Conservation Policy with Political Resistance

14.09.2026 14:15 – 15:30

INSTITUTE OF ECONOMICS AND ECONOMETRICS SEMINAR

Abstract:

Environmental regulation is political. Regulation protects natural resources by correcting externalities, but it also provokes political resistance from those who bear its costs. We study this tension in the Brazilian Amazon. Using data on campaign donations in legislative elections from 2002 to 2018 matched to a registry of agricultural firm owners, we show that stronger environmental enforcement led agricultural producers to sharply increase political support for politicians tied to agriculture. Donations from agricultural firm owners roughly doubled, and agricultural candidates received over 100 percent more donations and 45 to 80 percent more votes. To understand the implications of this political resistance for policy design, we develop a model of optimal regulation under the threat of political repeal. We show that Pigouvian taxes are no longer optimal: they impose large costs on inframarginal producers without corresponding environmental gains. The optimal tax targets marginal producers to the extent that the regulator observes private returns. When this information is available, it is optimal to forgo some environmental protection to reduce political risk. We estimate the model with spatial data on land use and agricultural returns across the Brazilian Amazon from 2001 to 2019. The results suggest that targeted approaches achieve large expected welfare gains where Pigouvian taxation cannot.

Lieu

Bâtiment: Uni Mail

Boulevard du Pont-d'Arve 40
1205 Geneva
Room M 3250, 3rd floor

entrée libre