IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-03344196.html
   My bibliography  Save this paper

The effects of extractive industries rent on deforestation in developing countries

Author

Listed:
  • Harouna Kinda

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

  • Noel Thiombiano

Abstract

The extractive industries (oil, gas, and mining) play a dominant economic, social, and political role in the lives of approximately 3.5 billion people living in 81 countries across the world. However, the benefits come at a cost that is no longer limited to the problems of the ‘curse of natural resources', but also includes the damage of greenhouse gas emissions, pollution, and biodiversity that extraction wreaks on the environment. This paper revisits the links between man-made and natural capital in developing countries, focusing on the case of forest cover loss . Considering a theoretical model of income maximization, we assess through empirical observation the impact of extractive industries on forest cover loss. Based on a panel of 52 resource-rich developing countries, over the period 2001-2017, we adopt a dynamic specification with the two-step Generalized Method of Moments (GMM) system to address the inherent bias. Our main results show that the total rent from the extractive industries is detrimental to the forest. More specifically, mineral and gas rents accelerate forest cover loss. In contrast, oil rents contribute to reducing forest cover loss. In addition, we find that natural resource tax revenues contribute to reducing forest cover loss. Our results suggest substitutability between oil rents (natural resource tax revenues and forest natural capital), and complementarity between mineral rents (gas rents and forest natural capital). To promote corporate environmental management, stakeholders must overcome regulatory inefficiencies in exploration and exploitation contracts so that environmental compensation is at least equal to the marginal damage caused by the extractive industries.

Suggested Citation

  • Harouna Kinda & Noel Thiombiano, 2021. "The effects of extractive industries rent on deforestation in developing countries," Post-Print hal-03344196, HAL.
    • Handle: RePEc:hal:journl:hal-03344196
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-03344196
    as

    Download full text from publisher

    File URL: https://uca.hal.science/hal-03344196/document
    Download Restriction: no
    ---><---

    Citations

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


    Cited by:

    1. Ranjan, Ram, 2022. "Optimal restoration of common property resources under uncertainty," Resources Policy, Elsevier, vol. 77(C).
    2. Altanshagai Batmunkh & Agus Dwi Nugroho & Maria Fekete-Farkas & Zoltan Lakner, 2022. "Global Challenges and Responses: Agriculture, Economic Globalization, and Environmental Sustainability in Central Asia," Sustainability, MDPI, vol. 14(4), pages 1-21, February.
    3. Avinash Kumar Ranjan & Bikash Ranjan Parida & Jadunandan Dash & Amit Kumar Gorai, 2023. "Evaluating Impacts of Opencast Stone Mining on Vegetation Primary Production and Transpiration over Rajmahal Hills," Sustainability, MDPI, vol. 15(10), pages 1-22, May.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:hal:journl:hal-03344196. 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.