Potential impacts on local quality of life due to sugarcane expansion: a case study based on panel data analysis

Abstract

Agribusiness participation in Brazil generates investments in rural infrastructure and employment, with direct effects on local quality of life. In this sense, government policies to support the production of ethanol from sugarcane and to promote bioelectricity from bagasse production have made Brazil a country of world leadership in this field. This paper reports an assessment of socioeconomic impacts due to sugarcane production in three regions in Brazil (Piracicaba, Presidente Prudente and Southwest Goias). Local quality of life is defined as five dimensions: income and inequality, education, infrastructure, health and general development, analysed using panel data modelling, with variables that could explain differences in development due to local characteristics, including sugarcane activity. Presidente Prudente has the highest levels of progress in education, poverty, infrastructure and general development indicators. The models indicate that participation of sugarcane has positive impacts on the indicators of the microregion. In case of Piracicaba microregion, in two models (“L-Theil” and “Illiteracy rate”) indicators related with sugarcane sector are significant explanatory variables, contributing for better indicators. Finally, Southwest Goias—where sugarcane activity develops later—is the single microregion in which the adjusted models have no significant explanatory variables related to sugarcane sector.