A new study by Stanford scientists reveals that agricultural companies can offset deforestation regulations by moving to less-restricted areas.

Companies strongly involved with deforestation prefer to expand in areas with lighter environmental restrictions, all other things equal, the scientists report. Additionally, the researchers found that companies generally prefer to operate in areas with low regulatory enforcement.

These preferences can lead deforestation to shift from one region to another. The authors conclude that this shift can be avoided by harmonizing deforestation regulations across regions and commodities, while simultaneously encouraging sustainable intensification of agriculture.

How to Slow Deforestation

“Studies suggest that at least 100 million more hectares of agricultural land will be needed to meet global demand for food by 2030 compared with 2000,” said Eric Lambin, a professor at the Stanford School of Earth, Energy, and Environmental Sciences who is also a senior fellow at the Stanford Woods Institute for the Environment. “It is therefore imperative that we find ways to meet the demand for food without clearing natural ecosystems.”

While some conservation policies appear to be working, signs of progress could be misleading. There are indications that limiting the expansion of commodities such as soy and beef in one place may simply displace it to another. That phenomenon, known as deforestation “leakage,” could have important policy implications, but to date its processes and extent remain largely unknown.

The Gran Chaco and Chiquitano woodlands, which span Brazil, Argentina, Bolivia and Paraguay, provide an ideal natural experiment to examine the causes of leakage. Land use in these areas remained largely unregulated until the mid-2000s, but new policies have created large regulatory differences within them.

To analyze how companies decide to locate their investments in the Gran Chaco and Chiquitano regions, the team interviewed 82 soybean and cattle companies in Argentina, Bolivia, and Paraguay whose properties total 2.5 million hectares. The researchers asked how strongly deforestation regulations affect the location of their investments, and whether differences in these regulations lead to deforestation leakage.

While they found that these decisions are mainly driven by proximity to current investments and availability of forestland, weaker deforestation regulations and lower enforcement also attract investments by agricultural companies that tend to clear more forests.

“Although the effects of deforestation regulation on investment decisions can be offset by other factors, they are still significant,” said lead author Yann le Polain de Waroux, postdoctoral researcher in Stanford’s School of Earth, Energy, and Environmental Sciences. “To prevent further deforestation leakage, we need greater harmonization of deforestation regulations across regions and commodities, and more sustainably intensive cattle ranching practices.”

The latter solution is proposed because more intensive cattle ranching practices, provided they are sustainable, could result in improved productivity and profitability under stricter regulatory conditions that, in turn, could reduce the impetus for companies to relocate to other regions.

In terms of harmonizing regulations, one key approach could be the broad implementation of private sector and finance standards.

“If international companies and banks were to adopt harmonized sustainability standards in every country in which they operate, it would make deforestation leakage less likely,” le Polain said.

In recent years, there has been a surge of corporate and investor commitments to remove deforestation in supply chains and investment portfolios. The Consumers Goods Forum (CGF), a group of retailers and brands with a combined revenue of more than $2.8 trillion that includes giants such as Unilever and Walmart, committed to zero net deforestation in their supply chains by 2020. Ten banks aligned their goals with the CGF and also commitment to achieve zero net deforestation by 2020 as part of the Soft Commodities Compact linked to the Banking and Environment Initiative (BEI). Other companies like Cargill and McDonalds committed to zero deforestation as part of the New York Declaration on Forests, in 2014.

“Momentum is building among major retailers and buyers in the global soy and beef supply chain to reduce deforestation, and our results suggest that harmonizing standards across these companies can help us achieve our goal of zero deforestation,” Lambin said.

The research was published March 28, 2016 in the journal Proceedings of the National Academy of Sciences, and was supported by the Gordon and Betty Moore Foundation through grant GBMF4263.