Conference Agenda

Sanctions for environmental infractions aim to punish perpetrators and deter future offenses. Social networks are important for mediating both objectives, yet are often overlooked by researchers and policymakers who design sanction regimes. With a rich panel dataset of millions of rancher-to-rancher cattle transactions in Brazil, we assessed how rare but costly sanctions for illegal deforestation propagated through transaction networks of ranchers who cleared forest. We found that sanctions did not significantly change ranchers’ network structure, suggesting that ranchers continued to access similar supply chains even after receiving an economic embargo. However, networks were important for deterring deforestation. Controlling for deforestation events in the network, the average rancher reduced forest clearing by 17.3 Ha/year after their network connection was sanctioned, and by 5.7 Ha/year after a connection-of-a-connection was sanctioned. Given the much larger number of connections-of-connections in the network, 84% of total avoided deforestation was on these properties. Our results highlight the importance of accounting for network-related spillovers when designing environmental policies and research. We also provide unique insight into the importance of distant connections for amplifying the total deterrence effects of environmental policies, extending beyond previous studies that measured spillovers only on direct spatial neighbors.