Collective property rights reduce deforestation in the Brazilian Amazon

In this paper, we draw on common-pool resource theory to argue that indigenous territories, when granted full property rights, will be effective at curbing deforestation. Using satellite data, we test the effect of property rights on deforestation between 1982 and 2016. In order to identify causal effects, we combine a regression discontinuity design with the orthogonal timing of homologation. We find that observations inside territories with full property rights show a significant decrease in deforestation, while the effect does not exist in territories without full property rights. While these are local average treatment effects, our results suggest that not only do indigenous territories serve a human-rights role, but they are a cost-effective way for governments to preserve their forested areas. First, obtaining full property rights is crucial to recognize indigenous peoples' original right to land and protect their territories from illegal deforestation. Second, when implemented, indigenous property rights reduce deforestation inside indigenous territories in the Amazon rainforest, and could provide an important positive externality for Brazil and the rest of the world in terms of climate change mitigation.