Deforestation and the subsequent use of deforested land for agricultural activities account for roughly 20% of the global CO2-equivalent emissions in the past two decades. Despite the global scope of the consequences of deforestation, public policies and private initiatives to reduce deforestation are often spatially targeted: they intensify environmental protection in specific ecosystems, making agricultural land scarcer. While potentially effective at a local level, their global effectiveness may be attenuated in general equilibrium, due to resulting increases in the demand for agricultural land in non-targeted areas, i.e. deforestation leakage. To quantify leakage, we build a quantitative spatial equilibrium model of the Brazilian economy where agricultural land is the output of a costly process of deforestation, firms produce goods that are differentially land-demanding, and there is costly trade and migration. Our main findings are that (i) targeting the regions with highest deforestation levels can be an effective tool to curb aggregate deforestation in Brazil, and (ii) leakage increases significantly when considering a longer time-horizon. After one year, 2-3% of the deforestation reductions are outdone by leakage. Simulating the model forward for 10 years, this number goes up to 10%. The relatively small leakage is driven by agricultural intensification, including more crop farming, increased worker and cattle density per pasture, and shifts of production towards more productive regions.

Tropical forests are crucial to the global environment, serving as biodiversity hubs, storing and sequestering carbon, yet they face severe threats from agricultural expansion. Recognizing their role in deforestation, countries like the UK, US, and EU have implemented trade policies to curb deforestation by requiring proof that the production of a set of agricultural commodities is deforestation-free. A key question is whether these policies will encourage farmers to adopt sustainable practices or instead push them toward less regulated buyers. In this paper, we adopt a structural approach to evaluate the effectiveness and potential leakages of sustainable supply-chain policies in the context of Brazil's cattle sector. First, we leverage a unique dataset on animal transport, matched with property boundaries, to document key empirical patterns of deforestation and the supply network of cattle at the farm level in the state of Pará, Brazil. Second, we build a structural model of farm-level land use decisions with an endogenous supply network. Third, guided by model-derived gravity equations, we estimate the role of existing domestic supply-chain zero-deforestation commitments (ZDC) in shaping the trade of cattle. Our results indicate that a 10% increase in deforestation by a farm is associated with an 14% decrease in their probability of being chosen as the supplier by a ZDC slaughterhouse.

Several countries are investing large sums of money in nation-wide tree planting programs as part of their climate mitigation and adaptation strategies. However, there is limited evidence on the impacts of such programs on livelihoods and ecosystems. These programs may disrupt ecosystems and agriculture, deplete water supplies, displace local communities, and lead to more deforestation in other areas. Conversely, planting the right species of trees at the right place can sequester carbon, regenerate forests, and provide ecosystem services like flood prevention. In this project, we focus on Pakistan's Billion Tree Tsunami Afforestation Programme (BTTAP), which planted 1 billion trees in the province of Khyber Pakhtunkhwa. First, we employ the AVOCADO remote-sensing algorithm to measure forest regrowth at high resolution (30m pixels) in order to measure the effectiveness of the program (Decuyper et al. 2022). Second, we also gather environmental data on wind, fires, temperature, precipitation, and pollution and combine it with administrative data on socioeconomic outcomes in order to measure ecological spillovers of the program in neighboring areas. Finally, we incorporate these spillovers in a general equilibrium framework to analyze whether the program displaced existing economic activities like agriculture.

The formality of land ownership is likely to be a key determinant of the economic and environmental efficiency of land use. However, the effects are theoretically ambiguous. On one hand, more secure land ownership may encourage the conservation of forests if they have long-term private benefits. On the other hand, it may encourage the conversion of forests to arable land or pastures as this conversion is a costly long-term investment. Moreover, a land titling program offering ownership rights to squatters may drive speculatory deforestation. I study the effects of the 1961 Land Reform law in Colombia which changed the requirements for landless squatters to claim ownership over rural land. The goal of this paper is to assess how property rights assignment from the state towards individuals modifies the market incentives driving land use change. A better understanding of the nature of this interaction could help better analyse (1) how market-based mechanisms to reduce land use emissions will work in an environment with ongoing land titling and (2) how property-rights reforms could interact with price changes, subsidies, or other changes to the profitability of agricultural activity.

This paper examines an environment inhabited by self-interested individuals and unconditional cooperators. The individuals are randomly paired and engage in the Prisoner's Dilemma Game. Cooperation among players is incentivized by institutional capital, and selfish individuals incur a cost to identify situations where defection goes unpunished. In this environment, we explore the coevolution of types and institutional capital, with both the distribution of types and capital evolving through myopic best-response dynamics. The equilibria are shown to be Pareto-ranked. The main finding is that any equilibrium level of institutional capital exceeds the optimal amount in the long run. Thus, forward-looking optimal institutions not only foster a more cooperative culture but are also more cost-effective compared to the myopically optimal ones.