Cotton has become another principal crop of the Chaco. Wild cotton has been known in much of the region since pre-Columbian times, but it never was grown as anything more than an agricultural curiosity until the 20th century. During World War I, with cotton prices at a peak, large areas in Argentina’s Chaco province were converted to cotton cultivation. Production was enhanced considerably by the use of irrigation and the development of drought-resistant stocks. The crop area subsequently has been expanded in Argentina, and cotton has become important in Paraguay; it also is grown in lesser quantities in Bolivia. These increases have occurred despite bad markets, insect plagues, and often poor weather in many years and more recent problems with soil erosion. Both fibre and cottonseed oil are produced, mainly for domestic consumption. Other crops include linseed, sunflowers, sorghum, and corn (maize).

The discovery of oil in the Bolivian piedmont in the 1920s led within a decade to the disastrous Chaco War between Bolivia and Paraguay, each country hoping to find more oil in the neighbouring Chaco Boreal. Paraguayan claims eventually were honoured, but they did not include any part of the oil-rich piedmont; subsequent explorations in Paraguay have been disappointing. Oil has been discovered across the border in Argentina, however, and large quantities of natural gas have been recovered on the northern fringe of the Bolivian Chaco near Santa Cruz.

Since World War II, efforts have been made by the respective governments to spur settlement of the Chaco. Argentine interest has been concentrated along the railways out of Resistencia and Formosa, with pioneer settlements composed mainly of eastern European immigrants and based on cotton production. In the central Paraguayan Chaco, which has been accessible by road only since 1965, Mennonite immigrants from Canada had settled in the 1920s and were joined by coreligionists from the Soviet Union in the 1930s. These settlers established self-sufficient colonies and were joined by another large contingent of refugees from the Soviet Union after World War II. The primary land use in the Bolivian Chaco is still open cattle range. The nearby supplies of oil and natural gas and the hydroelectric and water storage capacity of such fast-flowing piedmont streams as the Pilcomayo, however, offer great development potential.