Land Taxation to Discourage Deforestation

In principle, land taxes with higher rates for pasture and crop land could be used to limit livestock-related deforestation in circumstances (which are very common in the humid tropics) where livestock production is only marginally profitable. Land taxation would also:

- Dampen land speculation (this applies to taxes on land and especially to taxes on land transfers
- Provide an incentive for intensifying production on, and/or rehabilitating, established pasture, thus lessening pressure on new forest frontiers.

However, the preconditions for effective and equitable land taxation in terms of a complete and accurate cadastre (especially likely to be lacking in forest frontier areas), and the administrative costs of collecting land taxes, have meant that such policies have not generally worked in practice.

It can be argued that the increasing decentralisation of government in many Latin American countries creates the possibility of land taxes assessed by, collected by and accruing to, local government. Such taxes will be more effectively collected and more likely to achieve their environmental objectives.

Related Policy Options

Reform of land tenure

Key references

Kaimowitz, D. 1995. Livestock and Deforestation in Central America in the 1980s and 1990s: A Policy Perspective. EPTD Discussion Paper, IFPRI, Washington DC, 1995. Click to view as Word document . (further information including copies of the report can be obtained from IFPRI at http://www.iimi.org/ifpri)

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