DETER-ing Deforestation in the Amazon: Environmental Monitoring and Law Enforcement

Abstract

We study Brazil's recent use of satellite technology to overcome law enforcement shortcomings resulting from weak institutional environments. DETER is a system that processes satellite imagery and issues near-real-time deforestation alerts to target environmental enforcement in the Amazon. We propose a novel instrumental variable approach for estimating enforcement's impact on deforestation. Clouds limiting DETER's capacity to detect clearings serve as a source of exogenous variation for the presence of environmental authorities. Findings indicate that monitoring and enforcement effectively curb deforestation. Results hold across several robustness checks. (JEL K32, K42, O13, Q23, Q28, Q54, Q58)