The Political Economy of Deforestation in the Tropics
Author(s)Burgess, Robin; Hansen, Matthew; Olken, Benjamin A.; Potapov, Peter; Sieber, Stefanie
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Tropical deforestation accounts for almost one-fifth of greenhouse gas emissions and threatens the world’s most diverse ecosystems. Much of this deforestation is driven by illegal logging. We use novel satellite data that tracks annual deforestation across eight years of Indonesian institutional change to examine how local officials’ incentives affect deforestation. Increases in the number of political jurisdictions lead to increased deforestation and lower timber prices, consistent with Cournot competition between jurisdictions. Illegal logging and local oil and gas rents are short-run substitutes, but this effect disappears over time with political turnover. The results illustrate how local officials’ incentives affect deforestation and show how standard economic theories can explain illegal behavior.
DepartmentMassachusetts Institute of Technology. Department of Economics
Quarterly Journal of Economics
Oxford University Press
Burgess, R., M. Hansen, B. A. Olken, P. Potapov, and S. Sieber. “The Political Economy of Deforestation in the Tropics.” The Quarterly Journal of Economics 127, no. 4 (November 24, 2012): 1707-1754.
Author's final manuscript