Productivity efficiency and forestry club convergence: Forest cover trends in Latin America and the Caribbean toward a sustainable net zero transition

This study aims to determine environmental quality trends by exploring forestry coverage trends in Latin America and the Caribbean through the lens of club convergence. Its relevance lies in addressing the region's heterogeneous sustainability challenges amid global net zero commitments. Employing club convergence methodology and regression techniques such as Feasible Generalized Least Squares (FGLS) and Panel-Corrected Standard Errors (PCSE), the study evaluates the influence of socioeconomic factors—particularly productivity—on forestation dynamics. Results reveal distinct trajectories: Club 1 countries (e.g., Brazil, Costa Rica) show increasing forest cover driven by productivity gains and manufacturing expansion; Club 2 countries (e.g., Mexico, Chile) exhibit an inverted U-shaped pattern with recent declines; and Club 3 countries (e.g., Nicaragua, El Salvador) face sharp forest loss influenced by population growth and material consumption. A key contribution is the hypothesis of productivity efficiency, proposing that higher productivity reduces demand for natural inputs, thereby lessening forest exploitation while supporting industrial growth. This insight aims to advance understanding of sustainable development by linking economic efficiency with environmental outcomes. Practically, findings highlight the need for differentiated policy approaches recognizing regional heterogeneity and the central role of productivity improvements in fostering forest conservation. The study thus informs targeted strategies for balancing economic growth and ecological preservation in Latin America and the Caribbean's net zero transition.