The origins and control of forest fires in the Tropics

Balboni, Clare ORCID: 0009-0002-5088-5532, Burgess, Robin ORCID: 0009-0002-1187-3248 and Olken, Benjamin A. (2024) The origins and control of forest fires in the Tropics. The Review of Economic Studies. ISSN 0034-6527 (In Press)

	Text (Forest_Fires_Paper 121224) - Accepted Version Pending embargo until 1 January 2100. Download (1MB)
	Text (Forest_Fires_Paper appendix 121224) - Accepted Version Pending embargo until 1 January 2100. Download (4MB)

Abstract

Environmental externalities – uncompensated damages imposed on others – lie at the root of climate change, pollution, deforestation and biodiversity loss. Empirical evidence is limited, however, as to how externalities drive private decision making. We study one such behavior, illegal tropical forest fires, using 15 years of daily satellite data covering over 107,000 fires across Indonesia. Weather-induced variation in fire spread risk and variation in who owns surrounding land allow us to identify how far externalities influence the decision to use fire. Relative to when all spread risks are internalized, we find that firms overuse fire when surrounded by unleased government lands where property rights are weak. In contrast, and consistent with the Coase Theorem, firms treat risks to nearby private concessions similarly to risks to their own land. Government sanctions, concentrated on fires spreading to populated areas, also deter fires, consistent with Pigouvian deterrence.

Item Type:	Article
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions S Agriculture > SD Forestry G Geography. Anthropology. Recreation > GE Environmental Sciences
Date Deposited:	16 Dec 2024 09:21
Last Modified:	16 Dec 2024 09:21
URI:	http://eprints.lse.ac.uk/id/eprint/126393

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