The economics of tropical deforestation

Clare Balboni, Aaron Berman, Robin Burgess and Benjamin A. Olken

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Two factors have elevated recent academic and policy interest in tropical deforestation: first, the realization that it is a major contributor to climate change; and second, a revolution in satellite-based measurement that has revealed that it is proceeding at a rapid rate. We begin by reviewing the methodological advances that have enabled measurement of forest loss at a fine spatial resolution across the globe. We then develop a simple benchmark model of deforestation based on classic models of natural resource extraction. Extending this approach to incorporate features that characterize deforestation in developing countries—pressure for land use change, significant local and global externalities, weak property rights, and political economy constraints—provides us with a framework for reviewing the fast-growing empirical literature on the economics of deforestation in the tropics. This combination of theory and empirics provides insights not only into the economic drivers and impacts of tropical deforestation but also into policies that may affect its progression. We conclude by identifying areas where more work is needed in this important body of research.

Keywords: climate change; environmental economics; tropical deforestation; environmental degradation; biodiversity loss; natural resource management; land use change; remote sensing; externalities; common-property resources; political economy; Graduate Research Fellowship under grant 1745302; Advanced Grant 743278 (search for similar items in EconPapers)
JEL-codes: F18 H23 O13 O40 Q23 Q56 Q57 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-09-01
New Economics Papers: this item is included in nep-agr and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Annual Review of Economics, 1, September, 2023, 15, pp. 723 – 754. ISSN: 1941-1383

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