Deforestation, distribution and development

The promotion of economic growth has formed the centerpiece of development planning and policymaking in the post-war period (IFAD, 1993; World Bank, 1990). In recent years, economists have complemented this focus on growth with attention to basic needs, investment in human capital formation, and environmental protection. Although not included in formal measures of economic output or GDP, the quality of a country's natural and human resource base is now recognized to be an important determinant affecting economic growth and the prospects for improved social welfare (Leonard, 1989; World Bank, 1990).

This shift in emphasis from strictly economic growth considerations toward issues of sustainability and welfare has emerged in response to increasing recognition of the problems now facing many developing countries. The first is the persistence of acute poverty. Despite the considerable economic progress made by developing societies in the post-war period, the absolute numbers of people living in poverty remains unacceptably high (Steer, 1992; World Bank, 1990; van der Gaag, 1991; IFAD, 1993). According to the 1990 World Bank's Development Report an estimated 1 billion people in the developing world live in poverty, nearly half of them in southeast Asia. International poverty profiles suggest that these people are likely to live in rural areas, to be in female-headed households, to be farmers or agricultural workers, to be landless or near-landless, and to be a member of an ethnic minority (World Bank, 1990; IFAD, 1993; Fields, 1980). In addition, wide intra-country disparities in income and wealth persist, not only within regions and countries of the developing world but between countries as well (World Bank, 1990; Fields, 1980; van der Gaag, 1991).

A second problem is the growing environmental crisis many developing countries now face. As Leonard (1989) notes, an increasing number of these poor are situated in marginal, resource-poor and ecologically degraded areas. Highly exploitative patterns of subsistence behavior in these areas lead to decreasing agricultural productivity due to environmental decay and resource depletion. Similarly, declining resource stocks and environmental quality undermine economic growth and development, exacerbating already deep social inequalities, and hindering the onset of the demographic transition.

A substantial economic literature exists devoted to understanding the role of poverty and inequality in economic growth. Similarly, a smaller and more recent body of literature exists on the relationship between the environment and economic growth. (2 Patterns of poverty and inequality in developing countries, 3 Economic growth & patterns of environmental change below provide a very brief introduction to some of these works). However, most of the existing literature on economic development and the environment restricts itself to qualitative assessments of these relationships or merely speculates on the probable consequences for development arising from environmental degradation and excessive population growth (Myers, 1993). Despite the fact that distributional issues have been observed to have an important impact on economic growth and growth itself to have important consequences for the environment, there has been surprisingly little attempt to analyze the links between redistribution and the environment.

This paper will attempt to explore the nature of the relationship between the environment, poverty, inequality and economic growth. An important issue addressed is whether inequality and poverty have any significant mediating effect on observed relationships between growth and a key indicator of the decline in environmental quality: the rate of forest loss. In other words, does a country's distributional profile influence the relationship between economic development and a country's deforestation rate?

After a brief discussion outlining the dimensions of poverty and inequality in developing countries, the paper describes recent empirical evidence on the relationship between development and distribution and the environment. Following this discussion, the subsequent section will empirically analyze relationships using panel data from 48 developing countries. The estimated equations form the basis of a number of broad generalizations or “stylized facts” about the linkages between these key factors. Variables chosen for analysis in the study are predicted on the basis of the literature to influence deforestation outcomes, and as such, reflect key aspects of the development/deforestation/distribution nexus. It should be stressed at the outset that these relationships are not the only ones of importance influencing deforestation rates. Neither should it be assumed that the variables chosen for analysis are the only ones comprising this nexus. These relationships form part of a larger web of factors affecting forest loss, the relations and interrelations of which are highly complex. Despite this complexity (which makes it impossible to model these relationships adequately), the study aims to provide the basis for the development of more informative models and country-level investigations of these relationships in the future.

Patterns of poverty and inequality in developing countries

Empirical research on the distributional aspects of growth provides a number of implications for the present study:

(i) Much evidence points to a positive role for growth in reducing poverty; the incomes of the poor, in other words, have for the most part tended to rise with growth (Fields, 1989; World Bank, 1990). Countries that have made substantial progress in reducing the incidence of poverty have also been those in which income per capita has risen sharply (Fields 1980, Fields 1989).

Economic growth & patterns of environmental change

Recent empirical research suggests that the relationship between economic growth and environmental change exhibits a range of patterns, with many environmental indicators improving as incomes rise, some worsening, and others worsening and then improving (Steer, 1992). The growth of prosperity is also associated with improved living standards with respect to factors that bear directly on the quality of the environment (e.g. access to safe drinking water and sanitation) (Beckerman, 1992).

Several

Distribution, development and deforestation: sources of testable hypotheses

Differences in the nature of the relationships between economic growth and indicators of environmental quality may reflect differences in policies toward certain indicators, the costs of environmental degradation and its abatement, and/or variations in the production structures of countries at different levels of economic development. As economic activities shift away from agriculture to industry and then again to services and high-tech industries, “the intensity of environmental services used

Empirical analysis

This section empirically investigates the relative impact of distributional factors on the relationship between economic growth, development and deforestation. We begin with a standard panel data model for deforestation (e.g. Cropper and Griffiths, 1994; Koop and Tole, 1999). Deforestation is defined in this study as the percentage annual decrease in forest area. Data on forest cover loss for 48 tropical developing countries are derived from the FAO Production Yearbook for various years between

Conclusion

This paper has sought to establish some key stylized facts about the role of distribution in mediating the effects of development and growth on forest depletion in tropical developing countries. A key finding of the paper is that distributional profile is a significant determinant of whether economic development will have either a positive or a negative effect on the rate of forest depletion. It appears that in countries where levels of inequality are high, development will tend to exacerbate