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Deforestation and Government Conservation Policies

Author

Listed:
  • Luca Di Corato

    (Department of Economics, Swedish University of Agricultural Sciences)

  • Michele Moretto

    (Department of Economics and Management, University of Padua, Fondazione Eni Enrico Mattei and Centro Studi Levi-Cases)

  • Sergio Vergalli

    (Department of Economics and Management, University of Brescia and Fondazione Eni Enrico Mattei)

Abstract

In this paper we investigate land conversion in the presence of voluntary and mandatory habitat conservation policies. Conversion decisions are taken under uncertainty about the value of environmental services by a multitude of landholders competing on the market for agricultural products. We show that land conversion can be delayed by compensating landholders providing environmental services and by limiting the individual extent of developable land. In contrast, we find that setting a ceiling on aggregate land conversion may lead to runs which rapidly exhaust the targeted amount of land. Finally, studying conversion dynamics under different policy scenarios, we show that uncertainty, even if inducing conversion postponement in the short-run, increases the average rate of deforestation and reduces the expected time for total conversion in the long run.

Suggested Citation

  • Luca Di Corato & Michele Moretto & Sergio Vergalli, 2013. "Deforestation and Government Conservation Policies," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, July.
    • Handle: RePEc:fem:femre3:2013.07-01
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    More about this item

    Keywords

    Optimal stopping; Deforestation; Payments for environmental services; Natural resources management;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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