Biofuels offer an approach to reducing carbon emissions. However, the agricultural expansion required may put tropical forests at risk. This research uses a dynamic land use model to disentangle the roles of planted area and productivity in the supply of sugarcane ethanol in Brazil. The model is estimated using satellite remote sensing data on sugarcane activities. The estimates indicate that, at the margin, 92% of new ethanol comes from area expansion and only 8% from productivity gains. Direct deforestation accounts for 19% of long-term marginal area expansion. The study also evaluates carbon emissions and the deforestation implications of ethanol policies.

Researcher: Marcelo Sant’Anna
EPGE Brazilian School of Economics and Finance (FGV EPGE)

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