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This paper investigates empirically the effect of land invasions on farm production decisions. The main hypothesis is that more invasions in a region are associated with lower investment, and in particular a bias towards annual crops as opposed to long‐term crops. We use a county‐level dataset for the state of Paraná, Brazil, from 2003 to 2007, with 1,995 observations. The panel data structure allows us to control for fixed effects, such as the formalisation of land titles and land concentration, which might be correlated with the intensity of invasions. An instrumental variable fixed effects model was estimated to avoid other sources of bias. Our main finding is that land invasions are associated with lower long‐term crop production and a higher percentage of annual crops, which could accelerate land degradation, and undermine environmental sustainability.
