Carrots, Sticks and the Brazilian Forest Code: the promising response of small landowners in the Amazon

The Brazilian Forest Code has been in existence more than 80 years but has largely been ineffective in reducing deforestation in the Amazon due to a lack of adherence and enforcement. Recent revisions to the law reduced the restoration requirements for Areas of Permanent Preservation (APP) and Legal Reserve (LR) and established new tools to facilitate compliance, encourage environmental conservation and strengthen the supervision and monitoring of protected areas. The goal of these changes is to facilitate compliance, encourage environmental conservation, and strengthen the monitoring of protected areas. This paper investigates the probability that a household in Rondonia, Brazil will set aside land for permanent preservation and, once this decision is made, the extent of restoration. Our results suggest that-even in a region that is heavily deforested and under conditions of weak enforcement-households are complying with the law by developing formal plans for restoration. Most important, we find that access to extension agents, existing APP guidelines, and other policy levers (such as environmental licensing) have made a significant impact on the development of these plans suggesting that the 2012 Forest Code has the potential to impact future land restoration decisions.