Economic growth, institutional quality and deforestation: Evidence from Russia

Forestry reserves have a crucial role in preserving ecosystems and global climate regulation, and Russia boasts the largest forested area in the world. Economic development entails various challenges for the environment, including a lack of forestry legislation or compliance, poor governance and unrestrained privatisation. This study investigates the role of institutional quality in explaining deforestation using panel-time series data for 75 Russian regions from 2009 to 2019. We apply a one-way autoregressive fixed-effect model with Driscoll–Kraay standard errors due to spatial dependence and time lags across Russian regions. The findings affirm the hypothesis of the environmental Kuznets curve for deforestation, implying that after surpassing a threshold point of gross regional product per capita, deforestation decreases. Poor institutional quality significantly increases the deforestation rate, which remains robust when considering the timber harvesting volume. The results affirm our proposition that the Russian forestry preservation policy is somewhat effective in reducing the deforestation rate. The empirical findings reinforce the importance of improving institutional quality for preserving forest areas toward carbon sequestration and overall Sustainable Development Goal agendas.