Institutions and deforestation in the Brazilian amazon: a geographic regression discontinuity analysis

Bogetvedt, Ingvild Engen; Hauge, Mari Johnsrud
Master thesis
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URI
http://hdl.handle.net/11250/2486941
Date
2017
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Abstract
This study explores the impact of institutional quality at the municipal level on deforestation in

the Legal Amazon. We add to this insufficiently understood topic by implementing a geographic

regression discontinuity design. By taking advantage of high-resolution spatial data on

deforestation combined with an objective measure of corruption used as a proxy for institutional

quality, we analyse 138 Brazilian municipalities in the period of 2002-2004. Our empirical

findings show no causal effect of institutional quality on deforestation, suggesting that other

unobserved factors are more important drivers of deforestation. A supplementary analysis

indicates that location is a vital underlying factor in the interplay between deforestation and

institutional quality. However, further research is needed to establish inference with respect to the

relationship between deforestation, institutional quality and location.