Road revival and unavoidable deforestation: Evidence from the New Deal for Papua and beyond
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PhD Seminar (Econ)
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To what extent do better roads pose a threat to forests? This paper provides a credible answer to this question in the context of the Trans Papua Highway expansions and deforestation across Indonesia’s Papua, as one of the largest remaining rainforest areas in the world. The empirical identification relies on quasi-exogenous variation in the timing and placement of the Trans Papua Highway network induced by the introduction of the 2007 New Deal Policy and beyond. The dynamic difference-in-differences estimates show that newly connected villages by the highways experience substantial forest loss. The effects are short, only lasting for three years after the highway construction. The study sheds light on four mechanisms that potentially exacerbate the main findings: (i) higher firewood consumption by households, (ii) enhanced internal migration, (iii) increased non-agricultural land use (i.e., settlement, industry, and commerce), and (iv) developed local markets.
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