From Deforestation to Reforestation: The Role of General Deterrence in Changing Farmers’ Behavior

Advisor: Ricardo Dahis

Co-advisor: Juliano Assunção

This dissertation investigates the impact of environmental sanctions on forest changes in the Brazilian Amazon. We examine the role of general deterrence in changing farmers’ behavior by altering their perceived risk of violating forest laws after being punished or witnessing the punishment of adjacent farms. Using a difference-in-differences strategy and novel spatial data, we show that sanctions decrease deforestation by 48% in punished farms and 21% in adjacent farms while increasing reforestation by 15% and 6.5%, respectively. Heterogeneity analyses reveal that even sanctions lacking incapacitation components lead to substantial behavioral changes and that farmers’ responsiveness to sanctions coincides with the overall commitment to forest law enforcement. There is no evidence of spatial displacement or attempts to elude monitoring. In a counterfactual scenario without sanctions, farmers’ deforestation would increase by 29%. These findings suggest that general deterrence can make environmental sanctions a powerful tool for combating deforestation and promoting reforestation at scale.