When Green Policies Backfire: Deforestation and Sri Lanka's Fertilizer Ban

Lauren Ouedraogo () and Raphael Soubeyran ()
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Lauren Ouedraogo: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier
Raphael Soubeyran: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier

CEE-M Working Papers from CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro

Abstract: Economic regulations often generate unintended consequences beyond their intended scope. We exploit Sri Lanka's abrupt 2021 nationwide ban on chemical fertilizer imports as a quasi-natural experiment to identify how hard input constraints reshape land-use decisions. Comparing areas differentially exposed based on agronomic suitability for fertilizer-intensive crops, we find a 135% increase in deforestation in high-dependency areas, alongside declining rice yields, consistent with farmers substituting land expansion for lost productivity. Protected areas substantially attenuated this response, nearly fully offsetting the ban's cumulative effect in fully covered cells, suggesting conservation policy provides effective protection when external shocks sharply raise deforestation incentives.

Keywords: Deforestation; Fertilizer; Environmental regulation; Agricultural productivity (search for similar items in EconPapers)
Date: 2026-06-02
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