Between the Global Commodity Boom and Subnational State Capacities: Payment for Environmental Services to Fight Deforestation in Argentina

Abstract

Does subnational state capacity stop deforestation? The commodity boom of the 2000s significantly expanded the agriculture frontier in most provinces of Argentina, with devastating effects on native forests. Interestingly, some of the subnational governments that presided over the commodities supercycle also sought to reform the forestry sector to reduce rampant deforestation, despite promoting and benefiting from agricultural expansion. A national program to protect native forests through payment for environmental services (PES) was created to be implemented in local districts. We argue that the success of new forest protections is contingent on the capacity of subnational governments to implement the law. In our study, we find that changes in provincial deforestation rates are explained by the interaction of state capacity, on one hand, and high land prices driven by commodity pressures, on the other. Our research carries implications for students and practitioners of forest PES. Our findings underscore the fundamental role subnational state governments play in climate change mitigation and adaptation.