Computable General Equilibrium Model for Analysis of the Payment for Environmental Services in the Brazilian Cerrado

The provision of food, fiber, bioenergy and water is essential to meet the growing global demand, but it faces environmental challenges such as deforestation and habitat loss. Although the new Brazilian Forest Code aims to protect the environment, its effectiveness is limited, especially due to the diversity of biomes. The forest conversion in the Cerrado, particularly in the MATOPIBA region, demands immediate solutions. This research calculates the amount of Payment for Environmental Services (PES) required to encourage producers to adopt protective measures that prevent the conversion of the Legal Reserve Surplus (LRS) in agricultural areas. Using the model of Computable General Equilibrium (CGE) Brazilian Economic Analysis (BREA), two scenarios were simulated: Base and PES (BT). In the Base scenario, 400,000 hectares of LRS would be converted to crop production in the Cerrado biome. In the PES (BT) scenario, the converted area would be 191,000 hectares destined for soybean production and livestock rearing in the same territory. Financially, the soybean production in the PES (BT) scenario would generate R$ 541.2 million, while the production of pastures would reach R$ 2.4 billion. The results provide valuable inputs for public policy formulation, highlighting the importance of balancing agricultural production with environmental conservation in order to meet producers' needs and protect ecosystems.