London School of Economics EOPP: Economic Organisation and Public Policy Programme LSE
EOPP: Economic Organisation and Public Policy Programme

Current EOPP Research:
Decentralization and Deforestation: Understanding the Rapid Demise of Indonesia's Forests

Robin Burgess and Stefanie Sieber (with Matthew Hansen ,Geographic Information Science Center of Excellence/State University of South Dakota, and Benjamin Olken, MIT)


Indonesia has a rich stock of forest resources, which are rapidly being depleted. Understanding how this process can be slowed and better use made of current and future forests in Indonesia is a significant policy question at both the national and global level.

This project studies whether and how the process of political decentralization that followed the demise of the dictator Soeharto has affected the pattern of deforestation. Since satellite data provides a unique source to monitor annual changes in forest cover, we have constructed a panel of forest change using MODIS imagery for 2000-09. This creates a detailed picture of the pace and pattern of deforestation over the last ten years.

The main focus of our work is then to identify potential channels via which political decentralization might have altered the rate of logging within a district. As political decentralization was a 'big-bang' that affected all of Indonesia at the same time, disentangling its effects from other changes that occurred concomitantly is challenging. The overall strategy of our work is, therefore, to explore the links between differential changes in forest degradation at the district level and mechanisms through which decentralization could have had larger impacts in some districts relative to others. More specifically, we will be testing if local demand for revenue, the move from monopoly to competitive market, decreased administrative capacity to enforce property rights, environmental or production spillover can explain the observed increase in logging.