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The Role of Government Spending on Deforestation and Carbon Dioxide Emissions from Land Use Change

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Author Info

  • Gregmar Galinato
  • Suzette Galinato

    ()
    (School of Economic Sciences, Washington State University)

Abstract

There has been a shift in fiscal policies in developing countries with good quality institutions. Government spending is less likely to be procyclical and instead countercyclical where spending rises during times of recession and falls during times of expansion to reduce the effects of the business cycle. We show using a theoretical model that moving towards a countercyclical spending pattern yields an unintended consequence: during times of recession there is an increase in deforestation and carbon dioxide emissions from land use change. We empirically test the results from our theoretical model and find that an increase in total government spending significantly increases forest land clearing for agricultural production in the short run leading to more carbon dioxide emissions. In the long run, there is a lower steady-state forest biomass and carbon dioxide emissions are significantly higher than in the short run.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/Galinato/WP2013-14.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2013-14.

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Length: 40 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:wsu:wpaper:galinato-10

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Related research

Keywords: Carbon dioxide emission; deforestation; government spending; public goods expenditure;

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References

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  1. Lopez, Ramon & Galinato, Gregmar I., 2007. "Should governments stop subsidies to private goods? Evidence from rural Latin America," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1071-1094, June.
  2. Antle, John M & Heidebrink, Gregg, 1995. "Environment and Development: Theory and International Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 43(3), pages 603-25, April.
  3. Ramón López & Gregmar I. Galinato, 2005. "Trade Policies, Economic Growth, and the Direct Causes of Deforestation," Land Economics, University of Wisconsin Press, vol. 81(2).
  4. Ramon Lopez & Gregmar Galinato & Asif Islam, 2009. "Fiscal Spending and the Environment: Theory and Empirics," Working Papers 2009-22, School of Economic Sciences, Washington State University.
  5. Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-73, Supplemen.
  6. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
  7. Galinato, Gregmar I. & Galinato, Suzette P., 2012. "The effects of corruption control, political stability and economic growth on deforestation-induced carbon dioxide emissions," Environment and Development Economics, Cambridge University Press, vol. 17(01), pages 67-90, February.
  8. Fan, Shenggen & Zhang, Xiaobo & Rao, Neetha, 2004. "Public expenditure, growth, and poverty reduction in rural Uganda," DSGD discussion papers 4, International Food Policy Research Institute (IFPRI).
  9. Halkos, George E. & Paizanos, Epameinondas Α., 2013. "The effect of government expenditure on the environment:An empirical investigation," Ecological Economics, Elsevier, vol. 91(C), pages 48-56.
  10. Naughton-Treves, Lisa, 2004. "Deforestation and Carbon Emissions at Tropical Frontiers: A Case Study from the Peruvian Amazon," World Development, Elsevier, vol. 32(1), pages 173-190, January.
  11. Maureen Cropper & Jyotsna Puri & Charles Griffiths, 2001. "Predicting the Location of Deforestation: The Role of Roads and Protected Areas in North Thailand," Land Economics, University of Wisconsin Press, vol. 77(2), pages 172-186.
  12. Galinato, Gregmar I. & Galinato, Suzette P., 2013. "The short-run and long-run effects of corruption control and political stability on forest cover," Ecological Economics, Elsevier, vol. 89(C), pages 153-161.
  13. Cline-Cole, R. A. & Main, H. A. C. & Nichol, J. E., 1990. "On fuelwood consumption, population dynamics and deforestation in Africa," World Development, Elsevier, vol. 18(4), pages 513-527, April.
  14. Antony K. Samarawickrema & Ken W. Belcher, 2005. "Net Greenhouse Gas Emissions and the Economics of Annual Crop Management Systems," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(4), pages 385-401, December.
  15. Kenneth M. Chomitz & Timothy S. Thomas, 2003. "Determinants of Land Use in Amaz�nia: A Fine-Scale Spatial Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1016-1028.
  16. Cropper, Maureen & Griffiths, Charles, 1994. "The Interaction of Population Growth and Environmental Quality," American Economic Review, American Economic Association, vol. 84(2), pages 250-54, May.
  17. Bulte, Erwin H. & Damania, Richard & Lopez, Ramon, 2007. "On the gains of committing to inefficiency: Corruption, deforestation and low land productivity in Latin America," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 277-295, November.
  18. López, Ramón & Palacios, Amparo, 2011. "Why Europe has become environmentally cleaner: Decomposing the roles of fiscal, trade and environmental policies," CEPR Discussion Papers 8551, C.E.P.R. Discussion Papers.
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Cited by:
  1. Jean-Louis Combes & Philippe Delacote & Pascale Motel Combes, 2014. "Public expenses, credit and natural capital: Substitution or complementarity?," Working Papers halshs-00979191, HAL.

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