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The Political Economy of Deforestation in the Tropics

Robin Burgess, Matthew Hansen, Benjamin Olken, Peter Potapov and Stefanie Sieber

No 17417, NBER Working Papers from National Bureau of Economic Research, Inc

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 understanding 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. Illegal logging increases dramatically in the years leading up to local elections, suggesting the presence of "political logging cycles". And, illegal logging and rents from unevenly distributed oil and gas revenues are short run substitutes, but this effect dissapears 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.

JEL-codes: D73 L73 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-ene, nep-env, nep-pol and nep-sea
Note: EEE POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published as Robin Burgess & Matthew Hansen & Benjamin A. Olken & Peter Potapov & Stefanie Sieber, 2012. "The Political Economy of Deforestation in the Tropics," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1707-1754.

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Working Paper: The Political Economy of Deforestation in the Tropics (2012) Downloads
Working Paper: The Political Economy of Deforestation in the Tropics (2012) Downloads
Working Paper: The Political Economy of Deforestation in the Tropics (2012) Downloads
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