This study analyses the relationships between rural poverty and environmental degradation in Machadinho and Maximiliano de Almeida, in the state of Rio Grande do Sul, Brazil. A database was formed based on 48 interviews with small farmers, including several environmental and socioeconomic indicators. Non-linear regression (Probit) models were estimated, with dummy variables as dependents, expressing environmental degradation, and the socioeconomic indicators as independent variables, expressing the rural poverty situations. The main results point towards a refutation of the hypothesis that rural poverty and environmental degradation are directly correlated, forming a vicious circle.