Land Titles and Deforestation: Evidence from Peru's Palm Oil Sector

Abstract

The rapid expansion of oil palm (Elaeis guineensis) in the Amazon raises critical questions about the relationship between land ownership and deforestation. Producers, particularly companies establishing large plantations, are assumed to require titling before clearing land for oil palm, rather than risk investing in areas with insecure tenure. In the department of Ucayali, Peru, 75% of oil palm cultivation occurs on titled land (vs 30% for other agriculture), indicating the importance of land titles for this capital-intensive commodity. The timing of deforestation relative to titling is seldom studied, yet its variability presents challenges in predicting the net forest outcomes of formalization and highlights gaps in the enforcement of environmental regulations. Using an original property dataset (n = 6,072) and fixed-effects regression modeling, this study analyzes how land titling over the past 20 years influences the timing and extent of deforestation on parcels with and without oil palm and among smallholder and company producers. Contrary to expectations, results reveal that deforestation often precedes titling, especially on company oil palm properties, where 76.5% of forest cover is cleared before titling. Few oil palm properties retain the 30% forest cover required by Peru’s Forestry Law. Key informants suggest that amidst considerable pressure to expand oil palm, policies encourage preemptive deforestation to meet titling eligibility criteria, while conflicting laws and limited resources in regional offices hinder the enforcement of regulations. Although land formalization promises to improve forest governance, evidence from Ucayali shows titling is associated with accelerated forest loss.