The Role of Sanctions and Spillovers in Forest Conservation

João Pedro Vieira (), Ricardo Dahis and Juliano Assunção ()
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João Pedro Vieira: Department of Economics, PUC-Rio
Juliano Assunção: Department of Economics, PUC-Rio

No 2023-16, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We study how environmental sanctions and spillovers improve forest conservation in the Brazilian Amazon. Using a difference-in-differences framework and novel farm-level data, we show that sanctions curbed deforestation and promoted reforestation among punished farmers and their neighbors. Heterogeneity analysis reveals that even sanctions with limited incapacitation potential elicited relevant behavioral changes. In particular, farmers’ responsiveness to sanctions coincided with the government’s commitment to enforcement. We do not find substantial evidence of spatial displacement or monitoring evasion. Overall, sanctions prevented 1.6 billion tons of CO2 emissions between 2006 and 2019, equivalent to 31% of US emissions in 2021.

Keywords: Law Enforcement; Spillovers; Deforestation (search for similar items in EconPapers)
JEL-codes: K42 Q23 Q28 Q58 (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-agr, nep-env, nep-law and nep-res
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