Infrastructure and deforestation: evidence of limited environmental effects from the Calha Norte Program

Abstract

This study evaluates the impact of the Calha Norte Program (CNP) on deforestation in the Brazilian Legal Amazon. Its main contribution lies in offering a causal assessment of the program’s environmental effects and examining whether localized infrastructure initiatives operate differently from the large interventions emphasized in existing scholarship. Using the Matching Method for Time-Series Cross-Sectional Data developed by Imai, Kim, and Wang (2023), the analysis finds no statistically significant effect of CNP transfers on forest loss. Two interpretations follow: the infrastructure financed by the program may be insufficient to alter land-use incentives, or the available data may be too limited to capture subtler channels of influence. The latter is plausible given that municipalities receiving the largest cumulative transfers lie outside the Arc of Deforestation – where forest loss is most pronounced and determined by agricultural expansion and strong spatial spillovers. The results highlight the importance of considering project scale alongside broader economic and geopolitical configurations when evaluating state-led development initiatives in frontier regions. More broadly, the findings question deterministic links between infrastructure provision and forest loss in tropical environments, providing insights for designing public policies that seek to reconcile development with environmental conservation.