Conference Agenda

Effectively fighting deforestation requires monitoring of vast areas, which is possible thanks to satellite imagery. However, satellite monitoring can only reduce deforestation if three conditions are met: the monitoring alerts must be informative, the enforcement agency must use them to target inspections, and farmers must respond to enforcement action by doing less deforestation. This paper quantifies the contribution of real-time monitoring in deforestation reduction using detailed satellite and administrative data in the Brazilian Amazon forest. It studies the whole chain of events from the production of a deforestation alert to its effect on deforestation. It first documents an improvement in the monitoring system’s ability to detect infractions in real-time. Then it estimates the impact that real-time alerts have on deforestation inspections. Finally, it estimates the impact of inspections on deforestation using an instrumental variable approach and an event study. Overall, the real-time alerts increase by two percentage points the inspection probability for offenders, avoiding approximately 430 square kilometers of de- forestation per year.

This paper explores the economic consequences of deforestation policies on households, with a focus on distributional outcomes. In the context of the Priority Municipalities policy in Brazil, it asks whether increased regulation and enforcement, and the resulting reduction in deforestation, impacted employment and income of households situated in affected areas. The identification strategy exploits the assignment mechanism for priority status to run a fuzzy regression discontinuity analysis on municipalities in the Brazilian arc of deforestation close to the de facto thresholds for inclusion. It then uses a changes-in-changes analysis to examine effects at different parts of the distribution. In line with previous work on this topic, which considers effects at the municipality level, the study finds no evidence of economic impacts on average for these marginal municipalities. However, the changes-in-changes analysis suggests heterogeneous impacts at different parts of the income distribution, especially for those employed in agriculture. In particular, it appears that the lack of impact on average obscures regressive effects for this sector, perhaps due to a substitution from labor-intensive to more capital-intensive agricultural production.

Markets for emission offsetting have since long been plagued by problems in moni- toring, reporting and verification. For assessing the level of removed carbon in offset projects more accurately, new monitoring and measurement technologies are being developed. We argue that, besides accuracy, an important quality of a technology is its robustness to gaming, i.e. how hard it is to strategically manipulate measurement data. Based on Frankel and Kartik (2022), we develop a theoretical model to determine the relative merits of accuracy and gaming robustness. We demonstrate that improving gaming robustness is often more valuable than increasing accuracy. To illustrate our model, we apply it to a real-world dataset of cookstove carbon offset projects.

Payments for ecosystem services (PES) schemes are public or private programs that create incentives for restoration of ecosystems, often involving markets where credits are paid per ecosystem service unit produced. Stacking refers to ecosystem services produced from the same land unit but traded in different markets; this may increase land values while ensuring sustained production of these services by private actors and mitigation of negative impacts from landowners focusing on only one ecosystem service. We study PES stacking for water quantity and carbon sequestration/storage together with timber production, and identify conditions where stacking can achieve conservation goals from landowner and policy perspectives. We develop a forest land value model that extends Hartman (1976) to allow for ecosystem services that are substitutes or complements through time to varying degrees. We apply this model using data from five physiographic regions of Virginia together with carbon sequestration and water production data to explore the effects of stacking PES on optimal forest rotation ages and land expectation values under different conditions where the two ecosystem services may be substitutes (i.e. higher carbon storage leads to lower water yield) or complements depending on where land is located. We find stacking PES for water and carbon sequestration generates higher land values and shorter optimal rotation ages when landscape and forest conditions involve ecosystem services that are substitutes. When the ecosystem services are complements, stacking payments generates longer optimal rotation ages and can lower land values and timber production, thereby disincentivizing landowners.