Wednesday, July 24, 2013
Zachary Liscow (Berkeley - Ph.D.) has posted Do Property Rights Promote Investment But Cause Deforestation? Quasi-Experimental Evidence from Nicaragua (Journal of Environmental Economics) on SSRN. Here's the abstract:
Many policymakers argue that property rights decrease deforestation. Some theoretical papers also make this prediction, arguing that property rights decrease discount rates applied to a long-term investment in forestry. However, the effect is theoretically ambiguous. The paper takes a novel instrumental variables approach based on Nicaragua's agrarian reform to test for the effect, using a new data-set — Nicaragua's 2001 agricultural census. It finds that property rights significantly increase deforestation. The model, supported by the data, suggests a likely mechanism for this relationship: property rights increase investment, increasing agricultural productivity and therefore the returns to deforestation.