Determinants of farmers' opportunity cost in maintaining the legal reserve – the cases of São Paulo and Mato Grosso

Abstract This paper aims to estimate models that explain the determination of the opportunity cost of maintaining the legal reserve inside each farm as well as to identify possible spatial relationships among these costs. In order to reach this objective, the article uses the average cost of opportunity to holding legal reserve for the municipalities of São Paulo and Mato Grosso states in the years of 1995-96 and 2006. By using spatial econometric models, the main results indicate: (1st) there are spatial relationships among these opportunity costs; (2nd) second nature variables have more influence on these costs than the first nature variables; (3rd) there are different relationships between opportunity cost of maintaining legal reserve and the size of each farm for São Paulo and Mato Grosso states.