Deforestation, leakage and avoided deforestation policies: a spatial analysis

This paper analyses the impact of several avoided deforestation policies within a patchy forested landscape. Central is the idea that deforestation choices in one area influence deforestation decisions in nearby patches. We explore the interplay between forest landscapes comprising heterogeneous patches, localised spatial displacement, and avoided deforestation policies. Avoided deforestation policies at a landscape level are respectively: two Payments for Environmental Services (PES) policies, one focused on deforestation hotspots, the second being equally available to all agents; a conservation area; and, an agglomeration bonus. We demonstrate how the "best" policy, in terms of reduced leakage, depends on landscape heterogeneity. Agglomeration bonuses are shown to be more effective where there is less landscape heterogeneity, whilst conservation areas are most effective where there is more spatial heterogeneity.