Human and Nature: Economies of Density and Conservation in the Amazon Rainforest
Shunsuke Tsuda, Yoshito Takasaki, Mari Tanaka
Conserving tropical forests impacts the standard of living of local populations. Moreover, human adaptation through sectoral or spatial reallocation of economic activity may undermine conservation policy goals. To derive policies that balance human and ecological well-being, this paper estimates a multi-sector spatial model that formalizes human-nature interactions using high-resolution georeferenced data from roadless river basins in the Peruvian Amazon. Identification comes from plausibly exogenous variation in the structure of river networks. We find that the agglomeration externality in agricultural production outweighs dispersion forces in access to land, implying that higher concentration leads to higher productivity with less deforestation per farmer. We also find a strong congestion externality with spatial spillovers in natural resource extraction. The estimated agglomeration externality, primarily driven by economies of scale in transport technology and agricultural intensification, generates large welfare and forest cover gains but leads to natural resource depletion through general equilibrium effects. Counterfactuals demonstrate that combining well-targeted place-based protection policies and transport infrastructure can simultaneously achieve higher welfare, lower deforestation, and less natural resource depletion.
Event: World Bank Land Conference 2024 - Washington
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