Forest plantations and local economic development: Evidence from Minas Gerais, Brazil

Globally, Brazil is one of the most important producers of wood products from forest plantations. Climatic conditions suitable for high productivity coupled with strong market demand and other factors have led to a marked increase in the area devoted to forest plantations in the country. Wood production from these plantations has brought important macroeconomic benefits through export. However, knowledge of the socio-economic impacts of forest plantations at sub-national levels remains limited in Brazil as in other tropical country contexts. This study addresses this knowledge gap by analyzing the socioeconomic impacts of forest plantations across the municipalities of Minas Gerais, the state with the largest plantation area in Brazil since 1980. We use panel data regression methods to analyze the relationship between forest plantation area, poverty, and other variables over a 20-year period. The results show that an increase in forest plantation area is associated with a decrease in poverty over time. Our findings run counter to much of the current evidence on the socio-economic impacts of forest plantations and have important implications for research and policy on this topic not only in Brazil, but elsewhere in Latin America and beyond.