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The Political Economy of Deforestation in the Tropics

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  • 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.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Economic Organisation and Public Policy Discussion Papers Series with number 037.

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Date of creation: Apr 2012
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Handle: RePEc:cep:stieop:037

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

Related research

Keywords: political economy; corruption; deforestation; Cournot competition; satellite imagery; environmental monitoring; illegal logging; climate change; biodiversity;

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References

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  1. 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.
  2. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
  3. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in A Young Democracy Setting," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1301-1338, November.
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Cited by:
  1. Moricz, Sara & Sjöholm, Fredrik, 2014. "The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia," Working Paper Series 1023, Research Institute of Industrial Economics.
  2. Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Department of Economics, University of Leicester.
  3. David Lam, 2013. "Reply to Stan Becker, “Has the World Really Survived the Population Bomb? (Commentary on “How the World Survived the Population Bomb: Lessons from 50 Years of Extraordinary Demographic History”)," Demography, Springer, vol. 50(6), pages 2183-2186, December.
  4. Jonathan Colmer, 2013. "Climate Variability, Child Labour and Schooling: Evidence on the Intensive and Extensive Margin," Working Papers 2013.81, Fondazione Eni Enrico Mattei.
  5. Benjamin A. Olken & Rohini Pande, 2011. "Corruption in Developing Countries," NBER Working Papers 17398, National Bureau of Economic Research, Inc.
  6. Jonathan Colmer, 2013. "Climate Variability, Child Labour and Schooling: Evidence on the Intensive and Extensive Margin," Grantham Research Institute on Climate Change and the Environment Working Papers 132, Grantham Research Institute on Climate Change and the Environment.
  7. Dmitry Ryvkin & Danila Serra, 2013. "Does Competition Among Public Officials Reduce Corruption? An Experiment," Departmental Working Papers 1301, Southern Methodist University, Department of Economics.
  8. Bård Harstad, 2011. "The Market for Conservation and Other Hostages," NBER Working Papers 17409, National Bureau of Economic Research, Inc.
  9. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
  10. Eleni Stathopoulou & Dimitrios Varvarigos, 2013. "Corruption, Entry and Pollution," Discussion Papers in Economics 13/21, Department of Economics, University of Leicester.
  11. Michael Greenstone & B. Kelsey Jack, 2013. "Envirodevonomics: A Research Agenda for a Young Field," NBER Working Papers 19426, National Bureau of Economic Research, Inc.

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