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Growth, deforestation and the efficiency of the REDD mechanism

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  • Ollivier, Hélène

Abstract

This paper assesses the long term impacts of an international transfer called the Reduced Emissions from Deforestation and Degradation (REDD) mechanism, which aims at preserving tropical forests of the recipient economy. This two-sector economy faces a dilemma between economic growth and deforestation. The rural sector can substitute reproducible capital for agricultural land whereas the manufacturing sector only requires capital. The model shows that the REDD mechanism has a non-monotonic effect on steady state welfares. For low transfer schemes, the agricultural output increases with the transfer even though less land is under cultivation. For high transfer schemes, the increase in the transfer may not offset the decrease in the agricultural output. The open-loop symmetric Nash equilibrium in a dynamic deforestation game predicts that redistributing the transfer among a finite number of producers is less efficient in reducing deforestation than in the social optimum.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 64 (2012)
Issue (Month): 3 ()
Pages: 312-327

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Handle: RePEc:eee:jeeman:v:64:y:2012:i:3:p:312-327

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Web page: http://www.elsevier.com/locate/inca/622870

Related research

Keywords: Avoided deforestation; Growth; Aid efficiency;

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References

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  1. Mendelsohn, Robert, 1994. "Property Rights and Tropical Deforestation," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 750-56, Supplemen.
  2. HOTTE, Louis, 1997. "Natural-Resource Exploitation with Costly Enforcement of Property Rights," Cahiers de recherche 9720, Universite de Montreal, Departement de sciences economiques.
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  22. repec:fth:stanho:e-92-3 is not listed on IDEAS
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Citations

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Cited by:
  1. Timothy Laing & Charles Palmer, 2013. "Economy-wide impacts of REDD when there is political influence," Grantham Research Institute on Climate Change and the Environment Working Papers 110, Grantham Research Institute on Climate Change and the Environment.
  2. Agbo, Maxime, 2014. "Strategic exploitation with learning and heterogeneous beliefs," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 126-140.
  3. Alix-Garcia, Jennifer & Wolff, Hendrik, 2014. "Payment for Ecosystem Services from Forests," IZA Discussion Papers 8179, Institute for the Study of Labor (IZA).

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