This paper presents novel evidence for environmental offenses in Brazil. IBAMA’s strategy to deter violations is based on large operations and on decapitalizing offenders to signal its will to monitor and enforce the law. We want to answer the following questions: Do the sanctions applied by IBAMA, especially sanction charges, deter actual and potential offenders? Are there any spatial or temporal patterns affecting violations? We use data on offenses against flora and applied fines for Brazilian municipalities between 1998-2015. We contribute to the existing research by providing evidence for Brazil and by incorporating spatial controls in a dynamic panel approach to explain infractions against the environment. We develop and apply a Spatial LIML estimator that accounts for the endogeneity of sanction charges to estimate our panel models. Results show that there is a pedagogic deterrent effect associated with applied fine values. Sanction charges are important to discourage new offenses.

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