Can preferential credit programs speed up the adoption of low-carbon agricultural systems in Mato Grosso, Brazil? Results from bioeconomic microsimulation

Abstract

The need to balance agricultural production and environmental protection shifted the focus of Brazilian land-use policy toward sustainable agriculture. In 2010, Brazil established preferential credit lines to finance investments into low-carbon integrated agricultural systems of crop, livestock and forestry. This article presents a simulation-based empirical assessment of integrated system adoption in the state of Mato Grosso, where highly mechanized soybean–cotton and soybean–maize double-crop systems currently prevail. We employ bioeconomic modeling to explicitly capture the heterogeneity of farm-level costs and benefits of adoption. By parameterizing and validating our simulations with both empirical and experimental data, we evaluate the effectiveness of the ABC Integration credit through indicators such as land-use change, adoption rates and budgetary costs of credit provision. Alternative scenarios reveal that specific credit conditions might speed up the diffusion of low-carbon agricultural systems in Mato Grosso.