Can preferential credit programs speed up the adoption of low-carbon agricultural systems in Mato Grosso, Brazil? Results from bioeconomic microsimulation

Abstract

The need to balance agricultural production and environmental protection shifted the focus of Brazilian land-use policy toward sustainable agriculture. In 2010, Brazil established preferential credit lines to finance investments into low-carbon integrated agricultural systems of crop, livestock and forestry. This article presents a simulation-based empirical assessment of integrated system adoption in the state of Mato Grosso, where highly mechanized soybean-cotton and soybean-maize doublecrop systems currently prevail. We employ bioeconomic modeling to explicitly capture the heterogeneity of farmlevel costs and benefits of adoption. By parameterizing and validating our simulations with both empirical and experimental data, we evaluate the effectiveness of the ABC Integration credit through indicators such as land-use change, adoption rates and budgetary costs of credit provision. Alternative scenarios reveal that specific credit conditions might speed up the diffusion of low-carbon agricultural systems in Mato Grosso.

Carbon-optimised land management strategies for southern Amazonia

“…LUC simulations (until 2030) were carried out using LandSHIFT (Schaldach and Koch 2009) on data obtained from The International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT), IBGE statistics and agricultural yield predictions obtained from the MONICA agro-ecosystem model (Nendel et al 2011). MONICA simulates the growth and yield of the main agricultural crops (soybean, maize and cotton) and their response to weather variables and rising atmospheric CO 2 concentrations (Carauta et al 2018). In the concept of Carbiocial, this is the entry point for climate change (CC) considerations being produced from two different downscaling approaches for a resolution of 30 km 2 , driven by the ECHAM5/MPI-OM global circulation model.…”

“…The statistical regional climate modelling (STAR) showed a clear decreasing trend of precipitation for the whole study area (15-25%; 1981-2010 to 2011-2040), while dynamic WRF downscaling gave a much more heterogeneous spatial distribution with slightly increasing and decreasing areas. Agro-economic simulation using MPMAS (Carauta et al 2018) on detailed data on farm asset endowments and production requirements, crop management practices, historical prices for agricultural products and inputs, available sources of credit, relevant taxes and use of ABC program, as well as storage and transportation costs, produced the probably most complete dataset available for farm-level simulation in Mato Grosso, Brazil, including a detailed analysis of integrated crop-livestock systems (iCL) as part of the Brazilian ABC Program on their potential to improve land management and soil carbon storage (Oliveira et al 2018;Carauta et al 2018;Gil et al 2015).…”

“…Linking the interdisciplinary results of the Carbiocial and Carbioma projects, the importance of a greater distribution of integrated agro-silvo-pastoril systems within a better implementation of the ABC program (see Carauta et al 2018) combined with an intensified crop production along a sustainability pathway ) is necessary for better land management to reach the GHG reduction goals of the Brazilian Climate Plan.…”

Tradeoffs in the quest for climate smart agricultural intensification in Mato Grosso, Brazil

“…Our study rigorously examines both social and environmental outcomes for different cattle and cropping strategies in the Amazon across a range of stocking rates and climate scenarios. By offering insights into other soy and cattle frontiers in South America with similar land use contexts and intensification needs-including other states in the Brazilian Amazon, the Cerrado, and Gran Chaco regions-it can contribute to effective agricultural credit policies by better informing estimates for lenders [53] and payments for environmental service schemes [5,54]. Whole-farm modeling is a useful way of synthesizing existing scientific understanding of the impacts of different agricultural practices to assess tradeoffs and identify solutions that meet particular social and environmental goals [55].…”

Inter- and transdisciplinary scenario construction to explore future land-use options in southern Amazonia

“…For our research region, southern Amazonia, this means the unconditional support of large-scale agribusiness, the construction of large dams neglecting the legal consultation mechanisms foreseen in environmental auditing (Hall and Branford 2012), accompanied by a delayed land reform, violent forms of conflict resolution regarding land and natural resources, and impunity, such that in the municipality of Novo Progresso alone, unpaid fines for illegal deforestation have reached more than 400 million Reais. On the other hand, programs like Terra Legal that aim to regulate land use, and implementation mechanisms of the forest code, like Cadastro Ambiental Rural, an environmental licensing program, are chronically underfinanced (Azevedo et al 2015); additionally, credit lines for climate-smart agriculture like the ABC-program (Carauta et al 2017) would not consider the specific needs of farmers trying to shift to a climate smart rotation system (Gil et al 2015). The second major aspect of governmental policies is expansion on the global stage, and this is where environmental and climate policies come in.…”