Government policies may impact economic outcomes directly but also indirectly through effects on political equilibria. This paper examines the effects of the PPC-DAm – a centralized environmental policy that synced real-time satellite deforestation data with enforcement on the ground – on the behavior and electoral outcomes of a powerful special-interest group operating in the Brazilian Amazon: farmers. Exploiting close elections, we document that municipalities governed by farmer mayors had higher deforestation rates and CO2e emissions, earmarked more resources to agriculture, and experienced more land-related conflict before, but not after, the PPCDAm was implemented. Any electoral advantage these mayors had before the policy also disappears with the introduction of the PPCDAm. Our findings are consistent with a political agency model where candidates use their occupation to signal commitment to deforestation.
Suggested citation: Bragança, Arthur and Ricardo Dahis. Cutting Special Interests by the Roots: Evidence from the Brazilian Amazon. Working Paper 004. Rio de Janeiro: Climate Policy Initiative, 2021.