(Browder, 1988; Moran, 1976, 1990). The opening of new lands and the relative absence of people favored extensive development, such as ranching, over intensive development.

Land Tenure Rights For centuries, it has been the legal practice to grant rights of possession to whoever deforests a piece of Brazilian land. Rights of ownership soon follow (Fearnside, 1989). Squatters on public land can gain the rights to 100 ha by living on it and using it, but 100 ha is not sufficient for ranching. Ranchers often buy up the lots of failed farmers, and in 1974 it became possible for a company to acquire a tract of up to 66,000 ha (Smith, 1982). Large individual and corporate ranchers can build their own access roads and lay claim to extensive plots far from major highways. By the time roads are constructed, most state land in the Amazon is already claimed (Binswanger, 1989). Brazilian land laws encourage both extensive holdings and extensive use. For instance, the 1988 constitution provides that land ''in effective use,'' that is, cleared, cannot be expropriated for the purpose of agrarian reform (Hecht, 1989b).

Speculation Land holding has been a useful hedge against Brazil's galloping inflation and an excellent speculative investment. Mahar reports that a farm laborer can "net the equivalent of $9,000 from clearing 14 ha of forest, planting pasture, and a few crops for a few years, and selling the 'improvements' to a new settler" (1988:38). This is four times what the laborer could hope to earn from ordinary farm work. The largest speculative gains accrue to large investors with good connections in government and the courts because the value of land is greatly influenced by "institutional factors such as validity of title, [and] access to credits" (Hecht, 1989b:229).

Financial Incentives from Government To encourage development in the Amazon, the Brazilian government made rural credit available to those with a land title or a certificate of occupancy at low, indeed at negative, interest rates. The credits were so attractive that money flowed from the nonagricultural sector into extensive ranching (Binswanger, 1989). Small farms were not taxed on land, large ones could reduce their already low taxes by converting forest to pasture or crops (Binswanger, 1989), and corporations could deduct up to 75 percent of the cost of approved development projects in the Amazon from their federal tax liability (Browder, 1988). Corporations could also write off losses on Area-

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