Partnerships to prevent deforestation in the Amazon

Environmental protection, even with strong environmental laws on the books, often fails in developing countries because of limited government ability to monitor and enforce environmental laws. An alternative route to government monitoring and enforcement involves partnerships with private firms and non-governmental organizations. In this paper, we evaluate the performance of the Responsible Soy Project, a partnership between Cargill and The Nature Conservancy, to curb deforestation following the opening of a new soybean export facility in the Brazilian Amazon. We find that the project significantly decreased deforestation rates in properties enrolled in the project, despite its late arrival two years after the opening of the export facility. Theoretical predictions and empirical results show that the impacts of the project were greater on smaller properties that are more likely to be credit-constrained, and on properties initially not in compliance with Brazil's Forest Code that faced binding constraints on deforestation.