Credit Where It's Due: Unearthing the Relationship Between Rural Credit Subsidies and Deforestation

This policy brief by the Climate Policy Initiative (CPI/PUC-RIO) examines the link between subsidized rural credit and deforestation in Brazil between 2020 and 2022. The analysis reveals that a small number of large properties receive a disproportionate share of subsidized funds while being responsible for significant deforestation, suggesting that current economic incentives are misaligned with Brazil's environmental and climate goals.

• Between 2020 and 2022, 31% of properties that engaged in deforestation accessed subsidized rural credit, receiving an average of R$ 14 billion annually, which represents 15% of the total volume of subsidized credit.
• Deforestation among subsidized credit recipients is highly concentrated in large properties; the average area of properties with deforestation that receive these subsidies is approximately ten times larger than those without deforestation. Furthermore, 5% of the largest properties receiving subsidized credit account for 74% of the associated vegetation loss.
• The Cerrado biome shows the strongest link between subsidized credit and deforestation, with 47% of its subsidized rural credit associated with deforestation and 50% of its deforestation associated with subsidized rural credit.
• Current credit restrictions based on environmental embargoes are insufficient to prevent the flow of public funds to deforesting properties. Between 2020 and 2022, only 939 properties that deforested and took subsidized credit had active environmental embargoes, meaning the vast majority of such properties remained eligible for funds.
• The Brazilian Agricultural Plan (Plano Safra) for the 2023/24 agricultural year allocated R$ 436 billion for rural credit, with government subsidies and tax benefits totaling R$ 13.6 billion.
• The report recommends that subsidized rural credit be earmarked exclusively for properties without any deforestation, regardless of whether the vegetation suppression was legal or illegal, to align economic incentives with forest conservation.

APA

Climate Policy Initiative (2024). Credit Where It's Due: Unearthing the Relationship Between Rural Credit Subsidies and Deforestation. https://www.climatepolicyinitiative.org/publication/credit-where-its-due-unearthing-the-relationship-between-rural-credit-subsidies-and-deforestation/

Chicago

Climate Policy Initiative. Credit Where It's Due: Unearthing the Relationship Between Rural Credit Subsidies and Deforestation. 2024. https://www.climatepolicyinitiative.org/publication/credit-where-its-due-unearthing-the-relationship-between-rural-credit-subsidies-and-deforestation/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Credit Where It's Due: Unearthing the Relationship Between Rural Credit Subsidies and Deforestation |date=8 July 2024 |url=https://www.climatepolicyinitiative.org/publication/credit-where-its-due-unearthing-the-relationship-between-rural-credit-subsidies-and-deforestation/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2024credit, author = {{Climate Policy Initiative}}, title = {{Credit Where It's Due: Unearthing the Relationship Between Rural Credit Subsidies and Deforestation}}, institution = {Climate Policy Initiative}, year = {2024}, month = jul, url = {https://www.climatepolicyinitiative.org/publication/credit-where-its-due-unearthing-the-relationship-between-rural-credit-subsidies-and-deforestation/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }