IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v73y2018icp306-316.html
   My bibliography  Save this article

Public spending, credit and natural capital: Does access to capital foster deforestation?

Author

Listed:
  • Combes, Jean-Louis
  • Delacote, Philippe
  • Combes Motel, Pascale
  • Yogo, Thierry Urbain

Abstract

Improving access to man-made capital through domestic credit and public spending is a step towards development. Developing countries rely also on natural capital, which may generate possible conflicts between environment and development targets. Taking the case of land-use and deforestation, this paper revisits the links between man-made and natural capital. Relying on a model of income maximization, we theoretically assess how better access to man-made capital through public spending and credit, influences forest cover loss. Econometric investigations, over the period 2001–2012, show that forest cover loss is positively influenced by credit and public spending. A better access to capital is thus detrimental to the forest. This can be interpreted as a Tinbergen rule: the development objective of facilitating access to man-made capital cannot be tackled without facing the objective of environmental protection.

Suggested Citation

  • Combes, Jean-Louis & Delacote, Philippe & Combes Motel, Pascale & Yogo, Thierry Urbain, 2018. "Public spending, credit and natural capital: Does access to capital foster deforestation?," Economic Modelling, Elsevier, vol. 73(C), pages 306-316.
  • Handle: RePEc:eee:ecmode:v:73:y:2018:i:c:p:306-316
    DOI: 10.1016/j.econmod.2018.04.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999317316541
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.econmod.2018.04.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Delacote, Philippe, 2007. "Agricultural expansion, forest products as safety nets, and deforestation," Environment and Development Economics, Cambridge University Press, vol. 12(2), pages 235-249, April.
    2. López, Ramón & Galinato, Gregmar I. & Islam, Asif, 2011. "Fiscal spending and the environment: Theory and empirics," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 180-198, September.
    3. Susanti, Ari & Maryudi, Ahmad, 2016. "Development narratives, notions of forest crisis, and boom of oil palm plantations in Indonesia," Forest Policy and Economics, Elsevier, vol. 73(C), pages 130-139.
    4. England, Richard W., 2000. "Natural capital and the theory of economic growth," Ecological Economics, Elsevier, vol. 34(3), pages 425-431, September.
    5. Arcand, Jean-Louis & Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont, 2008. "Deforestation and the real exchange rate," Journal of Development Economics, Elsevier, vol. 86(2), pages 242-262, June.
    6. Susana Ferreira, 2004. "Deforestation, Property Rights, and International Trade," Land Economics, University of Wisconsin Press, vol. 80(2), pages 174-193.
    7. Delacote, Philippe, 2009. "Commons as insurance: safety nets or poverty traps?," Environment and Development Economics, Cambridge University Press, vol. 14(3), pages 305-322, June.
    8. Damette, Olivier & Delacote, Philippe, 2012. "On the economic factors of deforestation: What can we learn from quantile analysis?," Economic Modelling, Elsevier, vol. 29(6), pages 2427-2434.
    9. van Geldrop, Jan & Withagen, Cees, 2000. "Natural capital and sustainability," Ecological Economics, Elsevier, vol. 32(3), pages 445-455, March.
    10. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
    11. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    12. Godoy, Ricardo & O'neill, Kathleen & Groff, Stephen & Kostishack, Peter & Cubas, Adoni & Demmer, Josephien & Mcsweeney, Kendra & Overman, Johannes & Wilkie, David & Brokaw, Nicholas & Martinez, Marque, 1997. "Household determinants of deforestation by amerindians in honduras," World Development, Elsevier, vol. 25(6), pages 977-987, June.
    13. Dixon, Peter & van Meijl, Hans & Rimmer, Maureen & Shutes, Lindsay & Tabeau, Andrzej, 2016. "RED versus REDD: Biofuel policy versus forest conservation," Economic Modelling, Elsevier, vol. 52(PB), pages 366-374.
    14. Philippe Delacote & Arild Angelsen, 2015. "Reducing Deforestation and Forest Degradation: Leakage or Synergy?," Land Economics, University of Wisconsin Press, vol. 91(3), pages 501-515.
    15. M. Scott Taylor, 2009. "Innis Lecture: Environmental crises: past, present, and future," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1240-1275, November.
    16. Robert U. Ayres & Jeroen C.J.M. van den Bergh & John M. Gowdy, 1998. "Viewpoint: Weak versus Strong Sustainability," Tinbergen Institute Discussion Papers 98-103/3, Tinbergen Institute.
    17. Krautkraemer, Jeffrey A., 2005. "Economics of Natural Resource Scarcity: The State of the Debate," Discussion Papers 10562, Resources for the Future.
    18. Susana Ferreira & Jeffrey Vincent, 2010. "Governance and Timber Harvests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(2), pages 241-260, October.
    19. Faria, Joao Ricardo, 1998. "Environment, growth and fiscal and monetary policies," Economic Modelling, Elsevier, vol. 15(1), pages 113-123, January.
    20. Edward Barbier, 2011. "The policy challenges for green economy and sustainable economic development," Natural Resources Forum, Blackwell Publishing, vol. 35(3), pages 233-245, August.
    21. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    22. Eric Neumayer, 2013. "Weak versus Strong Sustainability," Books, Edward Elgar Publishing, number 14993.
    23. Combes, J.-L. & Combes Motel, P. & Minea, A. & Villieu, P., 2015. "Deforestation and seigniorage in developing countries: A tradeoff?," Ecological Economics, Elsevier, vol. 116(C), pages 220-230.
    24. Krautkraemer, Jeffrey, 2005. "Economics of Natural Resource Scarcity: The State of the Debate," RFF Working Paper Series dp-05-14, Resources for the Future.
    25. Culas, Richard J., 2007. "Deforestation and the environmental Kuznets curve: An institutional perspective," Ecological Economics, Elsevier, vol. 61(2-3), pages 429-437, March.
    26. Bhattarai, Madhusudan & Hammig, Michael, 2001. "Institutions and the Environmental Kuznets Curve for Deforestation: A Crosscountry Analysis for Latin America, Africa and Asia," World Development, Elsevier, vol. 29(6), pages 995-1010, June.
    27. World Bank, 2005. "Where is the Wealth of Nations? Measuring Capital for the 21st Century," World Bank Publications - Books, The World Bank Group, number 7505, December.
    28. Cleveland, Cutler J. & Ruth, Matthias, 1997. "When, where, and by how much do biophysical limits constrain the economic process?: A survey of Nicholas Georgescu-Roegen's contribution to ecological economics," Ecological Economics, Elsevier, vol. 22(3), pages 203-223, September.
    29. Pfaff, Alexander S. P., 1999. "What Drives Deforestation in the Brazilian Amazon?: Evidence from Satellite and Socioeconomic Data," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 26-43, January.
    30. Gupta, Manash Ranjan & Barman, Trishita Ray, 2009. "Fiscal policies, environmental pollution and economic growth," Economic Modelling, Elsevier, vol. 26(5), pages 1018-1028, September.
    31. Angelsen, Arild, 1999. "Agricultural expansion and deforestation: modelling the impact of population, market forces and property rights," Journal of Development Economics, Elsevier, vol. 58(1), pages 185-218, February.
    32. Galinato, Gregmar I. & Galinato, Suzette P., 2016. "The effects of government spending on deforestation due to agricultural land expansion and CO2 related emissions," Ecological Economics, Elsevier, vol. 122(C), pages 43-53.
    33. Solow, Robert M., 1997. "Georgescu-Roegen versus Solow-Stiglitz," Ecological Economics, Elsevier, vol. 22(3), pages 267-268, September.
    34. Bretschger, Lucas & Smulders, Sjak, 2012. "Sustainability and substitution of exhaustible natural resources," Journal of Economic Dynamics and Control, Elsevier, vol. 36(4), pages 536-549.
    35. Sushanta K. Mallick, 2014. "Disentangling the Poverty Effects of Sectoral Output, Prices, and Policies in India," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 773-801, December.
    36. Giles Atkinson & Simon Dietz (ed.), 2007. "Handbook of Sustainable Development," Books, Edward Elgar Publishing, number 1818.
    37. Stern, David I., 1997. "Limits to substitution and irreversibility in production and consumption: A neoclassical interpretation of ecological economics," Ecological Economics, Elsevier, vol. 21(3), pages 197-215, June.
    38. Azqueta, Diego & Sotelsek, Daniel, 2007. "Valuing nature: From environmental impacts to natural capital," Ecological Economics, Elsevier, vol. 63(1), pages 22-30, June.
    39. Rudel, Tom & Roper, Jill, 1997. "The paths to rain forest destruction: Crossnational patterns of tropical deforestation, 1975-1990," World Development, Elsevier, vol. 25(1), pages 53-65, January.
    40. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," Review of Economic Studies, Oxford University Press, vol. 41(5), pages 29-45.
    41. J. C. Burgess, 1998. "Economic analysis of deforestation in Mexico," Chapters, in: The Economics of Environment and Development, chapter 10, pages 183-222, Edward Elgar Publishing.
    42. Daly, Herman E., 1997. "Georgescu-Roegen versus Solow/Stiglitz," Ecological Economics, Elsevier, vol. 22(3), pages 261-266, September.
    43. Celentano, Danielle & Sills, Erin & Sales, Marcio & Veríssimo, Adalberto, 2012. "Welfare Outcomes and the Advance of the Deforestation Frontier in the Brazilian Amazon," World Development, Elsevier, vol. 40(4), pages 850-864.
    44. Angelsen, Arild & Kaimowitz, David, 1999. "Rethinking the Causes of Deforestation: Lessons from Economic Models," The World Bank Research Observer, World Bank, vol. 14(1), pages 73-98, February.
    45. Arild Angelsen & Thomas K. Rudel, 2013. "Designing and Implementing Effective REDD + Policies: A Forest Transition Approach," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 91-113, January.
    46. Alexander Pfaff & Juan Robalino & Robert Walker & Steven Aldrich & Marcellus Caldas & Eustaquio Reis & Stephen Perz & Claudio Bohrer & Eugenio Arima & William Laurance & Kathryn Kirby, 2007. "Road Investments, Spatial Spillovers, And Deforestation In The Brazilian Amazon," Journal of Regional Science, Wiley Blackwell, vol. 47(1), pages 109-123, February.
    47. Shahbaz, Muhammad & Solarin, Sakiru Adebola & Mahmood, Haider & Arouri, Mohamed, 2013. "Does financial development reduce CO2 emissions in Malaysian economy? A time series analysis," Economic Modelling, Elsevier, vol. 35(C), pages 145-152.
    48. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    49. Wunder, Sven, 2001. "Poverty Alleviation and Tropical Forests--What Scope for Synergies?," World Development, Elsevier, vol. 29(11), pages 1817-1833, November.
    50. Partha Dasgupta & Geoffrey Heal, 1974. "The Optimal Depletion of Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 3-28.
    51. Sushanta Mallick, 2001. "Dynamics of Macroeconomic Adjustment with Growth: Some Simulation Results," International Economic Journal, Taylor & Francis Journals, vol. 15(1), pages 115-139.
    52. Damette, Olivier & Delacote, Philippe, 2011. "Unsustainable timber harvesting, deforestation and the role of certification," Ecological Economics, Elsevier, vol. 70(6), pages 1211-1219, April.
    53. Caviglia-Harris, Jill L, 2003. "Sustainable Agricultural Practices in Rondonia, Brazil: Do Local Farmer Organizations Affect Adoption Rates?," Economic Development and Cultural Change, University of Chicago Press, vol. 52(1), pages 23-49, October.
    54. Choumert, Johanna & Combes Motel, Pascale & Dakpo, Hervé K., 2013. "Is the Environmental Kuznets Curve for deforestation a threatened theory? A meta-analysis of the literature," Ecological Economics, Elsevier, vol. 90(C), pages 19-28.
    55. Giovanni Ruta & Kirk Hamilton, 2007. "The Capital Approach to Sustainability," Chapters, in: Giles Atkinson & Simon Dietz (ed.), Handbook of Sustainable Development, chapter 3, Edward Elgar Publishing.
    56. 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.
    57. Antle, John M. & Stoorvogel, Jetse J. & Valdivia, Roberto O., 2006. "Multiple equilibria, soil conservation investments, and the resilience of agricultural systems," Environment and Development Economics, Cambridge University Press, vol. 11(4), pages 477-492, August.
    58. Daly, Herman E., 1994. "Fostering environmentally sustainable development: four parting suggestions for the World Bank," Ecological Economics, Elsevier, vol. 10(3), pages 183-187, August.
    59. Cropper, Maureen & Griffiths, Charles, 1994. "The Interaction of Population Growth and Environmental Quality," American Economic Review, American Economic Association, vol. 84(2), pages 250-254, May.
    60. Kaimowitz, David & Thiele, Graham & Pacheco, Pablo, 1999. "The Effects of Structural Adjustment on Deforestation and Forest Degradation in Lowland Bolivia," World Development, Elsevier, vol. 27(3), pages 505-520, March.
    61. M. Scott Taylor, 2009. "Innis Lecture: Environmental crises: past, present, and future," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(4), pages 1240-1275, November.
    62. Johanna Choumert & Pascale Combes Motel & K. Hervé Dakpo, 2013. "Is the Environmental Kuznets Curve for deforestation a threatened theory? A meta-analysis of the literature," Post-Print halshs-00806629, HAL.
    63. Edward Barbier & Philippe Delacote & Julien Wolfersberger, 2016. "The economic analysis of the forest transition," Working Papers 1605, Chaire Economie du climat.
    64. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
    65. Leblois, Antoine & Damette, Olivier & Wolfersberger, Julien, 2017. "What has Driven Deforestation in Developing Countries Since the 2000s? Evidence from New Remote-Sensing Data," World Development, Elsevier, vol. 92(C), pages 82-102.
    66. Andrew D. Foster & Mark R. Rosenzweig, 2003. "Economic Growth and the Rise of Forests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 601-637.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Novice Patrick Bakehe, 2019. "The effects of migrant remittances on deforestation in the Congo basin," Economics Bulletin, AccessEcon, vol. 39(4), pages 2361-2373.
    2. Nguyen, Canh Phuc & Nguyen, Binh Quang, 2023. "Environmental foe or friend: The influence of the shadow economy on forest land," Land Use Policy, Elsevier, vol. 124(C).
    3. Kinda, Harouna & Thiombiano, Noel, 2021. "The effects of extractive industries rent on deforestation in developing countries," Resources Policy, Elsevier, vol. 73(C).
    4. GOMADO, Kwamivi Mawuli, 2018. "Diversité ethnique et déforestation dans les pays en développement: identification des principaux canaux [Ethnic diversity and deforestation in developing countries: identifying the transmission ch," MPRA Paper 89380, University Library of Munich, Germany.
    5. Canh Phuc Nguyen & Binh Quang Nguyen & Duyen Thuy Le Tran, 2023. "Over two decades of severe deforestation: an economic perspective of tourism development," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 13(1), pages 83-104, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jean-Louis Combes & Pascale Combes Motel & Philippe Delacote, 2014. "Public expenses, credit and natural capital: Substitution or complementarity?," Working Papers halshs-00979191, HAL.
    2. Kinda, Harouna & Thiombiano, Noel, 2021. "The effects of extractive industries rent on deforestation in developing countries," Resources Policy, Elsevier, vol. 73(C).
