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Annual Review of Economics

Volume 15, 2023

The Economics of Tropical Deforestation

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.

Keyword(s): biodiversity loss, climate change, common-property resources, environmental degradation, environmental economics, externalities, JEL F18, JEL F64, JEL H23, JEL O13, JEL O44, JEL Q23, JEL Q56, JEL Q57, land use change, natural resource management, political economy, remote sensing, tropical deforestation
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/content/journals/10.1146/annurev-economics-090622-024705
2023-09-13
2024-04-30
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The Economics of Tropical Deforestation
Annual Review of Economics 15, 723 (2023); https://doi.org/10.1146/annurev-economics-090622-024705
/content/journals/10.1146/annurev-economics-090622-024705
/content/journals/10.1146/annurev-economics-090622-024705
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