Following the Rules: Brazilian Logging Concessions under Imperfect Enforcement and Royalties

Debates about forest concessions in the Brazilian Amazon have focused on the government's enforcement capacity. Using an optimization model largely parameterized with data from the Eastern Amazon, we investigate the effectiveness of renewability audits and performance bonds in inducing compliance with reduced-impact logging and harvest volume requirements. In weak enforcement environments, audits are unlikely to induce full compliance with harvest regulations, while performance bonds may be more effective. The use of royalty instruments such as the ad valorem and revenue-based royalties can generate revenues and, in the case of revenue-based instruments, modify harvest behavior, but only under limited circumstances.