    3. Combes, J.-L. & Combes Motel, P. & Minea, A. & Villieu, P., 2015. "Deforestation and seigniorage in developing countries: A tradeoff?," Ecological Economics, Elsevier, vol. 116(C), pages 220-230.
    4. Ajanaku, B.A. & Collins, A.R., 2021. "Economic growth and deforestation in African countries: Is the environmental Kuznets curve hypothesis applicable?," Forest Policy and Economics, Elsevier, vol. 129(C).
    5. Wolfersberger, Julien & Delacote, Philippe & Garcia, Serge, 2015. "An empirical analysis of forest transition and land-use change in developing countries," Ecological Economics, Elsevier, vol. 119(C), pages 241-251.
    6. Caravaggio, Nicola, 2020. "Economic growth and the forest development path: A theoretical re-assessment of the environmental Kuznets curve for deforestation," Forest Policy and Economics, Elsevier, vol. 118(C).
    7. Leblois, Antoine & Damette, Olivier & Wolfersberger, Julien, 2017. "What has Driven Deforestation in Developing Countries Since the 2000s? Evidence from New Remote-Sensing Data," World Development, Elsevier, vol. 92(C), pages 82-102.
    8. Nguyen, Canh Phuc & Nguyen, Binh Quang, 2023. "Environmental foe or friend: The influence of the shadow economy on forest land," Land Use Policy, Elsevier, vol. 124(C).
    9. Afawubo, Komivi & Noglo, Yawo Agbényégan, 2019. "Remittances and deforestation in developing countries: Is institutional quality paramount?," Research in Economics, Elsevier, vol. 73(4), pages 304-320.
    10. Wehkamp, Johanna & Koch, Nicolas & Lübbers, Sebastian & Fuss, Sabine, 2018. "Governance and deforestation — a meta-analysis in economics," Ecological Economics, Elsevier, vol. 144(C), pages 214-227.
    11. Caravaggio, Nicola, 2020. "A global empirical re-assessment of the Environmental Kuznets curve for deforestation," Forest Policy and Economics, Elsevier, vol. 119(C).
    12. Boris OK Lokonon & Ichaou Mounirou, 2019. "Does foreign direct investment impede forest area in Sub‐Saharan Africa?," Natural Resources Forum, Blackwell Publishing, vol. 43(4), pages 230-240, November.
    13. Barbier,Edward B., 2007. "Natural Resources and Economic Development," Cambridge Books, Cambridge University Press, number 9780521706513.
    14. Indarto, Jarot & Mutaqin, Dadang J., 2016. "An overview of theoretical and empirical studies on deforestation," MPRA Paper 70178, University Library of Munich, Germany.
    15. Novice Patrick Bakehe, 2020. "L'accès à l’électricité: une solution pour réduire la déforestation en Afrique?," African Development Review, African Development Bank, vol. 32(3), pages 338-348, September.
    16. Sébastien MARCHAND, 2010. "Technical Ef?ciency, Farm Size and Tropical Deforestation in the Brazilian Amazonian Forest," Working Papers 201012, CERDI.
    17. Sébastien Marchand, 2011. "Technical Efficiency, Farm Size and Tropical Deforestation in the Brazilian Amazonian Forest," CERDI Working papers halshs-00552981, HAL.
    18. Marchand, Sébastien, 2016. "The colonial origins of deforestation: an institutional analysis," Environment and Development Economics, Cambridge University Press, vol. 21(3), pages 318-349, June.
    19. Pascale COMBES MOTEL & Jean-Louis COMBES & Catherine ARAUJO BONJEAN & Claudio ARAUJO & Eustaquio J. REIS, 2010. "Does Land Tenure Insecurity Drive Deforestation in the Brazilian Amazon?," Working Papers 201013, CERDI.
    20. Nguyen, Canh Phuc & Su, Thanh Dinh, 2021. "Alleviating energy poverty for forest conservation: It seems to work, but what are we missing?," Land Use Policy, Elsevier, vol. 109(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:73:y:2018:i:c:p:306-316. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.