Long- and Short-Run Forest Dynamics: An Empirical Assessment of Forest Transition, Environmental Kuznets Curve and Ecologically Unequal Exchange Theories

Abstract

Forest dynamics are changing at a local and global level, with multiple social and environmental implications. The current literature points to different theories and hypotheses to explain these forest dynamics. In this paper, we formalized some of those theories, the environmental Kuznets curve (EKC), the forest transition and the ecologically unequal exchange, into hypotheses tested with a panel dataset covering 111 countries during the period the period 1992–2015. Considering the nature of our data, we relied on cointegration techniques to assess both long- and short-run dynamics in forest change, avoiding possible spurious results. Moreover, we attempted to disentangle direct and indirect effects of our independent variables to uncover the mechanisms that underly forest change dynamics. The results show that there is a long-run dynamic equilibrium relationship between forest cover area, economic development, agricultural area and rural population density. Furthermore, our results confirmed an EKC for high-income countries and post-forest transition countries, while low- and middle-income economies are experiencing different paths. We showed the importance of government quality as a positive feedback mechanism for previous periods of deforestation when tested for all countries together as well as for pre-transition and middle-income economies. Moreover, in low-income economies, economic development affects forest mainly indirectly through the agricultural area.