Deforestation and credit cycles in Latin American countries
This paper establishes a link between deforestation and credit cycles in Latin American countries. The latter exhibit rapid deforestation rates as well as macroeconomic instability that is often rooted in credit booms and crunches episodes: data available on the last years show a coincidence between higher macroeconomic instability and deforestation increases. This paper provides a theoretical explanation and econometric investigations of this phenomenon. A key ingredient of the model is the existence of two sectors: a modern agricultural sector and a subsistence one, which are hypothesised to catch the basic features of Latin American agricultural sectors. Agricultural production relies on three production factors: land, capital and labour. Agents clear forested areas in order to increase agricultural lands. Interest rates movements have an effect on agricultural decisions and thus on deforestation since they induce factor movements between the agricultural sectors. It is shown that deforestation occurs in response to interest rates increases or decreases primarily because of the irreversible character of forest conversion. Econometric tests are conducted on the 1948-2005 period on an exhaustive sample of Latin American countries. The database on deforestation is a compilation of FAO censuses and several measures of credit cycles are calculated as well. The main output of the paper is to evidence a link between credit cycles and deforestation. The results are robust to the introduction of usual control variables in deforestation equations.
|Date of creation:||17 Jan 2011|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00556809|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arcand, Jean-Louis & Guillaumont, Patrick & Jeanneney, Sylviane Guillaumont, 2008.
"Deforestation and the real exchange rate,"
Journal of Development Economics,
Elsevier, vol. 86(2), pages 242-262, June.
- Jean-Louis Arcand & Patrick Guillaumont & Sylviane Guillaumont Jeanneney, 2011. "Deforestation and the Real Exchange Rate," Working Papers halshs-00570477, HAL.
- Jean-Louis ARCAND & Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2005. "Deforestation and the Real Exchange Rate," Working Papers 200533, CERDI.
- Jean-Louis ARCAND & Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2003. "Deforestation and the Real Exchange Rate," Working Papers 200332, CERDI.
- Jean-Louis Arcand & Sylviane Guillaumont Jeanneney & Patrick Guillaumont, 2008. "Deforestation and the Real Exchange Rate," Post-Print hal-00274384, HAL.
- Adolfo Barajas & Roberto Steiner, 2002. "Credit Stagnation in Latin America," IMF Working Papers 02/53, International Monetary Fund.
- Kahn, James R. & McDonald, Judith A., 1995. "Third-world debt and tropical deforestation," Ecological Economics, Elsevier, vol. 12(2), pages 107-123, February.
- Bulte, Erwin H. & Damania, Richard & Lopez, Ramon, 2007. "On the gains of committing to inefficiency: Corruption, deforestation and low land productivity in Latin America," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 277-295, November.
- Gourinchas, Pierre-Olivier & Landerretche, Oscar & Valdés, Rodrigo, 2001.
"Lending Booms: Latin America and the World,"
CEPR Discussion Papers
2811, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas & Rodrigo Valdes & Oscar Landerretche, 2001. "Lending Booms: Latin America and the World," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 47-100, January.
- Edward Barbier & Michael Rauscher, 1994. "Trade, tropical deforestation and policy interventions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(1), pages 75-90, February.
- G. C. van Kooten & Henk Folmer, 2004. "Land and Forest Economics," Books, Edward Elgar Publishing, number 3466, June.
- Andrew W. Horowitz, 1996. "Wage-Homestead Tenancies: Technological Dualism and Tenant Household Size," Land Economics, University of Wisconsin Press, vol. 72(3), pages 370-380.
- Edward B. Barbier, 2004. "Explaining Agricultural Land Expansion and Deforestation in Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1347-1353.
- Henk Folmer & G. Cornelis van Kooten, 2006. "Deforestation," Working Papers 2006-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00556809. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.