Article ID Journal Published Year Pages File Type
958978 Journal of Environmental Economics and Management 2013 21 Pages PDF
Abstract

Many policymakers argue that property rights decrease deforestation. Some theoretical papers also make this prediction, arguing that property rights decrease discount rates applied to a long-term investment in forestry. However, the effect is theoretically ambiguous. The paper takes a novel instrumental variables approach based on Nicaragua's agrarian reform to test for the effect, using a new dataset—Nicaragua's 2001 agricultural census. It finds that property rights significantly increase deforestation. The model, supported by the data, suggests a likely mechanism for this relationship: property rights increase investment, increasing agricultural productivity and therefore the returns to deforestation.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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