Using a Market-Based Instrument to Strategically Prevent Legal Deforestation in Mato Grosso

Brazil’s Forest Code of 2012 mandates the maintenance of 80% legal reserve of forested land in every private property in the Amazon biome. Property owners who deforested more than legally permitted before 2008 have the option of buying credits from owners who have surplus native vegetation in the same biome to satisfy their legal reserve defi cit. The use of Environmental Reserve Quotas (“CRA”) could potentially reduce legal deforestation of surplus forested land. Our research objective was to model supply and demand for CRA, by accounting for priority areas defi ned in terms of deforestation risk, carbon stock, and biodiversity importance in the Amazon biome in Mato Grosso.