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Institutions, Economic Development, and Deforestation

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  • Grimm, Michael
  • Klasen, Stephan
  • Schwarze, Stefan

Abstract

This paper offers a unified framework linking two important debates: First, the debate about the respective roles of geography and institutions on economic development; Second, the literature on the role of technological change and economic development on agricultural intensification and land use changes. We use this framework to study empirically deforestation patterns at the rainforest margin. To this end we specify an empirical model that can explore the causal chain ranging from geographic conditions via institutional change to economic development and deforestation. We estimate this model using a unique data set of villages at the rainforest margin in Indonesia. Our results show that geography-induced institutional change is the key driver of technological change in our villages. The bad news is that some of these processes along the causal chain seem to promote deforestation. The good news is that economic development, conditional on these effects, appears to reduce deforestation.

Suggested Citation

  • Grimm, Michael & Klasen, Stephan & Schwarze, Stefan, 2009. "Institutions, Economic Development, and Deforestation," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 18, Verein für Socialpolitik, Research Committee Development Economics.
  • Handle: RePEc:zbw:gdec09:18
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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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