Linkages are shown between debt, forests, macroeconomic and microeconomic conditions, and the public sector.
What economic factors have contributed to the recent rapid deforestation in tropical countries? Has the increase in external debt led to increased deforestation in these countries?
The deforestation and degradation of tropical forests are taking place at an extremely rapid pace. According to the Food and Agriculture Organization (FAO), the estimated annual rate of tropical deforestation during the 1981-1985 period was 113,846 square kilometers or 0.6% of the 1981 total forested area. The implications of the loss of these forests are staggering.
Tropical forests are extremely rich ecosystems that support a disproportionate large share of the world's plant and animal species. Forests play a crucial role in both nutrient and hydrological cycling and may provide sustainable economic benefits through managed harvesting of timber and the collection of non-timber products such as fruits, nuts, and rubber. Also, deforestation is a significant source of global warming through its effects on the global carbon cycle.
This study focuses on the relationship between debt and deforestation, examining conceptual and empirical arguments that debt is a source of deforestation pressure. It was shown that debt is significantly correlated with deforestation under a wide variety of assumptions and specifications.
Kahn, J. R. and J. A. McDonald. 1994. Third World debt and tropical deforestation. Ecological Economics (submitted).
Integrated Assessment Briefs. 1995. ORNL/M-4227. Oak Ridge National Laboratory, Oak Ridge, TN.