Fire, Tractors, and Health in the Amazon: A Cost-Benefit Analysis of Fire Policy

Pollution from agricultural fires is a global health issue that is particularly challenging where smallholders depend on burnings for subsistence. In Acre state, Western Amazon, a partial ban on fire, enforced with fines, is coupled with subsidized tractors. To evaluate this policy, a discrete choice experiment and contingent valuation were merged into a novel statistical variant of the Hicks-Kaldor test that is robust to preference heterogeneity. Among 27 ways to extend the ban, 5 could improve both respiratory health and smallholders' welfare, when compensated with tractors that are available for longer hours and at the right time of the year.