The economics of tropical deforestation

This paper provides a survey of 'first wave' economic studies of tropical deforestation and land use. These studies of tropical forest land conversion are generally at the cross-country level. We also conduct a synthesis cross-country analysis of tropical agricultural land expansion. The results show that agricultural development is the main factor determining land expansion, but institutional factors have an important influence. Income effects tend to vary from region to region, and do not always display an 'Environmental Kuznets Curve' relationship. This paper also provides a review of the more recent 'second wave' economic studies of tropical deforestation that model and analyze the economic behaviour of agricultural households, timber concessionaires and other agents within tropical forest countries who affect deforestation through their land use decisions. Further work in this area requires more country-level and local case studies into tropical deforestation and land use.