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Do property rights promote investment but cause deforestation? Quasi-experimental evidence from Nicaragua

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  • Liscow, Zachary D.
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    Abstract

    Many policymakers argue that property rights decrease deforestation. Some theoretical papers also make this prediction, arguing that property rights decrease discount rates applied to a long-term investment in forestry. However, the effect is theoretically ambiguous. The paper takes a novel instrumental variables approach based on Nicaragua's agrarian reform to test for the effect, using a new dataset—Nicaragua's 2001 agricultural census. It finds that property rights significantly increase deforestation. The model, supported by the data, suggests a likely mechanism for this relationship: property rights increase investment, increasing agricultural productivity and therefore the returns to deforestation.

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    Bibliographic Info

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

    Volume (Year): 65 (2013)
    Issue (Month): 2 ()
    Pages: 241-261

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    Handle: RePEc:eee:jeeman:v:65:y:2013:i:2:p:241-261

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

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    Keywords: Property rights; Deforestation; Investment;

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    Cited by:
    1. Resosudarmo, Ida Aju Pradnja & Atmadja, Stibniati & Ekaputri, Andini Desita & Intarini, Dian Y. & Indriatmoko, Yayan & Astri, Pangestuti, 2014. "Does Tenure Security Lead to REDD+ Project Effectiveness? Reflections from Five Emerging Sites in Indonesia," World Development, Elsevier, vol. 55(C), pages 68-83.
    2. Daedlow, Katrin & Beckmann, Volker & Schlüter, Maja & Arlinghaus, Robert, 2013. "Explaining institutional persistence, adaptation, and transformation in East German recreational-fisheries governance after the German reunification in 1990," Ecological Economics, Elsevier, vol. 96(C), pages 36-50.

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