Deforestation in Brazil: Potential Revenue and GDP Losses

Mario López-Alcalá and Juan Sampieri

Land-use change for soy and beef production has historically been identified as the prevalent cause of deforestation and wildfires in the Amazon and Cerrado regions of Brazil. Traders of Brazilian beef and soy that do not comply with potential deforestation-free requirements could lose access to key markets, such as Brazil, China and the EU, potentially resulting in lost revenue and lower Brazilian GDP. The interactive chart below highlights estimated revenue and GDP losses under eight possible scenarios. Our recent blog post explores how these potential losses could in turn impact the spreads of corporate and sovereign bonds.

As representative samples, we used the top three producers for each market by volume, which represented 38% of soy production and 49% of Brazil’s beef production in 2017. Figures in the soy and beef columns might not add to the total column due to rounding. Source: Trase, MSCI ESG Research LLC.