Is decentralization bad for conservation?

Daniela Miteva & Subhrendu Pattanayak Duke University

Impact of decentralization on forests

Mixed evidence from empirical models The outcome depends on the context

▪ Different mechanisms at play!

Very few studies on the impact on conservation policies Pfaff et al, 2011: Federal vs. State PAs Engel et al (Forthcoming): game theoretic

model between PA managers and communities

Impact of PAs on deforestation Seem to work on average

Evidence from Latin America and Thailand mostly Heterogeneity by PA type

Multi-use PA more effective than strict PAs at preventing forest fires (Nelson & Chomitz, 2011)

Heterogeneity by geographic attributes PAs more effective close to cities (e.g. Ferraro et

al, 2011; Nelson & Chomitz, 2011; Pfaff & Robalino, 2012)

PAs not effective in poor areas (Ferraro et al, 2011)

Decentralization in Indonesia Significant increase in district government

authority District gov’t regulate logging

Significant increase in community role Obtained weak property rights of forest

resources Can elect district governments

Corruption Weak PA enforcement District splitting: 292 districts in 1998 -

>483 in 2008

General modeling framework

Other districts in

the province(timber market)

Timber pricesQuantities of logging permits(Cournot model)

District government

Logging firms

Communities

Electoral participation

Bargaining Logging vs. no loggingPAs effective or not

Corruption

Communities vs. logging firms

Community net benefits Benefits from forests (NTFP) Benefits from PAs (tourism) Costs from PAs (restricted access)

Benefits=NTFP()+R(PA, type of PA, proximity to PA, )

Logging company’s profit maximization Timber prices Logging permit prices (increase with electoral

participation) Costs of logging Timber transport (location)

To log or not to log

Profits

Community benefits

Community willing to bargain

Firm willing to bargain

No bargaining

Logging

PAs ineffective

No bargainingNo loggingPAs effective

Bargaining

Adapted from Engel et al (2006)

Logging unprofitable

III

III

Optimal logging

𝐿∗={ 0 𝑖𝑓 𝑖𝑛 𝐼𝐼𝐼𝑎𝑟𝑔𝑚𝑎𝑥 (𝑝𝑟𝑜𝑓𝑖𝑡𝑠− h𝑐 𝑎𝑛𝑔𝑒𝑖𝑛𝑏𝑒𝑛𝑒𝑓𝑖𝑡𝑠 )𝑖𝑓 𝑖𝑛 𝐼𝐼

𝑎𝑟𝑔𝑚𝑎𝑥 π 𝑖𝑓 𝑖𝑛 𝐼

If a strict reserve is introduced

Net revenue

Community benefits

Community willing to bargain

Firm willing to bargain

No bargaining

Logging

No bargainingNo logging

Logging unprofitable

Bargaining

If a national park is introduced

Profits

Community benefits

Community willing to bargain

Firm willing to bargain

No bargaining

Logging

PAs ineffective

No bargainingNo logging

Logging unprofitable

Bargaining

Some predictions from the model

Electoral participation increases PA effectiveness (makes logging costlier)

PA effectiveness depends on the type of PA and the proximity to major cities (role of tourism)

IUCN II (national parks) close to major cities are likely to have the greatest impact

Baseline poverty & forest dependence are likely to decrease the effectiveness of PAs

Empirical specification

L*=fn(accessibility, proximity to ports, local markets and large cities, baseline forest, forest dependence, poverty, voters ,

presence & type of PA, timber prices)

DID matching methods (within a province) PLM for heterogeneity

Endogenous placement No data, change through time

Some preliminary results: PA effectiveness at preventing fires

-.005

0.00

5.01

.015

Fire i

ncide

nce

High Low

0.65%**

0

1%0.38%**

-0.27%*

1.5%

0.5%

-0.5%

Electoral participationHigh Lo

wForest dependence

Pro

babili

ty o

f fire

Key references

Burgess, R., Hansen, M., Olken, B. A., Potapov, P., & Sieber, S. (Forthcoming). The Political Economy of Deforestation in the Tropics. Quartterly Journal of Economics

Deaton, A. (2010),'Understanding the Mechanisms of Economic Development', Journal of Economic Perspectives, 24(3), 3-16.

Engel, S., López, R., & Palmer, C. (2006). Community–Industry Contracting over Natural Resource use in a Context of Weak Property Rights: The Case of Indonesia. Environmental and Resource Economics, 33(1), 73-93. doi: 10.1007/s10640-005-1706

Fox, J. J., Adhuri, D. S., & Resosudarmo, I. P. (2005). Unfinished edifice or Pandora's box? Decentralization and resource management in Indonesia. In B. Resosudarmo (Ed.), The politics and economics of Indonesia's natural resources (pp. 92-108). Singapore: Institute of Southeast Asian Studies.

Larson, A. M., & Soto, F. (2008). Decentralization of Natural Resource Governance Regimes. Annual Review of Environment and Resources, 33(1), 213-239. doi: doi:10.1146/annurev.environ.33.020607.095522

Miteva, D. A., Pattanayak, S. K., & Ferraro, P. J. (2012). Evaluation of biodiversity policy instruments: What works and what doesn't? Oxford Review of Economic Policy, 28(2).

Pfaff A, Robalino J, & Herrera LD (2011) Decentralization given environment-development tradeoffs: Federal versus state conservation and impacts on Amazon deforestation. Working paper

Ravallion, M. (2009),'Evaluation in the Practice of Development', The World Bank Research Observer, 24(1), 29-53.

Shleifer, A., & Vishny, R. W. (1998). The grabbing hand : Government pathologies and their cures. Cambridge, Mass.: Harvard University Press.