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Conservation Contracts and Political Regimes

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  • Bård Harstad
  • Torben Mideksa

Abstract

Motivated by tropical deforestation, we analyze (i) a novel theory of resource extraction, (ii) the optimal conservation contract, (iii) when the donor prefers contracting with central rather than local governments, and (iv) how the donor’s presence may induce institutional change. Deforestation can be legal or illegal in the model: each district decides how much to protect and how much to extract for sale on a common market. If districts are strong, in that they find protection inexpensive, extraction is sales-driven and districts bene.t if neighbors conserve. If districts are weak, they lose when neighbors conserve since the smaller supply increases the price and the pressure on the resource, and thus also the cost of protection. Consequently, decentralizing authority increases conservation if and only if districts are weak. Contracting with the central authority is socially optimal, but, on the one hand, the donor benefits from contracting with districts if they are weak; on the other hand, districts prefer to decentralize if they are strong. The presence of the donor may lead to a regime change that increases extraction by more than it is reduced by the contract itself.

Suggested Citation

  • Bård Harstad & Torben Mideksa, 2015. "Conservation Contracts and Political Regimes," CESifo Working Paper Series 5334, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5334
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    Citations

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    Cited by:

    1. Strand, Jon, 2017. "Modeling the marginal value of rainforest losses: A dynamic value function approach," Ecological Economics, Elsevier, vol. 131(C), pages 322-329.
    2. Nicolas Querou, 2018. "Interacting collective action problems in the commons," CEE-M Working Papers 18-04, CEE-M, Universitiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    3. Strand,Jon, 2015. "Modeling the marginal value of rainforest losses : a dynamic value function approach," Policy Research Working Paper Series 7445, The World Bank.
    4. Liana O Anderson & Samantha De Martino & Torfinn Harding & Karlygash Kuralbayeva & Andre Lima, 2016. "The Effects of Land Use Regulation on Deforestation: Evidence from the Brazilian Amazon," OxCarre Working Papers 172, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.

    More about this item

    Keywords

    deforestation; resource extraction; conservation; contracts; centralization; decentralization; externalities; participation constraints; incentive constraints; tropical forests; climate change; REDD; PES;

    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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