The new economic geography of land use change: Supply chain configurations and land use in the Brazilian Amazon

• Published in: Land use policy Vol. 34; pp. 265 - 275
• Main Authors: Garrett, Rachael D., Lambin, Eric F., Naylor, Rosamond L.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Ltd 01-09-2013; Elsevier
• Subjects: Agglomeration economies; Amazon; Amazon region; Animal, plant and microbial ecology; Applied ecology; Biological and medical sciences; Brazil; Brazilians; Capital; Competition; crop production; Economic geography; Environment; environmental law; Fundamental and applied biological sciences. Psychology; geography; Highways; Land; Land tenure; Land use; land use change; Land utilization; Prices; Production; Productivity; Regulation; Soybean; Supply chain; Brazil; Amazonia; South America; Amazon Basin; America; Brazil, Para, Santarem; South America, Amazon R; Brazil, Mato Grosso; Brazil, Para; Supply chain; Brazil; Soybean; Amazon; Land use; Agglomeration economies; Environmental policy; Tropical zone; Land use change; Glycine max; Grain legume; Economy; Leguminosae; Economic geography; Dicotyledones; Angiospermae; Spermatophyta
• ISSN: 0264-8377; 1873-5754
• DOI: 10.1016/j.landusepol.2013.03.011

•Examines causes and impacts of soy agglomeration economies in the Brazilian Amazon.•Environmental institutions affect the development of agglomeration economies.•Agglomeration economies affect agricultural innovation, profits, and area expansion.•Agglomeration economies affect land use rules and enforcement of rules.•Occurrence of agglomeration economies leads to non-linear land use processes.
In this paper we present a framework for understanding regional land use processes by incorporating the concept of agglomeration economies into agricultural frontier theory. We show that agricultural firms can obtain positive externalities from locating in close proximity to other agricultural firms, leading to agglomeration economies. Agglomeration economies lead to high levels of competition and diversity within a local agricultural supply chain and influence local prices, information flows, and private enforcement of environmental institutions. We use the theory of agglomeration economies to understand the development of soybean production in two counties along the Santarém-Cuiaba (BR-163) highway in the Brazilian Amazon: Santarém, Pará and Sorriso, Mato Grosso. We conclude that differences in environmental and land tenure institutions influenced the occurrence of agglomeration economies in these two counties, which in turn affected the total factor productivity of soy in each region. In particular, the supply chain became extremely competitive and diverse in Sorriso where few environmental regulations existed, while environmental restrictions reduced the diversification of the supply chain in Santarém. The presence of a soy agglomeration economy in Sorriso spurred innovation, increased productivity, and led to extremely rapid soy expansion in that county, while the monopolistic supply chain in Santarém reduced producers’ access to land and capital and impeded soy expansion.