ELSEVIER Resource and Energy Economics 17 (1995) 155-188 RESOURCE andENERGY ECONOMICS Farming in Rond6nia Donald W. Jones a,., Virginia H. Dale b, John J. Beauchamp c, Marcos A. Pedlowski d, Robert V. O'Neill b a Ener~, Dirision, Oak Ridge National Laborato~, Oak Ridge, TN 37831, USA Lel'ironmentai Sciences Dirision, Oak Ridge National Laboratory, Oak Ridge, TN 37831, USA c Er~gineering Physics and Mathematics Dirision, Oak Ridge National Laboratory, Oak Ridge, TN 37831, USA d Department of Urban Affairs and Planning, Virginia Polytechnic Institute and State Uni-'ersity, Blacksburg, VA, USA Received October 1993; accepted May 1994 Abstract We study economic and environmental aspects of farming practices of a sample of 91 family farms around the city of Ouro Preto, in Brazil's state of Rond6nia, in western Amazonia, from four overlapping r,~,'spectives. First, we estimate production functions for six activities on muitiproduct farms, finding evidence of increasing returns to scale in cattle activity and possible evidence of nonindependence of profit and utility maximization in several subsistence crops. Second, we examine determinants of overall current farm revenue and wealth, finding possible evidence of overuse of land and underinvestment in cattle, decapitalization of farms over time, overpopulation, and a trade-off between children and capital accumulation. Third, we study interactions between burning strategies, diversifica- tion of f~rm activities, locational choice, length of tenure on a farm, and soil quality. Longer tenure on a farm and larger area in perennial crops appear to reduce the frequency of burning, while greater area in annual crops increases the frequency. Larger pasture area tends to reduce the frequency of burning below an annual periodicity. Less frequent burning appears to be accompanied by greater diversification of farm income sources. Fourth, we study the determinants of deforestation on lots, finding a negative effect of clearance costs and productivity of land in cultivation on the clearance of new land. However, the evidence for the relationship between cattle activit~ and deforestation is mixed: a larger number of * Corresponding author. Prepared by the Oak Ridge National Laboratory, Oak Ridge, TN 37831, USA, managed by Martin Marietta Energy Systems, Inc. for the U.S. Depaament of Energy under contract no. DE-ACO5-840R21400. SSDI 0928-7655(94)0001 1-8