October 24, 2011

Optimal Policies to Preserve Tropical Forests

by Gilles Lafforgue and Helene Olliviery

- We develop a North/South growth model to investigate the normative question of international transfers to preserve tropical forests. The South converts forest lands into agricultural lands to produce a final consumption good which is consumed by the North. We consider two ways of incorporating the externality coming from de-forestation in the utility of the North: i) through an amenity value, which reflects a continuous willingness to preserve forests, or ii) through a minimum stock of tropical forests to be preserved.

Lafforgue, G. and H. Ollivier (2011). "Optimal Policies to Preserve Tropical Forests." LERNA Working Paper No. 11.14.348, Feb 2011.