Defending public interests in private forests: Land-use policy alternatives for the Xingu River headwaters region of southeastern Amazonia

When native vegetation is cleared to establish agricultural lands, damage to ecosystem services such as air, water, and climate can outweigh the substantial benefits of agricultural production. Brazil has created ambitious laws and regulations for the purpose of regulating land use on private lands in Amazon forests. This dissertation analyzes the performance of the central piece of Brazilian environmental legislation in the Amazon region: the Forest Code. In the wake of escalating deforestation and international pressure in the mid-1990's, the Brazilian Government modified the Forest Code, increasing from 50 to 80% the required area of each private landholding in the region that had to be maintained in native forest. I analyzed (1) the level of compliance with both the old and new Forest Code, the change in compliance over time, the costs of compliance, and the ecological services provided under the old versus the new regulations; (2) the potential for hybrid regulatory-economic policies (tradable forestland development rights and land-use zoning) to reduce the opportunity costs of the modified Forest Code while protecting ecosystem services and ecological integrity; and (3) the potential of the emerging forest carbon market to complement Forest Code and land-use zoning protection of public interests in Amazon forests. As a case study, I used the 178,000 km 2 Xingu River headwaters region in the southeastern Amazon Basin. I developed a spatially-explicit land-cover simulation model in conjunction with a river discharge model and maps of potential economic rents under soy, cattle ranching, and logging, to conduct these analyses.;When the Forest Code's "legal reserve" increased from 50 to 80% in 1996, compliance dropped immediately from 92 to 72%, then declined further to 46% by 2005. The regulatory change imposed approximately nine billion dollars in forgone profits from forest conversion to soy and cattle ranching. The Mato Grosso state zoning plan, if implemented, would potentially provide 4000 km2 more agricultural and pasture land, reducing the opportunity costs of strict compliance with the 80% legal reserve by one third, while protecting ecosystem services similarly well. Emerging carbon markets, if expanded to fully and fungibly include forest carbon could offset much of the opportunity cost of forest conservation in the Xingu region, increasing the viability of forest conservation.