Modelling the Relationship between Government Policy, Economic Growth, and Deforestation in the Brazilian Amazon
Abstract
This paper develops a theoretical as well as an empirical model of deforestation and economic development in a tropical forest economy. The empirical model is estimated using panel data for 316 municipalities in the Brazilian Amazon during the period 1970-1985. The effects of controversial Brazilian policies, such as road building through the Amazon and subsidized credit to agricultural establishments, are evaluated both in the theoretical model and in the estimated empirical model. The paper concludes that subsidized credit, while certainly causing deforestation, is so beneficial for economic growth that the benefits seem to outweigh the environmental costs. This does not hold for road building, however, because the opening up of new land by federal road building tend to promote a wasteful use of land.Download Info
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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 1997-2.
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Handle: RePEc:aah:aarhec:1997-2
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Related research
Keywords: Tropical deforestation and economic growth; policy evaluation; multiple equation spatial panel data model;Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- R11 - Urban, Rural, Regional and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R13 - Urban, Rural, Regional and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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- Munroe, Darla K. & Southworth, Jane & Tucker, Catherine M., 2001. "The Dynamics Of Land-Cover Change In Western Honduras: Spatial Autocorrelation And Temporal Variation," 2001 Annual meeting, August 5-8, Chicago, IL 20759, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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