Conference Agenda

State decentralization is often promoted as a way to improve public service delivery. However, its effects on forests are ambiguous. Decentralization can improve local forest governance, but also change the incentives to promote agricultural expansion into forests. This study focuses on the power devolution stemming from the proliferation of new administrative units in Indonesia during the last two decades. Using a spatial boundary discontinuity design with 14,000 Indonesian villages, we analyze the effects of 115 district splits between 2002 and 2014. Results show a 35% deforestation decline at the border of new (child) districts relative to the existing (mother) districts both immediately before and after the district split. In pre-split years, we observe agricultural divestment by the mother districts on territories that are soon to be lost. In post-split years, the short-term forest conservation benefits are neither rooted in an increased social cohesion, nor stronger development. Instead, newly formed districts might suffer from temporary administrative incapacity to attract large-scale agricultural investments. In the long run, no lasting local forest conservation benefits persist as deforestation equalizes between child and mother districts a few years later.