Public spending, credit and natural capital: Does access to capital foster deforestation?

Jean-Louis Combes, Philippe Delacote, Pascale Combes Motel and Thierry Yogo ()
Authors registered in the RePEc Author Service: Pascale Motel Combes ()

Economic Modelling, 2018, vol. 73, issue C, 306-316

Abstract: Improving access to man-made capital through domestic credit and public spending is a step towards development. Developing countries rely also on natural capital, which may generate possible conflicts between environment and development targets. Taking the case of land-use and deforestation, this paper revisits the links between man-made and natural capital. Relying on a model of income maximization, we theoretically assess how better access to man-made capital through public spending and credit, influences forest cover loss. Econometric investigations, over the period 2001–2012, show that forest cover loss is positively influenced by credit and public spending. A better access to capital is thus detrimental to the forest. This can be interpreted as a Tinbergen rule: the development objective of facilitating access to man-made capital cannot be tackled without facing the objective of environmental protection.

Keywords: Deforestation; Development; Credit; Public spendings (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Public spending, credit and natural capital: Does access to capital foster deforestation? (2018)
Working Paper: Public spending, credit and natural capital: Does access to capital foster deforestation? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:73:y:2018:i:c:p:306-316

DOI: 10.1016/j.econmod.2018.04.006

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