This book truly represents the result of a North–South collaborative effort between the Institute of Applied Economic Research (IPEA) in Rio de Janeiro, the University of California in San Diego (UCSD), the Catholic University in La Paz, Bolivia, The London School of Economics in the UK, and the Center for International Forestry Research (CIFOR) in Bogor, Indonesia. The origin of the project dates back to 1989 when Professor Rudi Dornbusch of MIT organized a conference on economic policy responses to global warming and invited Eustáquio Reis to contribute a paper discussing the policy issues surrounding Amazonian deforestation. The resulting paper, co-authored with Sérgio Margulis, was the original seed of this book. Thus to Rudi, as the primum mobile, this book is dedicated.
A driving philosophy behind this project has always been that good policy analysis can be made only on the basis of good data and rigorous methodology. While alternative methodologies can always be considered, accurate and comprehensive data is a universal prerequisite. However, at the end of the 1980s when Eustáquio and Sérgio were working on their paper, the statistical evidence on the extent of Amazonian deforestation was practically non-existent. This lack of reliable data gave rise to wild speculation on the extent of deforestation and the probable fate of the remaining forest. Simple extrapolations based upon two or three points in time led to dire predictions of the complete disappearance of the Brazilian Amazonian rainforest within a few decades. These types of analyses were clearly unsatisfactory, but the lack of hard data hampered any fruitful discussion on the matter.
A key insight at that time was that if you can assume that geography mimics history, it could be possible to compensate for the lack of time series data with the (albeit scanty) estimates of deforestation at the municipal level that were available for the Brazilian Amazon. In other words, the difference between heavily deforested versus pristine municipalities in one year could proxy for the change over time within a single municipality as land cover evolve from virgin forest to developed land uses.