A global empirical re-assessment of the Environmental Kuznets curve for deforestation

This paper investigates an unresolved question in environmental economics: An Environmental Kuznets Curve for deforestation (EKCd). It relies on a 55 year panel of forest cover data reconstructed from the periodic national forest inventories of 114 countries clustered in low, middle, and high income groups—as defined by the World Bank—and examines these clusters within both static and dynamic frameworks. The results are supportive of the inverse U-shaped EKC for deforestation. For low income countries strong effort will be required to avoid further increases in forest loss as these countries develop. Middle income countries, the largest cluster under investigation, display the classic bell-shaped EKCd with the turning point for a decreasing rate of deforestation at US$ 3,790. Deforestation continues thereafter, only at a lower rate until, eventually, for high income countries these rates become negative and these economies begin to show absolute gains in total forest cover. While the combined results from the three clusters confirm the existence of an EKCd, its relatively elevated turning point and the even higher level of development at which forests begin to increase and recover, raise important concern, but also opportunity, for the modern policies and management addressing global forest cover—doubts and opportunities on which the conclusion to this paper reflects further.