Economic benefits of reduced deforestation are offset by excess deforestation – a counterfactual simulation

Abstract

Assessment of the effectiveness of policies to preserve natural forests and the eco-nomic benefits we derive from them is of high international relevance. Here we use a counterfactual simulation approach to compare observed and expected deforesta-tion for Brazil, DR Congo and Indonesia. We reveal changes in the social costs of carbon (SCC), which coincide with command-and-control policies, climate anoma-lies, armed conflicts and pre-election promises. Our simulation of counterfactual country-level deforestation assumes that farmers seek satisfactory land-use profits. The approach integrates market data (1990-2019), but also accounts for heteroge-neous expectations. Phases with reduced deforestation saved 11% to 26% of SCC, while phases with excess deforestation caused 6% to 28% more SCC. In sum, a comparison with counterfactual deforestation levels showed forest savings of 11.1 million hectares (11% of the expected deforestation 2001-2019), but also excess deforestation of 11.3 million hectares. Our results confirm ongoing disastrously high SCC of forest losses.