Land conservation policies and income distribution: who bears the burden of our environmental efforts?

We analyze the impact of land conservation policies on income distribution using a two-sector model. We find that conservation policies can have important distributional effects through changes in rents and wages. We show how aggregate rents rise when protected areas increase despite the reduction of land availability. Simultaneously, real wages decrease in consequence of higher agricultural prices. These distributional changes also affect the efficiency of conservation policies since higher rents lead to deforestation elsewhere. Results suggest that Pareto improving compensation should also be aimed at agricultural workers.