Modeling Effects of Climate Change Policies on Small Farmer Households in the Amazon Basin, Brazil

Despite discussions on the effectiveness of carbon trade to reduce deforestation in the tropics, significant deforestation is expected to take place in the Amazon forest. Brazil is the fourth largest carbon emitter in the world, and nearly of 40% of its emission from deforestation come from smallholders. Smallholders can play a fundamental role in the conservation of carbon stocks due to their ability to adopt a highly diverse production system that does not require clearing of forest for production in the same way as soybean barons or cattle ranchers. This study analyzes potential effects of carbon trade policies on a typical 100-ha-smallholder farm located in the Transamazon highway, near Altamira in the eastern Brazilian Amazon. Land use change was estimated using an ethnographic linear programming model over a 5-yr period. Carbon trade increased their income by 9% and avoided the emission of 347 t of carbon, demonstrating the potential of climate payments with economic improvement of marginalized popu...