The Impact of Brazil's ABC Program Credit on Pasture Recovery: Evidence from the Cerrado

Table of Contents

• Figure 1. Pasture Area by Biome, 2000–2022 13
• Figure 2. Area by Land Use Type and Pasture Vigor Class in Millions of Hectares, 2000, 2010, 2020, and 2022, Brazil and Cerrado 15
• Figure 3. Number of Contracts and Value of the ABC Program by Subprogram, 2016–2022 17
• Figure 4. Percentage of ABC Recuperação Credit Contracts According to Geodetic Coordinates Reporting, 2016–2022 20
• Figure 5. Percentage of Pasture Areas over the Total Area of ABC Recuperação Credit Polygons in the Cerrado, Operations Contracted between 2016–2018 28
• Figure 6. Percentage of Low or Medium Vigor Pastures over the Total Area of ABC Recuperação Credit Polygons in the Cerrado, Operations Contracted between 2016–2018 29
• Figure 7. Average Pasture Areas by Vigor Class, Native Vegetation and Other Land Uses of ABC Recuperação Credit Polygons in the Cerrado, Operations Contracted between 2016–2018 30
• Figure 8. Land Use Transitions in ABC Recuperação Credit Polygons in the Cerrado, Operations Contracted between 2016–2018 31
• Table 1. Average Effects of ABC Recuperação Credit on Various Variables of Interest (Percentages of Polygon Area), Credit Operations Carried Out Between 2016 and 2018 in the Cerrado 32
• Figure 9. Effects of ABC Recuperação Credit on the Proportion of Total Pasture Area and by Vigor Classes over the Polygon Area, 2016–2018 34
• Figure 10. Dynamic Effects of ABC Recuperação Credit on the Proportion of Crop Area and Crop-Cattle Mosaic over the Polygon Area, 2016–2018 35
• Figure 11. Dynamic Effects of ABC Recuperação Credit on the Proportion of Natural Forest and Planted Forest Area over the Polygon Area, 2016–2018 36
• Figure 12. Dynamic Effects of ABC Recuperação Credit on the Proportion of Total Pasture Area and Degraded Pasture (Low or Medium Vigor) over the Polygon Area, with and without Technical Assistance, 2016–2018 37
• Figure 13. Dynamic Effects of ABC Recuperação Credit on the Proportion of Total Pasture Area and Degraded Pasture (Low or Medium Vigor) over the Polygon Area, for Different Soil Types, 2016–2018 39
• Figure 14. Predominant Soil Types in the Cerrado Biome, by Federal Unit 40
• Table 2. Estimated Contribution of ABC Recuperação Credit to the ABC Plan Target. 42
• Table 3. Average Effects of ABC Recuperação Credit on the Proportion of Total Pasture Area and with Signs of Degradation over the Polygon Area, with Different Econometric Specifications. 44
• Table 4. Average Effects of ABC Recuperação Credit on Various Variables of Interest (Percentages of Polygon Area), Credit Operations Carried Out between 2016 and 2018 in All Biomes. 45
• Table 5. Average Effects of ABC Recuperação Credit on Various Variables of Interest (Percentages of Polygon Area), Credit Operations Carried Out between 2016 and 2021 in the Cerrado. 46
• Table 6. Average Effects of ABC Recuperação Credit on the Proportion of Total Pasture Area and with SIgns of Degradation over the Polygon Area, Varying the Sample According to the Polygon Area Distribution Deciles. 47
• Table 7. Average Effects of ABC Recuperação Credit on Various Variables of Interest (Percentages of Polygon Area), Credit Operations Carried Out between 2016 and 2018 in the Cerrado with Polygons Restricted to Pasture Area in the Year of the Credit Operat 48
• Introduction 7
• Results and Policy Recommendations 9
• Results 9
• Pasture Recovery and Conversion 9
• Technical Assistance and Soil Type 10
• Deforestation 10
• ABC Plan Targets 10
• Robust Results 10
• Recommendations 11
• Context 12
• Pastures in Brazil 12
• The ABC Program (RENOVAGRO) 16
• Data 19
• Rural Credit Data 19
• Land Use Data and Pasture Vigor 22
• Other Information 23
• Methodology 24
• Credit Assessment ABC Recuperação 27
• Descriptive Statistics 27
• Results of the Empirical Analysis 32
• Medium Effects 32
• Effects over Time 33
• Heterogeneous Effects 36
• The Contribution of Credit to Meeting the ABC Plan Target 41
• Sensitivity Analysis of Results 44
• Econometric Specifications 44
• Results for All Biomes 45
• Results for Credit Operations Contracted between 2016 and 2021 46
• Robustness Test: Polygon Size 47
• Results Restricting the Declared Polygons to Pasture Areas 48
• Conclusion 49
• References 51