Deforestation and Government Conservation Policies

11 Pages Posted: 10 Jul 2013

See all articles by Luca Di Corato

Luca Di Corato

Ca Foscari University of Venice - Dipartimento di Economia

Michele Moretto

University of Padua, Dep of Economics and Management

Sergio Vergalli

University of Brescia - Department of Economics; Fondazione Eni Enrico Mattei (FEEM), Milan

Date Written: July 4, 2013

Abstract

In this paper we investigate land conversion in the presence of voluntary and mandatory habitat conservation policies. Conversion decisions are taken under uncertainty about the value of environmental services by a multitude of landholders competing on the market for agricultural products. We show that land conversion can be delayed by compensating landholders providing environmental services and by limiting the individual extent of developable land. In contrast, we find that setting a ceiling on aggregate land conversion may lead to runs which rapidly exhaust the targeted amount of land. Finally, studying conversion dynamics under different policy scenarios, we show that uncertainty, even if inducing conversion postponement in the short-run, increases the average rate of deforestation and reduces the expected time for total conversion in the long run.

Keywords: Optimal stopping, Deforestation, Payments for environmental services, Natural resources management

JEL Classification: C61, D81, Q24, Q58

Suggested Citation

Di Corato, Luca and Moretto, Michele and Vergalli, Sergio, Deforestation and Government Conservation Policies (July 4, 2013). Review of Environment, Energy and Economics (Re3), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2291609

Luca Di Corato

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Michele Moretto

University of Padua, Dep of Economics and Management ( email )

via Del Santo 33
Padova, 35123
Italy
+39 049 8274265 (Phone)
+39 049 8274211 (Fax)

Sergio Vergalli (Contact Author)

University of Brescia - Department of Economics ( email )

Via San Faustino 74B
Brescia, 25122
Italy

Fondazione Eni Enrico Mattei (FEEM), Milan ( email )

Corso Magenta 63
20123 Milan
Italy

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