A growing set of researchers and policymakers argue, somewhat counterintuitively, that regulated timber extraction can help conserve forests in developing countries by discouraging illegal logging and land-use change. However, rigorous tests of that hypothesis are rare. We use matched difference-in-differences models to measure the net effect on tree cover loss of awarding timber extraction permits to Mexican communal land-holding organizations. Our findings suggest that permits do not have large systematic effects on tree cover loss. We are able to discern statistically significant effects only in select subgroups of forest management units, not in our national sample. Moreover, subgroup effects are relatively modest and vary in sign. Subgroups in which permits have discernible effects are defined by, among other things, levels of privation and the opportunity costs of retaining forest cover—results that suggest forest governance and the demand for cleared land moderate permits’ effects.
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