Sustainable agricultural intensification or Jevons paradox? The role of public governance in tropical South America

•Governance behaves unexpectedly with respect to agricultural expansion.•Intensification promotes agricultural expansion when governance is good.•Service on external debt increases pressures to expand agriculture.•Per capita income is ultimately positively related to agricultural expansion.•The effect of agricultural exports on agricultural expansion is moderate. The process of global deforestation calls for urgent attention, particularly in South America where deforestation rates have failed to decline over the past 20 years. The main direct cause of deforestation is land conversion to agriculture. We combine data from the FAO and the World Bank for six tropical Southern American countries over the period 1970–2006, estimate a panel data model accounting for various determinants of agricultural land expansion and derive elasticities to quantify the effect of the different independent variables. We investigate whether agricultural intensification, in conjunction with governance factors, has been promoting agricultural expansion, leading to a “Jevons paradox”. The paradox occurs if an increase in the productivity of one factor (here agricultural land) leads to its increased, rather than decreased, utilization. We find that for high values of our governance indicators a Jevons paradox exists even for moderate levels of agricultural productivity, leading to an overall expansion of agricultural area. Agricultural expansion is also positively related to the level of service on external debt and population growth, while its association with agricultural exports is only moderate. Finally, we find no evidence of an environmental Kuznets curve, as agricultural area is ultimately positively correlated to per-capita income levels.