Page - 21 - in options, Volume winter 2019

The Cerrado biome in Brazil is the largest savanna region in South America. Despite its importance as a global biodiversity hotspot, it is one of the most threatened and over-exploited regions in the country. Less than 20% of the Cerrado’s original area remains undisturbed and this habitat is at risk of conversion to agriculture, especially for soybean cultivation. A study involving IIASA researchers set out to quantify the direct and indirect impacts of expanding the Amazon Soy Moratorium – a zero-deforestation agreement between civil society, industry, and government that forbids the buying of soy grown on recently deforested land – to the Cerrado biome in terms of avoided native vegetation conversion and consequent soybean production loss. The findings indicate that expanding the moratorium to the Cerrado would prevent the direct conversion of 3.6 million hectares of native vegetation to soybeans between 2020 and 2050. “According to our model, expanding the Amazon Soy Moratorium to the Cerrado can avoid the loss of a significant amount of native vegetation while simultaneously achieving soybean production goals,” explains Aline Soterroni, an IIASA researcher and an author of the study. Urgent action is needed to preserve the biodiversity and ecosystem services provided by the remaining parts of the Cerrado. The researchers urge the EU and stakeholders from other regions to encourage the expansion of conservation measures to the Cerrado and to make soy trade with Brazil more sustainable. According to an IIASA-led study, there are two sets of factors that encourage investors to direct resources to emerging economies, namely global (push) and domestic (pull) factors. The first, which includes foreign interest rates, international liquidity, and global risk conditions, are beyond the control of emerging economies, while internal or pull factors, such as the macroeconomic conditions in a particular country, provide information about the prevailing economic conditions in that country. The authors note that in the last decade, episodes of increases in capital flows to Mexico began with the recovery of global markets mid-2009 and have continued until the present. This increase in capital flows to emerging economies has renewed interest in the determinants of capital flows. The study looked into the determinants of different types of capital flows to Mexico, for the period during which the country started a flexible exchange rate regime (1995–2015), analyzing the impact and persistence of shocks to push and pull factors on each component of the financial account for the Mexican Balance of Payments. The authors conclude, among other results, that an increase in the foreign interest rate leads to lower portfolio investment for the country, and that an increase in overall risk generally decreases portfolio investment in private sector securities, while foreign investors respond to a higher extent to foreign interest rates and liquidity shocks compared to domestic investors. Determinants of capital flows to emerging economies: The case of Mexico A M E R I C A S Making soy agriculture more sustainable in the Brazilian Cerrado Isela-Elizabeth Tellez-Leon: tellez@iiasa.ac.at Aline Soterroni: soterr@iiasa.ac.at Further info: pure.iiasa.ac.at/15686 Further info: pure.iiasa.ac.at/15996 By Luiza Toledo By Luiza Toledo Regional impacts 21Optionswww.iiasa.ac.at Winter 2019/20