Scandinavian Working Papers in Economics
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School of Economics and Business, Norwegian University of Life Sciences Working Paper Series, School of Economics and Business, Norwegian University of Life Sciences

No 04-2017:
Amazonian farmersí response to fire policies and climate change

Federico Cammelli () and Arild Angelsen ()

Abstract: Despite a fall in deforestation, frequency and severity of fires in the Brazilian Amazon are rising, causing huge carbon emissions, biodiversity losses and local economic costs. The ignition sources are anthropogenic and mostly related to the accidental spread of agricultural fires. Fire risk mitigation is a coordination problem with strategic complementarities: a farmerís benefit of mitigation depends on complementary action of other farmers.

We experimentally assess ex-ante the impact of two different policies under varying exogenous drought risk scenarios. Command and control is more effective than payments for environmental services in promoting coordination, possibly because of participantsí risk aversion (to the fine) and a local demand for justice and law enforcement. We also find evidence of a human-mediated self-reinforcing loop of drought and fires: droughts increase the exogenous component of fire risk, giving farmers less incentives to mitigate fire risk coming from their own farms.

Keywords: Brazilian Amazon; forest fires; climate change; framed field experiment; coordination games; (follow links to similar papers)

JEL-Codes: C93; Q23; Q54; (follow links to similar papers)

36 pages, August 9, 2017

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