Brazilian Cerrado in 2006 and 2017, and investigates their underlying mechanisms in relation to forest transition theory. A stochastic production frontier was estimated using a large database, and deforestation was modeled as an environmentally detrimental input. The results indicated an average TE of 75% in both periods, while EE increased from 39% in 2006 to 45% in 2017. A heterogeneous distribution of forest transition stages in the Cerrado was also observed: municipalities in the southeast and central‐west regions are predominantly in the transition between the second and third phases, while the northeastern regions remain mostly in the initial stages, suggesting that deforestation in these areas may increase in the future. Our findings also suggested that, among the factors associated with efficiency, rural credit and technical assistance stand out due to their potential to reduce deforestation and enhance productivity. The results highlight the urgency of regionally targeted public policies to conserve the Brazilian Cerrado, especially in frontier regions where deforestation pressures remain highest.