The Economics of Tropical Deforestation

Clare Balboni (), Aaron Berman (), Robin Burgess () and Benjamin A. Olken ()
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Clare Balboni: Department of Economics, London School of Economics, London, United Kingdom
Aaron Berman: Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA
Robin Burgess: Department of Economics, London School of Economics, London, United Kingdom
Benjamin A. Olken: Department of Economics, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA

Annual Review of Economics, 2023, vol. 15, issue 1, 723-754

Abstract: Two factors have elevated recent academic and policy interest in tropical deforestation: first, the realization that it is a major contributor to climate change; and second, a revolution in satellite-based measurement that has revealed that it is proceeding at a rapid rate. We begin by reviewing the methodological advances that have enabled measurement of forest loss at a fine spatial resolution across the globe. We then develop a simple benchmark model of deforestation based on classic models of natural resource extraction. Extending this approach to incorporate features that characterize deforestation in developing countries—pressure for land use change, significant local and global externalities, weak property rights, and political economy constraints—provides us with a framework for reviewing the fast-growing empirical literature on the economics of deforestation in the tropics. This combination of theory and empirics provides insights not only into the economic drivers and impacts of tropical deforestation but also into policies that may affect its progression. We conclude by identifying areas where more work is needed in this important body of research.

Keywords: climate change; environmental economics; tropical deforestation; environmental degradation; biodiversity loss; natural resource management; land use change; remote sensing; externalities; common-property resources; political economy (search for similar items in EconPapers)
JEL-codes: F18 F64 H23 O13 O44 Q23 Q56 Q57 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (6)

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DOI: 10.1146/annurev-economics-090622-024705

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