The unintended consequences of market consolidation: Evidence from Mato Grosso, Brazil
(2018) Job Market Paper [PDF]
How does market consolidation alter producer behavior? This paper presents evidence from the emergence of regional oligopsonies in the slaughterhouse industry in Mato Grosso, Brazil. Mato Grosso is Brazil’s agribusiness powerhouse and contains part of the Amazon rainforest. A simple economic model of land use allocation by agricultural producers suggests that consolidation reduces cattle production and pastureland, which may in turn lower deforestation rates. However, the potential conservation benefits of oligopsonies emerge only if no alternative land uses exist. A fixed effects strategy applied to data from 2007 to 2015, combined with a new measure of consolidation, shows that market consolidation in the slaughterhouse industry had no effect on average deforestation in Mato Grosso. Deforestation decreased only in regions that are unsuitable for soy production, where the average annual deforestation rates fell by 0.21%. The deforestation response was tempered by the fact that farmers reallocated pastureland to soy; a one standard deviation increase in the market consolidation ratio is associated with a decrease in pasture areas of between 8.7% and 11.8%, and an increase in land used for soy production of between 12.1% and 18.1%. I highlight the paradox that market consolidation is unlikely to generate conservation benefits if agricultural producers can easily reallocate a factor of production toward an alternative use.
Tropical storms, forests and economic growth
(2018) with Dominic Parker
Abstract: Tropical storms cause physical destruction, loss of human life, and economic damages in tropical countries. With rising global temperature due to climate change, the frequency and intensity of tropical storm will increase in the next century. Here I measure the effects of tropical storm on economic activity in several tropical countries. While it is paramount to understand the economic consequences, it is equally important to gain further understanding if and how tropical countries can protect from the negative impact of these storms. In this paper, we directly test if the existence of intact forest ecosystems around a city or population hub can mitigate the negative impacts of tropical storms. We create spatially explicit wind storm profiles for any country struck by a major tropical storm after 2012. Then, we combine storm measurements with nighttime lights data to assess how tropical storms impact economic activity globally and nationally. We also estimate how tropical storms of different intensities cause different impacts on economic growth, allowing us to generate crucial sensitivity parameters. Lastly, we use a spatially explicit measure of forest cover to test whether or not the presence of intact forest ecosystems reduces any negative impacts of tropical storms.
Cost-Effectiveness of Tropical Reforestation for Carbon Dioxide Removal
(2018) with Jonah Busch, Susan Cook-Patton, Bronson Griscom, Timm Kroeger, Hugh Possingham, Priya Shyamsundar (revise and resubmit)
Abstract: Tropical reforestation is potentially a large-scale strategy for mitigating climate change but its cost-per-ton of carbon dioxide removed from the atmosphere is uncertain. Here we produce the first pan-tropical, spatially disaggregated marginal abatement cost curves for reforestation by simulating the effects of payments for increased carbon dioxide removals. We estimate that carbon dioxide removal from tropical reforestation between 2020-2050 could be increased by 5.7 GtCO2 (5.6%) at a carbon price of $20/tCO2 or by 15.1 GtCO2 (14.8%) at $50/tCO2. Ten countries comprise 55% of potential low-cost abatement from tropical reforestation. In aggregate, avoided deforestation offers 7.2-9.6 times as much potential low-cost abatement as reforestation—55.1 GtCO2 at $20 or 108.3 GtCO2 at 50/tCO2 between 2020-2050. But reforestation offers more potential low-cost abatement than avoided deforestation at $20/tCO2 between 2020-2050 in 21 of 90 tropical countries, 17 of which are in Africa.
Shaping the future of the cattle agreement in Mato Grosso and Para
(2018) with Holly Gibbs, Lisa Rausch, Jacob Munger, Matthew Christie
Abstract: Deforestation for pasture in Brazil’s Amazon forest continues despite a range of private and public-sector efforts to halt it. Anti-deforestation efforts have been constrained in part by data limitations, which prevent improved implementation and enforcement of policies in the cattle sector. We aim to close some of these information gaps and provide a description of cattle ranchers in Mato Grosso and Para. In Para, 71.4% of producer are small-scale cattle breading and rearing operation who do not sell to slaughterhouse, and in Mato Grosso the share is equally high with 64.9%. We also highlight the important role which large fattening and confinements operation take in the supply chain, as they purchase between 32.0 and 28.6% of all non-slaughter ready cattle and sell 36.2% and 41.2% of slaughtered cattle. Our analysis highlights the dichotomous structure of the cattle supply chain in Mato Grosso. Our results have important implications for public and private sector policies aiming to reduce deforestation from cattle pasture expansion. In MT-Am, expanding monitoring to include tier-one indirect suppliers would expand the reach of the CA to 74.0% of all ranching properties. However, in PA, expanding to tier-1 indirects would only reach 40.2% of all ranches. Expanding the cattle agreement will be a challenging endeavor for slaughterhouses, as the demand for deforestation-free cattle by slaughterhouses exceeds current production of deforestation-free cattle in Mato Grosso and Para.
