The Legal Amazon is the most economically isolated region in Brazil. Data indicates that the potential market of a typical municipality in the Amazon is 2.1 times smaller than that of a typical municipality in the rest of the country. The Legal Amazon’s isolation is mostly due to the poor quality and limited coverage of its network of roads, railways, and waterways.
Against such a backdrop, investment in logistics infrastructure is considered essential to improving the Legal Amazon’s ties with domestic and international markets and thus driving the region’s economic growth. Meanwhile, the experience of recent decades suggests that logistics investments in the Legal Amazon encounter implementation challenges and cause considerable socio-environmental damage. These costs affect the cost-benefit analysis of logistics projects in the region. For example, merely the cost of the carbon released by the deforestation that comes with logistics infrastructure projects in the Amazon often exceeds the tax costs associated with implementing the projects.
In this context, it is essential to design public policy that improves accessibility in the Legal Amazon without causing significant environmental degradation. This document discusses how improvements in delimiting the area of influence for logistics infrastructure projects can help mitigate the socio-environmental risks of these projects. It begins by discussing problems with the procedures commonly used to delimit the area of influence for logistics projects. Next it introduces a new methodology for delimiting the area of influence – the market access approach, commonly used in the literature of international trade. It then discusses how better defining of the area of influence contributes to the anticipation and mitigation of a socio-environmental risks. It concludes with recommendations for public policy.
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