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

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

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 manmade 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 manmade capital cannot be tackled without facing the objective of environmental protection.

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  • Jean-Louis Combes & Pascale Combes Motel & Philippe Delacote & Thierry Urbain Yogo, 2018. "Public spending, credit and natural capital: Does access to capital foster deforestation?," Working Papers 1806, Chaire Economie du climat.
  • Handle: RePEc:cec:wpaper:1806
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    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. 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.

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    Keywords

    Deforestation; Development; Credit; Public spending;

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