Deforestation in the Brazilian Amazon: why do local stakeholders on the frontier invest in clearing rainforest?

Abstract This study provides qualitative and quantitative data related to incentives and enabling conditions driving forest clearing at the epicenter of deforestation in the Brazilian Amazon. A case study is provided for the Rio Juma Settlement Project (PARJ), located in the municipality (county) of Apuí, in the state of Amazonas. The results suggest that the very high financial profitability (internal rate of return) from cattle ranching in the PARJ (38–59% annually in 2020) and land speculation (95–214% annually in 2020) are fueling investments in expanding the deforestation and in establishing pasturelands in southern Amazonas. The very low risk of informal ranching activities and the absence of land-governance systems are also important incentives for deforestation and the accumulation of land by new arrivals, who are more capitalized than the original settlers. Deforestation in the region is more related to commodity and land-price fluctuations than to macro-economic and policy factors. We discuss the information needed to help reduce deforestation, such as improving transparency and accountability for private transactions executed through financial institutions and comparing these amounts with the municipality's public accounts.