Amazonian farmers' response to fire policies and climate change

Abstract

Fires are a major threat to the conservation of the Amazon forest. Despite a large decline in deforestation in the Brazilian Amazon between 2004 and 2012, frequency and extent of forest fires have been increasing over the last two decades. Fires cause huge carbon emissions, biodiversity losses and local economic costs. Fires are anthropogenic and mostly due to the accidental spread of agricultural fires. Yet, there is little data and knowledge about fire mitigation policies' effectiveness. We experimentally assess the impact of two policies under varying drought risk scenarios among Brazilian smallholders. Command and control is more effective than payments for environmental services. We conjecture that the first policy operates through participants' risk aversion (to the fine) and local demand for justice, while payments seem to switch farmers' motivation from normative to monetary payoffs. We also find evidence of a human-mediated, self-reinforcing loop of droughts and fires: droughts increase the exogenous component of fire risk, reducing farmers' incentives to control own fires and to invest in fire-free techniques.