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The Role of Government Spending on Deforestation and Carbon Dioxide Emissions from Land Use Change

Author

Listed:
  • Gregmar Galinato
  • Suzette Galinato

    (School of Economic Sciences, Washington State University)

Abstract

There has been a shift in fiscal policies in developing countries with good quality institutions. Government spending is less likely to be procyclical and instead countercyclical where spending rises during times of recession and falls during times of expansion to reduce the effects of the business cycle. We show using a theoretical model that moving towards a countercyclical spending pattern yields an unintended consequence: during times of recession there is an increase in deforestation and carbon dioxide emissions from land use change. We empirically test the results from our theoretical model and find that an increase in total government spending significantly increases forest land clearing for agricultural production in the short run leading to more carbon dioxide emissions. In the long run, there is a lower steady-state forest biomass and carbon dioxide emissions are significantly higher than in the short run.

Suggested Citation

  • Gregmar Galinato & Suzette Galinato, 2013. "The Role of Government Spending on Deforestation and Carbon Dioxide Emissions from Land Use Change," Working Papers 2013-14, School of Economic Sciences, Washington State University.
    • Handle: RePEc:wsu:wpaper:galinato-10
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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/Galinato/WP2013-14.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jean-Louis Combes & Pascale Combes Motel & Philippe Delacote, 2014. "Public expenses, credit and natural capital: Substitution or complementarity?," Working Papers halshs-00979191, HAL.
    2. Combes, J.-L. & Combes Motel, P. & Minea, A. & Villieu, P., 2015. "Deforestation and seigniorage in developing countries: A tradeoff?," Ecological Economics, Elsevier, vol. 116(C), pages 220-230.
    3. Wehkamp, Johanna & Koch, Nicolas & Lübbers, Sebastian & Fuss, Sabine, 2018. "Governance and deforestation — a meta-analysis in economics," Ecological Economics, Elsevier, vol. 144(C), pages 214-227.

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    More about this item

    Keywords

    Carbon dioxide emission; deforestation; government spending; public goods expenditure;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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