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Conservation Contracts and Political Regimes

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  • Bård Harstad
  • Torben Mideksa

Abstract

Motivated by tropical deforestation, we analyze (i) a novel theory of resource extraction, (ii) the optimal conservation contract, (iii) when the donor prefers contracting with central rather than local governments, and (iv) how the donor’s presence may induce institutional change. Deforestation can be legal or illegal in the model: each district decides how much to protect and how much to extract for sale on a common market. If districts are strong, in that they find protection inexpensive, extraction is sales-driven and districts bene.t if neighbors conserve. If districts are weak, they lose when neighbors conserve since the smaller supply increases the price and the pressure on the resource, and thus also the cost of protection. Consequently, decentralizing authority increases conservation if and only if districts are weak. Contracting with the central authority is socially optimal, but, on the one hand, the donor benefits from contracting with districts if they are weak; on the other hand, districts prefer to decentralize if they are strong. The presence of the donor may lead to a regime change that increases extraction by more than it is reduced by the contract itself.

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  • Bård Harstad & Torben Mideksa, 2015. "Conservation Contracts and Political Regimes," CESifo Working Paper Series 5334, CESifo.
  • Handle: RePEc:ces:ceswps:_5334
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    1. García, Jorge H. & Orlov, Anton & Aaheim, Asbjørn, 2018. "Negative leakage: The key role of forest management regimes," Journal of Forest Economics, Elsevier, vol. 33(C), pages 8-13.
    2. François Bareille & Matteo Zavalloni, 2020. "Decentralisation of agri-environmental policy design," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(4), pages 1502-1530.
    3. Harstad, Bård, 2016. "The market for conservation and other hostages," Journal of Economic Theory, Elsevier, vol. 166(C), pages 124-151.
    4. Bård Harstad, 2022. "Trade, Trees, and Contingent Trade Agreements," CESifo Working Paper Series 9596, CESifo.
    5. Costa, Francisco J M & Szerman, Dimitri & Assunção, Juliano, 2024. "The Environmental Costs of Political Interference: Evidence from Power Plants in the Amazon," SocArXiv 6y7vk, Center for Open Science.
    6. Strand, Jon, 2017. "Modeling the marginal value of rainforest losses: A dynamic value function approach," Ecological Economics, Elsevier, vol. 131(C), pages 322-329.
    7. Bård Harstad, 2020. "Trade and Trees: How Trade Agreements Can Motivate Conservation Instead of Depletion," CESifo Working Paper Series 8569, CESifo.
    8. Bård Harstad, 2023. "The Conservation Multiplier," Journal of Political Economy, University of Chicago Press, vol. 131(7), pages 1731-1771.
    9. Nicolas Querou, 2018. "Interacting collective action problems in the commons," Working Papers halshs-01936007, HAL.
    10. Harding, Torfinn & Herzberg, Julika & Kuralbayeva, Karlygash, 2021. "Commodity prices and robust environmental regulation: Evidence from deforestation in Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    11. Strand, Jon, 2018. "Forest Preservation Under REDD+ Schemes With Incentives Distortions," Ecological Economics, Elsevier, vol. 154(C), pages 343-348.
    12. Bareille, François & Wolfersberger, Julien & Zavalloni, Matteo, 2023. "Institutions and conservation: The case of protected areas," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    13. Lina O Anderson & Samantha De Martino & Torfinn Harding & Karlygash Kuralbayeva & Andre Lima, 2016. "The Effects of Land Use Regulation on Deforestation:," OxCarre Working Papers 172, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    14. Balboni, Clare & Berman, Aaron & Burgess, Robin & Olken, Benjamin A., 2023. "The economics of tropical deforestation," LSE Research Online Documents on Economics 120074, London School of Economics and Political Science, LSE Library.
    15. Albuquerque Sant'Anna, André & Costa, Lucas, 2021. "Environmental regulation and bail outs under weak state capacity: Deforestation in the Brazilian Amazon11The authors gratefully acknowledge Antonio Ambrózio, Juliano Assunção, Arthur Bragança, Filipe ," Ecological Economics, Elsevier, vol. 186(C).
    16. Vehviläinen, Iivo, 2023. "Greed is good? Of equilibrium impacts in environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).

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    More about this item

    Keywords

    deforestation; resource extraction; conservation; contracts; centralization; decentralization; externalities; participation constraints; incentive constraints; tropical forests; climate change; REDD; PES;
    All these keywords.

    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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