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Despite the importance of tropical moist forests for conserving biodiversity and storing carbon, forests continue to fall, because the private benefits of clearing land for agriculture far outweigh tangible economic gains from retaining forests. This report measures the financial disparity between forested and cleared land for small-scale farmers in two settlements in the western Brazilian Amazon where pastures are expanding and forests receding. Considering smallholder land use decisions—when and how much to deforest and for what purpose—the report weighs the trade-offs and complementarities among three development objectives: economic growth through agriculture, environmental sustainability, and poverty alleviation. Drawing on field data collected in the mid-1990s, it uses multivariate analysis to explore how factors such as soil quality and market access shape deforestation and use of cleared land. It introduces a farm-level bioeconomic linear programming model to illuminate how such factors influence land use over time, taking into account soil fertility shifts and exploring policy and technology options that give farmers incentives to slow deforestation without decreasing farm household income. -- Authors' Abstract
