Incentive mechanisms to enforce sustainable forest exploitation

Using a two-player differential game approach, this paper deals with the issue of tropical deforestation. The assumption is that developing forestry countries (called the South) do not, or cannot, necessarily have the same utility for forest conservation than the developed countries (called the North). Given the global nature of the problem, we assume that it may be wise that the North offers financial support to the South to help in achieving a sustainable forest policy. We derive sustainable and short-run deforestation policies and provide a transfer mechanism which insures that the South will indeed implement the sustainable one.