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The Political Economy of Deforestation in the Tropics

Author

Listed:
  • Robin Burgess
  • Matthew Hansen
  • Benjamin Olken
  • Peter Potapov
  • Stefanie Sieber

Abstract

Tropical deforestation accounts for almost one-…fifth of greenhouse gas emissions worldwide and threatens the world's most diverse ecosystems. The prevalence of illegal forest extraction in the tropics suggests that understanding the incentives of local bureaucrats and politicians who enforce forest policy may be critical to combating tropical deforestation. We …find support for this thesis using a novel satellite-based dataset that tracks annual changes in forest cover across eight years of institutional change in post-Soeharto Indonesia. Increases in the numbers of political jurisdictions are associated with increased deforestation and with lower prices in local wood markets, consistent with a model of Cournot competition between jurisdictions. We also show that illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this effect disappears over time as political turnover occurs. The results illustrate how incentives faced by local government officials affect deforestation,and provide an example of how standard economic theories can explain illegal behavior.

Suggested Citation

  • Robin Burgess & Matthew Hansen & Benjamin Olken & Peter Potapov & Stefanie Sieber, 2012. "The Political Economy of Deforestation in the Tropics," STICERD - Economic Organisation and Public Policy Discussion Papers Series 037, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stieop:037
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    File URL: http://sticerd.lse.ac.uk/dps/eopp/eopp37.pdf
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    References listed on IDEAS

    as
    1. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in a Young Democracy Setting," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1301-1338.
    2. Baland, Jean-Marie & Bardhan, Pranab & Das, Sanghamitra & Mookherjee, Dilip, 2010. "Forests to the People: Decentralization and Forest Degradation in the Indian Himalayas," World Development, Elsevier, vol. 38(11), pages 1642-1656, November.
    3. Alberto Alesina, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 651-678.
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    More about this item

    Keywords

    political economy; corruption; deforestation; Cournot competition; satellite imagery; environmental monitoring; illegal logging; climate change; biodiversity;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products

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