Many terrorist organizations around the world seek shelter in forests and this paper tries to address the impact of this phenomenon on forest conservation. We construct a framework to measure the social loss when a terrorist lives in the forest and has full control over the forest resources. We also consider a game between the terrorists and the government when the government tries to combat them to recover the social loss. We characterize the equilibrium of the game in which the terrorist chooses the optimum rotation length of the forest and the government chooses the optimum combat-effort. We derive the impact of two popular policy measures such as strengthening the combat operations and restricting the sale of timber by the terrorist groups in the market, on forest conservation and find both to be negative.
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