POMBAL, Brazil—For the past 15 years, Carlos Pacheco has raised cattle in what was once virgin forest. When pastures went bad, he would simply cut deeper into the Amazon, one of millions of farmers who have helped strip away about a fifth of the world’s greatest rainforest.

Because he expanded into land he doesn’t own, he can’t use it as collateral for a loan to buy equipment and fertilizer, nor can he tap the expertise of a government agronomist. The upshot is that he uses more land to raise each cow than do legal farmers in the breadbasket of southern Brazil.

It may sound counterintuitive, but Brazilian authorities think giving Mr. Pacheco a deed to the land he farms might curtail deforestation. The idea is it could help him become a more efficient farmer, able to produce more on less land, and also make him hesitate to just walk away from depleted pastures and carve new ones. In short, it might discourage him and squatters like him from cutting ever deeper into the jungle.

“If this doesn’t happen, we will continue to deforest,” said the 49-year-old rancher, the leader of a tightknit group of several hundred settlers on the forest frontier.

The administration of Brazilian President Jair Bolsonaro wants to see if he is right. In February, it plans to start handing out deeds to some 300,000 Amazon squatters, with a plan that might help but has raised a howl of disapproval for rewarding bad behavior.