Deforestation and the subsequent use of deforested land for agricultural activities account for roughly 20% of the global CO2-equivalent emissions in the past two decades. Despite the global scope of the consequences of deforestation, public policies and private initiatives to reduce deforestation are often spatially targeted: they intensify environmental protection in specific ecosystems, making agricultural land scarcer. While potentially effective at a local level, their global effectiveness may be attenuated in general equilibrium, due to resulting increases in the demand for agricultural land in non-targeted areas, i.e. deforestation leakage. To quantify leakage, build a quantitative spatial equilibrium model of the Brazilian economy where agricultural land is the output of a costly process of deforestation, firms produce goods that are differentially land-demanding, and there is costly trade and migration. Our main findings are that (i) targeting the regions with highest deforestation levels can be an effective tool to curb aggregate deforestation in Brazil, and (ii) leakage increases significantly when considering a longer time-horizon. After one year, 2-3% of the deforestation reductions are outdone by leakage. Simulating the model forward for 10 years, this number goes up to 10%. The relatively small leakage is driven by agricultural intensification, including more crop farming, increased worker and cattle density per pasture, and shifts of production towards more productive regions.

We study the tradeoffs between using Pigouvian taxes and targeted bans to promote conservation when political economy concerns are relevant. A land use tax on emissions reduces emissions at least cost to aggregate domestic welfare, but involves large losses to producer surplus. These losses can generate political pushback. A land use ban is potentially less efficient, but does not impose losses on inframarginal players. Avoiding these losses can enhance political sustainability. We apply these ideas to tropical forests in Brazil and Indonesia. In Brazil, we show empirically that agricultural producers react to stronger environmental regulation by increasing their political support for pro-agricultural politicians. In both Brazil and Indonesia, we show quantitatively that bans can help to navigate this resistance. Bans and taxes are similarly effective at reducing carbon emissions, but bans are much less costly for agricultural producers. Our findings indicate that bans may be more politically sustainable than taxes.

Several countries are investing large sums of money in nation-wide tree planting programs as part of their climate mitigation and adaptation strategies. However, there is limited evidence on the impacts of such programs on livelihoods and ecosystems. These programs may disrupt ecosystems and agriculture, deplete water supplies, displace local communities, and lead to more deforestation in other areas. Conversely, planting the right species of trees at the right place can sequester carbon, regenerate forests, and provide ecosystem services like flood prevention. In this project, we focus on Pakistan's Billion Tree Tsunami Afforestation Programme (BTTAP), which planted 1 billion trees in the province of Khyber Pakhtunkhwa. First, we employ the AVOCADO remote-sensing algorithm to measure forest regrowth at high resolution (30m pixels) in order to measure the effectiveness of the program (Decuyper et al. 2022). Second, we also gather environmental data on wind, fires, temperature, precipitation, and pollution and combine it with administrative data on socioeconomic outcomes in order to measure ecological spillovers of the program in neighboring areas. Finally, we incorporate these spillovers in a general equilibrium framework to analyze whether the program displaced existing economic activities like agriculture.

The formality of land ownership is likely to be a key determinant of the economic and environmental efficiency of land use. However, the effects are theoretically ambiguous. On one hand, more secure land ownership may encourage the conservation of forests if they have long-term private benefits. On the other hand, it may encourage the conversion of forests to arable land or pastures as this conversion is a costly long-term investment. Moreover, a land titling program offering ownership rights to squatters may drive speculatory deforestation. I study the effects of the 1961 Land Reform law in Colombia which changed the requirements for landless squatters to claim ownership over rural land. The goal of this paper is to assess how property rights assignment from the state towards individuals modifies the market incentives driving land use change. A better understanding of the nature of this interaction could help better analyse (1) how market-based mechanisms to reduce land use emissions will work in an environment with ongoing land titling and (2) how property-rights reforms could interact with price changes, subsidies, or other changes to the profitability of agricultural activity.

This paper examines an environment inhabited by self-interested individuals and unconditional cooperators. The individuals are randomly paired and engage in the Prisoner’s Dilemma Game. Cooperation among players is incentivized by institutional capital, and selfish individuals incur a cost to identify situations where defection goes unpunished. In this environment, we explore the coevolution of types and institutional capital, with both the distribution of types and capital evolving through myopic best-response dynamics. The equilibria are shown to be Pareto-ranked. The main finding is that any equilibrium level of institutional capital exceeds the optimal amount in the long run. Thus, forward-looking optimal institutions not only foster a more cooperative culture but are also more cost-effective compared to the myopically optimal ones.