represented by preferences for saving Amazon rainforests in other countries (mainly, “passive use” values in higher-income countries manifested in willingness to pay for Amazon forest protection programs in such countries). Since these values always would come in addition to local protection values, they could (often) “tip the balance” in favor of protection, when forest conversion otherwise appears to be economically efficient. This raises new sets of problems and issues. One problem is that there are few means by which such global values, expressed by overseas beneficiaries, can readily transmit incentives to land users to forgo from deforestation in favor of conservation. While it is important to have a global perspective in mind when attempting to apply our results to practical policy, it will not play much of a role for our discussion in this paper, which is relatively technical and confined to the local and regional aspects.

Conversion of the rainforest to other uses in the Amazon (since 1970, approximately 18% of the total initial Brazilian rainforest area has been lost) has resulted from a complex of often interrelated causes, involving local, national and international drivers (Soares-Filho et al. 2008, Nepstad et al. 2006), with most of deforestation resulting in conversion into pastureland. The conflict between protection values and opportunity values in the form of agricultural production is thus essential. However, in the following discussion, one must be aware that finding “true” protection values of particular parts of the forest can be complicated and controversial (even when not taking any of the global values into consideration). This is in part due to strong interaction effects: the removal of rainforest from one area can have synergistic effects on other areas; or (when the removed forest area is large) even induce “tipping points” whereby catastrophic changes may be triggered.

On the other hand, one needs to recognize the great uncertainties involved in such exercises. Even when strong evidence is found that conversion of Amazon rainforest to other uses could be economically optimal, the process of forest conversion is essentially irreversible which places additional burdens of proof on such decisions. Important valuation elements may have been left out; and preferences (such as those for choosing the preservation alternative as such) may shift in favor of conservation. Thus, when we say that conversion of forest can be “optimal”; this is a conclusion that must be subjected to great scrutiny.

We will in this paper attempt to sum up and document some of the efforts that have been made, to put economic values on the service flows from the Amazon rainforest and how such values will be affected by forest losses. Most of what we document arises from studies at a local, project level, rather than to assess values at a regional scale. The objective is to serve as a starting point for a more systematic effort of this sort, where we intend to develop relevant and useful tools for policy makers.

Previous, but incomplete, attempts to value Amazon rainforests and their changes are found in Fearnside (1997), Andersen (1997), Torras (2000), Andersen et al (2002), and Margulis (2003). More recently, several more substantial efforts and projects have been undertaken, some of 3 | P a g e