Imperiled Riches—Threatened Rainforests


July 22, 2012

The majority deforestation in the Amazon Basin since the 1960s has been caused by cattle ranchers and land speculators who burned huge tracts of rainforest for pasture. Brazilian government data indicates that more than 60 percent of deforested land ends up as cattle pasture. But conversion to cattle pasture isn't limited to Brazil — in the 1970s and early 1980s vast tracts of rainforest in Costa Rica, Honduras, and El Salvador were burned and converted into cattle pasture lands to meet American demand for beef.

In Central America, cattle pasture land set aside in the 1970s and 1980s was an especially poor choice because a large portion was located on the minority of fertile rainforest soils (volcanic and floodplain soils). For example, by the mid-1990s, cattle pasture land in Honduras took up over 40 percent of the country's fertile land. Cattle grazing in the tropics is relatively inefficient: initially each hectare of cleared land may support an animal, but after 6-8 years, each animal may require five hectares.

Nonetheless, cattle are an attractive option in Latin American rainforests. By simply clearing forest and placing a few head on the land, colonists and developers can gain title to the land in some countries (notably Brazil). They often choose cattle over other options because cattle have low maintenance costs and are highly liquid assets easily brought to market. Additionally, cattle are a low-risk investment relative to cash crops which are more subject to wild price swings and pest infestations. Cattle also don't require much capital.

Vast swaths of rainforest are cleared and used for cattle grazing in Latin America for land speculation purposes. The land tenure system in many countries promotes such conversion of land from a natural productive asset to a speculative one by wealthy landowners and speculators. When real pasture land prices exceed real forest land prices, land clearing is a good hedge against inflation, which has been rampant in many developing countries at times in the 1980s and 1990s (2,500 percent in Brazil in 1993, 13,340 percent in Venezuela from 1993-1998). When the growth of land prices is greater than inflation, such land clearing is a good investment regardless of the use of the land. Additionally, at times of high inflation, the appreciation of cattle prices and the stream of services (milk) they provide may outpace the interest rate earned on money left in the bank.

Even today with moderate rates of inflation, land clearing for cattle pasture remains a popular activity for land speculators. In parts of the Amazon, pasture land can be sold at a higher price than forested lands. Thus cattle ranching is used as a vehicle for land speculation.

Cattle ranchers sometimes work with soy farmers in the Brazilian Amazon. Ranchers — or their agents — clear the land and use it for low productivity cattle grazing. The land is then leased to soy growers, who add lime to the soil to make it suitable for soybeans. After a few years the lease expires and the landowner takes advantage of the improved soil conditions to boost cattle productivity. Ranchers also buy soy as cattle feed.

Cow in the Pantanal, a giant wetland south of the Amazon. Click image for more pictures. Photo by Rhett A. Butler

Review questions:

  • What is the largest source of deforestation in Latin America?
  • Why do land speculators clear rainforest?

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Continued / Next: Dams in the Rainforest

  • Fearnside, P.M. ("Deforestation in Brazilian Amazonia: The Effect of Population and Land Tenure," Ambio, vol. 22 no. 8 (537-545), Dec. 1993) provides a detailed study of deforestation for cattle pastures in the Amazon. Among other statistics, he provides government figures for large scale cattle ranching and discusses the importance of inflation in clearing for land speculation. Dore, M.H.I. and Noguiera, J.M. ("The Amazon Rain Forest, Sustainable Development and the Biodiversity Convention: A Political Economy Perspective," Ambio Vol. 23 No. 8 (491-496), December 1994) further detail the role of inflation and high interest rates in Amazonian deforestation.
  • According to Gradwohl, J. and Greenberg, R., Saving the Tropical Rainforests, Island Press, Washington D.C., 1988, cattle pastures in Honduras take up more than 40% of the nation's fertile land.
  • Nigel J.H. Smith, Emanuel Adilson S. Serro, Paulo T. Alvim, and Italo C. Falesi in Amazonia - Resiliency and Dynamism of the Land and its People (The United Nations University, 1995) discuss why cattle are an attractive investment in the Amazon.