IDEAS home Printed from https://ideas.repec.org/p/cgd/wpaper/280.html
   My bibliography  Save this paper

Economic Dynamics and Forest Clearing: A Spatial Econometric Analysis for Indonesia- Working Paper 280

Author

Listed:
  • David Wheeler, Dan Hammer, Robin Kraft, Susmita Dasgupta, Brian Blankespoor

Abstract

This paper uses a large panel database to investigate the determinants of forest clearing in Indonesian kabupatens since 2005. Our study incorporates short-run changes in prices and demand for palm oil and wood products, as well as the exchange rate, the real interest rate, land-use zoning, forest protection, the estimated opportunity cost of forested land, the quality of local governance, the poverty rate, population density, the availability of communications infrastructure, transport cost, and local rainfall and terrain slope. Our econometric results highlight the role of dynamic economic factors in forest clearing. We find significant roles for lagged changes in all the short-run economic variables—product prices, demands, the exchange rate and the real interest rate—as well as communications infrastructure, some types of commercial zoning, rainfall, and terrain slope. We find no significance for the other variables, and the absence of impact for protected-area status is particularly notable. Our results strongly support the model of forest clearing as an investment that is highly sensitive to expectations about future forest product prices and demands, as well as changes in the cost of capital (indexed by the real interest rate), the relative cost of local inputs (indexed by the exchange rate), and the cost of land clearing (indexed by local precipitation). By implication, the opportunity cost of forested land fluctuates widely with changes in international markets and decisions by Indonesia’s financial authorities about the exchange and interest rates. Our results suggest that forest conservation programs are unlikely to succeed if they ignore such powerful force.

Suggested Citation

  • David Wheeler, Dan Hammer, Robin Kraft, Susmita Dasgupta, Brian Blankespoor, 2011. "Economic Dynamics and Forest Clearing: A Spatial Econometric Analysis for Indonesia- Working Paper 280," Working Papers 280, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:280
    as

    Download full text from publisher

    File URL: http://www.cgdev.org/files/1425820_file_Wheeler_et_al_Forest_Clearing_Indonesia.pdf
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Miteva, Daniela A. & Pattanayak, Subhrendu K., 2021. "The effectiveness of protected areas in the context of decentralization," World Development, Elsevier, vol. 142(C).
    2. Dasgupta, Susmita & Hammer, Dan & Kraft, Robin & Wheeler, David, 2014. "Vyāghranomics in space and time: Estimating habitat threats for Bengal, Indochinese, Malayan and Sumatran tigers," Journal of Policy Modeling, Elsevier, vol. 36(3), pages 433-453.

    More about this item

    Statistics

    Access and download statistics

    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:cgd:wpaper:280. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Publications Manager (email available below). General contact details of provider: https://edirc.repec.org/data/cgdevus.html .

    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.