Essays on environmental and resource economics: evaluation of voluntary and mandatory policies

Herzberg, Julika; Lorz, Jens Oliver (Thesis advisor); Lontzek, Thomas S. (Thesis advisor)

Aachen : RWTH Aachen University (2019, 2021)
Dissertation / PhD Thesis

Dissertation, Rheinisch-Westfälische Technische Hochschule Aachen, 2019


This thesis studies the effectiveness of governmental and market-based instruments inreducing ecological and social deterioration, which could be linked to the productionand extraction of primary products. By using a theoretical approach as well as quasi-experimental empirical techniques, the three essays of this dissertation shed light one ffectiveness of various policy instruments and take a special focus on their robustness inperiods of high commodity prices.The first essay provides a theoretical model which studies two unilateral policy optionsof manufacturing countries that source minerals from a resource-abundant country witha weak institutional background. The research is motivated by demands for more transparency in global supply chains and increasing possibilities in tracking and tracing alongthe value chain in order to identify legally extracted minerals. It aims to deepen theunderstanding of the welfare effects of trade policies which ban an entire region or, alter-natively, ban only those mines which are not proven to operate legally. The results suggest that an embargo against conflict-affected country leads to a declinein rent-seeking but also reduces prices for minerals and thus, also the income for legally operating actors. In the case of a targeted sanction in the form of the auditing and labeling of legal mines, it can be shown that the policy-implementing country sources fromverified mines in the conflict country. Resource prices for legal minerals increase, whilethe price for illegal resources further declines, making rent-seeking less attractive. This makes the ban of single mines superior to a ban of the entire region since both sides ofthe supply chain benefit from higher transparency of the primary production process.The second essay empirically investigates the effects of governmental and consumer-drivenstandards in the tropical timber sector. The study is motivated by a lack of evidenceon the effectiveness of market-driven sustainable forestry compared to governmentallyimplemented sustainable forest projects. The research gives evidence on the creditability of environmental-friendly labeled forest products and disentangles the factors which are decisive for the impact of these policies on deforestation. For this purpose, the essay considers a novel dataset of 70 sustainable-use zones which are distributed over the Brazilian Amazon in a period over 13 years from 2002-2015. For the empirical examination, a difference-in-difference estimator is employed to detect discontinuities in thedeforestation trend around the implementation of the zone in a spatial and in a temporal dimension. Moreover, the essay studies the geographical characteristics of a zone'slocation and economic incentives which increase or decrease the opportunity costs of de-forestation. The results imply that deforestation rates rather increase than decrease afterthe implementation of both mandatory and voluntary sustainable-use policies, especiallyif certain micro- and macroeconomic determinants are not considered. In the third essay, the impact of booming agricultural commodity prices on deforestation in Brazil is empirically analyzed and it is shown how different policy instruments affect this impact. These policies are: blacklisting (monitoring of and sanctions against themunicipalities with the highest deforestation rates), conservation zones (protected areaswhich receive legal management and monitoring to achieve long-term conservation of natural assets) and the Soy Moratorium (a voluntary agreement of the soy industry to stopclearing the forest for new soy plantation). International commodity prices are interactedwith the three policies to study the latter’s potential to decrease the price pressure onthe forest and also to study potential channel of leakage. The results indicate that aboom in commodity prices increases deforestation in our period of observation by about20,682 km2. With respect to the policies, the results show that within-municipality leak-age make policies targeting specific areas (conservation zones) ineffective in reducing thepressure from international agriculture commodity prices. The effectiveness of a policytargeting one crop (Soy Moratorium) is limited by the compensation farmers could createby planting other crops on recently deforested land. In contrast, a policy of blacklistingentire municipalities, irrespective of the source of deforestation, leads to a reduction indeforestation related to agricultural prices.


  • International Economics Unit [814320]