As part of the book Frontiers of Biodiversity Economics, Cambridge University Press, this chapter describes a model of interactions in the context of deforestation, based on an equilibrium in beliefs about the neighbours’ actions, and applies the model to data of two regions within Costa Rica.
This chapter describes a simple model of interactions in the context of deforestation, based on an equilibrium in beliefs about the neighbours’ actions. Discusses empirical issues in measurement of interactions and the benefits of using an instrumental variable approach and the data requirements for analysing neighbours’ interactions in deforestation decisions. Finally, presents the results for two regions within Costa Rica, as well as discussion of how to obtain the equilibria once the parameters of the model are estimated.
Co-authors:
Alexander Pfaff and Arturo Sanchez-Azofeifa
