Reelection Incentives, Blacklisting and Deforestation in Brazil

Local political authority (formal or informal) over natural resources may create rents for politicians. The political decision to use or allocate resources involves balancing private rents with reelection prospects. I examine the case of deforestation in Brazil and a presidential decree granting the federal government the authority to punish counties that failed to limit total deforestation within their borders. This collective punishment aimed to generate pressure on local politicians to slow deforestation. Using binding term limits as a source of variation in reelection eligibility, I find eligibility has no effect on deforestation prior to the decree. After the decree, reelection eligible mayors reduced annual deforestation 10% more than mayors ineligible for reelection. These findings are consistent with the equilibrium outcome of a lobbying model. Policies such as sanctions, which target the electorate in order to influence political behavior, may be less effective when politicians are not accountable to voters. JEL codes: D72, Q23, O17 ∗Department of Economics, University of California, Santa Barbara. Contact: [email protected] †I would like to acknowledge both financial and intellectual support from PERC through their graduate fellows program. I would especially like to thank Dan Benjamin and PJ Hill. This paper has benefitted from many helpful comments from Robert Deacon, Doug Steigerwald, Paulina Oliva, Gary Libecap, members of the UCSB Econometrics Research Group, participants of the UCSB Environmental Lunch Seminar and CU environmental workshop. All errors are, of course, my own.