Modelling the Relationship between Government Policy, Economic Growth, and Deforestation in the Brazilian Amazon

Lykke E. Andersen ()

No 1997-2, Economics Working Papers from School of Economics and Management, University of Aarhus

Abstract: This paper develops a theoretical as well as an empirical model of deforestation and economic development in a tropical forest economy. The empirical model is estimated using panel data for 316 municipalities in the Brazilian Amazon during the period 1970-1985. The effects of controversial Brazilian policies, such as road building through the Amazon and subsidized credit to agricultural establishments, are evaluated both in the theoretical model and in the estimated empirical model. The paper concludes that subsidized credit, while certainly causing deforestation, is so beneficial for economic growth that the benefits seem to outweigh the environmental costs. This does not hold for road building, however, because the opening up of new land by federal road building tend to promote a wasteful use of land.

Keywords: Tropical deforestation and economic growth; policy evaluation; multiple equation spatial panel data model (search for similar items in EconPapers)
JEL-codes: C33 R11 R13 O18 Q23 Q28 (search for similar items in EconPapers)
View citations in EconPapers

Downloads: (external link)
ftp://ftp.econ.au.dk/afn/wp/wp/wp1997_2.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Failed to CWD to directory wp

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:aah:aarhec:1997-2

Access Statistics for this paper

More papers in Economics Working Papers from School of Economics and Management, University of Aarhus
Series data maintained by ().