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Byline: Jill L. Caviglia-Harris, James R. Kahn Carbon annuities have been suggested as a means for rewarding landowners for preserving forests and sequestering carbon. Although this is an intuitively appealing approach, the benefits of the sequestration activities have not been compared with the opportunity cost of preserving the forest. This paper represents an initial attempt at analysing how large carbon annuities must be to induce a landowner in the Amazonian rainforest to accept the annuity and leave the forest intact. The benefits of carbon sequestration are computed based on estimates in the literature on the carbon contained in a hectare of rainforest and the damages associated with a ton of carbon emissions. This is compared with information on household income from Rondonia, Brazil. Our results show that, for the majority of our conservative assumptions about the damages of carbon emissions, the magnitude of an annuity is greater than the income from agriculture. For less conservative assumptions about the damages from global warming, a fraction of the annuity would be a sufficient incentive for small-scale farmers to switch to sustainable techniques that leave the forest intact.

Byline: James F. Casey, Jill L. Caviglia-Harris, James R. Kahn, Alexandre Rivas This paper investigates the role that information plays in the decision by subsistence farmers to deforest, and generates a body of evidence from three Latin American studies demonstrating that information about agricultural techniques and general agricultural education are important to tropical land-use decisions. Based on a growing body of literature, inadequately defined property rights clearly play a central role as a potential source of excessive deforestation. While property rights are important, the implementation and enforcement of property rights will not in itself resolve the deforestation problem, if informational market failures are present. We hypothesise that long-time forest residents have more knowledge about sustainable uses of the forest (compared with recent migrants from non-rainforest areas), and that the regions where the long-time residents reside experience less deforestation, independent of property rights. We conclude with a discussion of the results.