Spillover effects and deforestation in the Brazilian Amazon

• Grant number: 15/17942-4
• Support Opportunities: Scholarships abroad - Research Internship - Master's degree
• Start date: October 01, 2015
• End date: March 31, 2016
• Field of knowledge: Applied Social Sciences - Economics - Agrarian and Natural Resource Economics
• Principal Investigator: André Luis Squarize Chagas
• Grantee: Luíza Cardoso de Andrade
• Supervisor: Alexander Pfaff
• Host Institution: Faculdade de Economia, Administração e Contabilidade (FEA). Universidade de São Paulo (USP). São Paulo , SP, Brazil
• Institution abroad: Duke University, United States
• Associated to the scholarship: 14/19332-6 - Spillover effects of deforestation in the Brazilian Legal Amazon, BP.MS

Abstract

This project estimates the impact of the a targeted deforestation curbing policy. Apart from the policy's effect on the treated municipalities, we intend to test if it also affects their neighbors. Studies evaluating the impact of such policies on deforestation commonly disregard the possibility of spatial spillover affecting the neighbors. As an innovative feature, we use an spatial difference-in-difference estimator to include the spillovers in the estimated effects. If the policy reduces deforestation the results in the literature might be underestimating the policy's effectiveness. More importantly, if it dislocates deforestation to the neighbors, not taking spill-over effects into account overestimates the effects and mislead the policy's accountability. The objectives of the research internship are to improve and discuss the theoretical model proposed, the treatment of the database and the econometric estimation method and to find other possible applications for both the theoretical framework and the empirical method.