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Economics Job Candidate Seminar

Thursday, January 9, 2025
4:00pm to 5:00pm
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Online Event
The Global Allocative Efficiency of Deforestation
Prakash Mishra, PhD Candidate in Applied Economics, Wharton School, University of Pennsylvania,

THIS SEMINAR WILL NOW BE HELD ON ZOOM.
PLEASE CONTACT SABRINA HAMEISTER FOR THE LINK.

Abstract: This paper quantifies global inefficient and spatially misallocated agricultural deforestation: carbon emissions-intensive deforestation on land with low agricultural yields. I overcome the limitations of a reduced form descriptive analysis by incorporating spatial cost differences, agricultural trade, and cross-country non-agricultural productivity in a trade general equilibrium model to estimate how they contribute to misallocation. Against a benchmark case with a Pigouvian tax at a $190 per ton social cost of carbon, 97% of carbon emissions from deforestation since 1982 are inefficient. Strikingly, these emissions are produced by only 13% of global agricultural land. Preventing these emissions costs only 7% of status quo agricultural production, yielding welfare gains of $6.6 trillion since 1982. However, an equity-efficiency tradeoff results: the tax burden falls on the poorest landowners. Lastly, if countries with carbon pricing policy apply these prices to deforestation, they would deliver 5% of emissions reductions achieved under the Pigouvian benchmark.

For more information, please contact Sabrina Hameister by phone at 626-395-4228 or by email at [email protected].