Selective Credit Controls

While subsidised credit has been less important than often thought (see subsidies for forest clearing) there is still a case for credit policies to discourage conversion of forest to pasture. The scope for such policies will depend on :

- whether credit is provided by government or private banks
- if the latter, the degree of interference in private lending that is legally, politically and administratively possible
- whether credit is currently subsidised or not.

Depending on the answers to these questions, there are various options :

- Ending existing subsidies to bring interest rates to commercial levels
- Prohibiting credit for cattle
- Prohibiting credit for individuals owning more than a certain number of cattle
- Prohibiting credit to geographical areas at high risk of deforestation
- Targetting credit on inputs used for intensive, and not extensive, livestock production.

However, all these policies except the first are likely to be frustrated by the fungibility of credit : between the agricultural activities of an enterprise, between geographically separated holdings of an enterprise, and between individuals or enterprises.

Key references

Ledec, G. 1992. New Directions for Livestock Policy; an Environmental Perspective. In Downing, T.E., Hecht, S.B., Pearson, H.A. and Garcia-Downing, C. (eds) Development or Destruction: The Conversion of Tropical Forest To Pasture in Latin America Westview, Boulder

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