Illicit exploitation of natural resources: The forest concessions in Brazil

The Brazilian forest sector has undergone crisis with complexities involved in investment in an insecure political environment, a regime of ambiguous property rights, forest sector illegality and enormous pressure for agricultural expansion. To address these challenges, Brazil's Public Forest Management Law was approved in 2006 enabling private forest management on public forestland. Assessing the policy in a dynamic computable general equilibrium framework, we find that household welfare improves and legal forestry grows faster. In the absence of improved monitoring and enforcement, however, forest concessions are shown to have a depressing effect on the price of forestland and accelerate illegal forestry operations.