Estimation Of A Discrete-Choice Model With Spatial Interactions The Case Of Deforestation In Western Attica Between 1990 And 2000

This paper presents an environmental application, investigating land use changes of forests and semi-natural areas in the Greek region of Western Attica. Its objective is to estimate the spatial equilibrium distribution of individual deforestation actions and determine the degree of coordination in individual behaviour. For this purpose, the paper starts by creating a virtual economic network of 156 agents, by laying an ad hoc square grid over the region. Next, the dominant forest land use changes have been determined for each land parcel, using CORINE land cover maps for the years 1990 and 2000. The economic model used is a discrete choice model, with endogenous spatial interactions. Even though spatial interactions produce multiple equilibria, the present research proposes a two-stage fixed point estimator, yielding a unique solution. Empirical findings suggest that equilibrium deforestation actions are strategic substitutes for the environment and complements for agriculture, and are characterized by a relative lack of coordination in individual behaviour.