(2016) with Jonah Busch and Alice Lépissier. Technical background brief which contributed to Chapter 5 of the book Why Forests? Why Now? The Science, Economics, and Politics of Tropical Deforestation and Climate Change
(2015) with Jonah Busch, Kalifi Ferretti-Gallon, Max Wright, Kemen G. Austin, Fred Stolle, Svetlana Turubanova, Peter V. Potapov, Belinda Margono, Matthew C. Hansen, and Alessandro Baccini, Proceedings of the National Academy of Sciences of the United States of America 112 (5) 1328-1333
Abstract: To reduce greenhouse gas emissions from deforestation, Indonesia instituted a nationwide moratorium on new license areas (“concessions”) for oil palm plantations, timber plantations, and logging activity on primary forests and peat lands after May 2011. Here we indirectly evaluate the effectiveness of this policy using annual nationwide data on deforestation, concession licenses, and potential agricultural revenue from the decade preceding the moratorium. We estimate that on average granting a concession for oil palm, timber, or logging in Indonesia increased site-level deforestation rates by 17–127%, 44–129%, or 3.1–11.1%, respectively, above what would have occurred otherwise. We further estimate that if Indonesia’s moratorium had been in place from 2000 to 2010, then nationwide emissions from deforestation over that decade would have been 241–615 MtCO2e (2.8–7.2%) lower without leakage, or 213–545 MtCO2e (2.5–6.4%) lower with leakage. As a benchmark, an equivalent reduction in emissions could have been achieved using a carbon price-based instrument at a carbon price of $3.30–7.50/tCO2e (mandatory) or $12.95–19.45/tCO2e (voluntary). For Indonesia to have achieved its target of reducing emissions by 26%, the geographic scope of the moratorium would have had to expand beyond new concessions (15.0% of emissions from deforestation and peat degradation) to also include existing concessions (21.1% of emissions) and address deforestation outside of concessions and protected areas (58.7% of emissions). Place-based policies, such as moratoria, may be best thought of as bridge strategies that can be implemented rapidly while the institutions necessary to enable carbon price-based instruments are developed.
(2017) with Jonah Busch. Environmental Research Letters 13.1 (2017): 015001.
Included by the editors of Environmental Research Letters in the exclusive 'Highlights of 2017' collection.
Abstract: Reducing tropical deforestation is potentially a large-scale and low-cost strategy for mitigating climate change. Yet previous efforts to project the cost-effectiveness of policies to reduce greenhouse gas emissions from future deforestation across the tropics were hampered by crude available data on historical forest loss. Here we use recently available satellite-based maps of annual forest loss between 2001–2012, along with information on topography, accessibility, protected status, potential agricultural revenue, and an observed inverted-U-shaped relationship between forest cover loss and forest cover, to project tropical deforestation from 2016–2050 under alternative policy scenarios and to construct new marginal abatement cost curves for reducing emissions from tropical deforestation. We project that without new forest conservation policies 289 million hectares of tropical forest will be cleared from 2016–2050, releasing 169 GtCO2. A carbon price of US$20/tCO2 ($50/tCO2) across tropical countries would avoid 41 GtCO2 (77 GtCO2) from 2016–2050. By comparison, we estimate that Brazil's restrictive policies in the Amazon between 2004–2012 successfully decoupled potential agricultural revenue from deforestation and reduced deforestation by 47% below what would have otherwise occurred, preventing the emission of 5.2 GtCO2. All tropical countries enacting restrictive anti-deforestation policies as effective as those in the Brazilian Amazon between 2004–2012 would avoid 58 GtCO2 from 2016–2050.
WORK IN PROGRESS
A Synthetic Control Evaluation of Brazil's Large-scale, Anti-deforestation Policy
with Rhita Simorangkir, Paul J. Ferraro, Jonah Busch
Determinants and Implications of Global Protected Area Effectiveness
with Payal Shah, Kathy Baylis, and Jonah Busch
The evolution of the beef-processing industry in the Brazilian Amazon
with Ricardo Value and Petterson Vale