Protected or Postponed? Dynamics of Deforestation in Protected and Non-Protected Areas

This paper studies the effectiveness of forest protected areas (PAs) in a dynamic setting. I investigate whether the establishment of PAs in the Brazilian Amazon immediately accelerates deforestation in the neighborhoods, and logging activities gradually shift back to PAs over time. This dynamic displacement stems from the fact that trees in the Amazon are treated as a nonrenewable resource. Exploiting variations in the proximity to PA boundaries and in the timing of PA establishment, I identify the dynamic effects of new PAs on deforestation in non-protected areas (NPAs) and PAs, respectively. The establishment of PAs dramatically increases the size of newly deforested areas in the neighborhoods for the first 6 years, while the incremental effect suddenly disappears or the deforestation rate even decreases 7-10 years after the establishment. In the interior of PAs close to their boundaries, the rate of deforestation gradually increases from the beginning of the establishment. Deforestation is particularly severe inside PAs in the second phase of deforestation in NPAs (i.e., 7-10 years after the establishment). This phenomenon suggests that logging activities repeatedly shift in response to the dynamics of logging costs in NPAs and PAs.