Can companies end deforestation? The limitations and potential opportunities of zero-deforestation commitments in the Brazilian Amazon and Cerrado

Abstract

Commodity-driven deforestation is the primary source of forest loss in the tropics, with major negative socio-environmental impacts occurring as a result. To combat this, many companies have made zero-deforestation commitments (ZDCs), policies to purchase goods only from deforestation-free producers. It is hoped that these private supply chain policies can reduce producers’ incentives to deforest and achieve deforestation at scale in a context of insufficient territorial governance. However, evidence for ZDCs’ efficacy remains unclear, particularly due to key knowledge gaps stemming from: i) the heterogenous exposure of farmers to ZDC companies over time and space, ii) incomplete implementation to all actors involved in ZDC supply chains, and iii) the unclear impact of political context in implementing regions. The goal of this dissertation is to address each of these uncertainties, using evidence from the soy and cattle sectors of the Brazilian Amazon and Cerrado. Chapter 2 of this thesis uses multivariate regression to assess how local variations in ZDC exposure, measured by estimating the municipal-level market share of ZDC companies, influenced conservation outcomes in the cattle sector of the Brazilian Amazon. This chapter finds that for the Amazonian portions of the Brazilian states of Pará, Rondônia, and Mato Grosso, 7,000 ± 4,000 km2 (15 ± 8%) of deforestation was avoided due to ZDCs between 2010 and 2018, and that had all firms adopted an effective ZDC, deforestation could have dropped by 24,000 ± 13,000 km2 (50 ± 28%). These results suggest that ZDCs in the Brazilian cattle sector are reducing deforestation, but only where ZDC market share is high. Chapter 3 examines both how the presence of non-ZDC buyers and ZDC companies’ failure to monitor indirect suppliers’ deforestation affects the ZDC effectiveness in the cattle sector of Pará. It also investigates whether these two policy weaknesses are associated with leakage. This is achieved by developing a property level dataset of direct and indirect cattle suppliers in the state of Pará to differentiate producers’ supply chain tier and ZDC treatment. In line with Chapter 2, this chapter finds that incomplete adoption is the biggest challenge to ZDC effectiveness, as this allows producers to avoid ZDCs and business-as-usual deforestation to continue. Yet cattle laundering, whereby indirect suppliers to ZDC supply chains continue to deforest and sell through “clean” direct suppliers, is also linked to a substantial amount of deforestation. This pathway seems particularly linked to leakage, as direct ZDC suppliers who deforest are significantly more likely to switch to supplying ZDC firms indirectly than direct ZDC suppliers who do not deforest. The final research chapter of this thesis presents the concept of the “sacrifice frontier” to explain the role that local political narratives have on producers’ resistance to supply chain policies. I suggest that sacrifice frontiers are regions where due to reinforcing perceptions of suitability for agricultural expansion, there is a heightened likelihood of political consolidation by agribusiness interests, low levels of public and private policy implementation, high levels of agglomeration, and low perceived risks to frontier expansion, making rapid land use change especially probable. Using data from semi-structured interviews with soy value chain members in the Matopiba region collected in 2018, this chapter examines to what extent the Cerrado aligns with this characterization and the potential implications that being a sacrifice frontier has for the effectiveness of private policies in such regions. This chapter finds the Cerrado closely corresponds to the sacrifice frontier concept and that as a result, the implementation of ZDCs in the region is highly challenging, as producers and agribusiness institutions are resistant to ZDC adoption locally and feel entitled to deforest. These results suggest that in sacrifice frontiers, such as the Cerrado, interventions need to go beyond market exclusion and alter prevailing narratives surrounding agricultural expansion, such as via interventions that consider the specific issues faced by local producers, or via more inclusive, jurisdictional-level positive incentives, technical support, and capacity building.