Do forest conservation policies undermine the soybean sector in the Brazilian Amazon? Evidence from the priority listing of municipalities

Minimizing the trade-offs between agricultural production, development and forest conservation is key to ensure that conservation policies can achieve long-term positive impacts. Taking the case of the Brazilian Amazon in the context of the Action Plan for the Prevention and Control of Deforestation in the Legal Amazon, I estimate the impact of the prioritizing of municipalities with high deforestation risk from soybean production (a major driver of deforestation), exports and land-use changes relying on a difference-in-differences and generalized synthetic control approach. I find that, although effective in reducing deforestation, the policy is unlikely to have undermined the soybean production and exports. On the contrary, the results suggest that the soybean sector benefited from the changes in land use following the implementation of the priority list. However, I do not find evidence that land restriction triggered the intensification of soybean production, which suggests that the soybean sector benefited from intra-crops reallocation and pasture conversion.