Patterns of frontier development: a dynamic model of resource extraction in the Brazilian Amazon

Abstract

AbstractDeveloping countries are known to exploit their resource frontier to achieve growth objectives and reduce poverty. This can lead to long-term positive outcomes or – if resource exploitation is unsustainable – lose–lose outcomes that leave populations and ecosystems worse off. This paper introduces a dynamic model of resource exploitation to explain how regions may succumb to, avoid or escape this negative outcome. The theoretical model characterizes a frontier community that uses soil as an input into agricultural production. The model shows that there may be a critical point in the soil stock that determines whether agricultural activities lead to sustainable development or a collapse in local income. This suggests that, in the event of a resource collapse, temporary adjustments to the system may permanently rehabilitate the resource base and change a community's development pattern. Calibration of the model to several frontier states of the Brazilian Amazon points toward an overall outcome of steady development.