Environmental protection, even with strong environmental laws on the books, often fails in developing countries because of limited government ability to monitor and enforce environmental laws. An alternative route to government monitoring and enforcement involves partnerships with private firms and non-governmental organizations. In this paper, we evaluate the performance of the Responsible Soy Project, a partnership between Cargill and The Nature Conservancy, to curb deforestation following the opening of a new soybean export facility in the Brazilian Amazon. We find that the project significantly decreased deforestation rates in properties enrolled in the project, despite its late arrival two years after the opening of the export facility. Theoretical predictions and empirical results show that the impacts of the project were greater on smaller properties that are more likely to be credit-constrained, and on properties initially not in compliance with Brazil's Forest Code that faced binding constraints on deforestation.
Bibliographical noteFunding Information:
We are grateful for financial support from the Graduate School (Interdisciplinary Doctoral Fellowship) and the Center for International Food and Agricultural Policy (Travel Grant) at the University of Minnesota . We thank Jose Benito Guerrero, David Cleary, Ted Olson, Frank Pantoja, Francisco Fonseca, and Lorenda Raiol from The Nature Conservancy (TNC) for arranging interviews, helping with data collection, and providing comments on an earlier draft, and Gilmar Tirapelle and Jusciedison Roco Cella from Cargill for helping with the interviews with farmers. We also thank all interviewees from Cargill, TNC, state and municipality governments, São Paulo University, and International Finance Corporation (IFC) for their time, Nishan Bhattarai at the University of Michigan for help with biophysical data, and Martha Rogers, Diele Lobo, Tarciso Leão, and Polasky lab group participants at the University of Minnesota for their helpful comments on earlier drafts of this paper. The work on this paper was done independently from Cargill and TNC and the authors alone are responsible for the results. We acknowledge that Stephen Polasky is a member of the Board of Directors of TNC and both authors have received funding from the Natural Capital Project for which TNC is one of core partners.
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- Amazon deforestation
- Credit constraints
- Environmental regulation
- Impact evaluation
- Private initiative