Abstract
Conservation policies in developing countries often fall short of expectations. Yet, the mechanisms underlying cases of limited efficacy remain poorly understood. This paper revisits Indonesia’s 2011 forest moratorium to investigate why forest loss persisted despite the suspension of new logging and plantation licenses in primary forests. The analysis combines high-resolution satellite data on annual tree cover loss and fire hotspots with local economic statistics, employing grid-year variation for empirical identification. The results indicate persistently high deforestation within moratorium areas after 2011. This can be explained by three mechanisms. First, although the moratorium curtailed formal concession expansion, design loopholes incentivised informal and illegal clearing to degrade the forest within the moratorium, as evidenced by a rise in ignition events. Second, the policy led to an employment decline in the forestry industry, resulting in contractions in formal concession activity and a shift toward informal and unrecorded land clearing. Third, environmental expenditure remained subdued, suggesting weak implementation capacity. Overall, the results suggest that informal and small-scale fire clearing might substitute for regulated land conversion, driven by design loopholes, weak enforcement and local employment pressures.
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