Economic Development and Forest Cover: Evidence from Satellite Data

Abstract

Ongoing deforestation is a pressing, global environmental issue with direct impacts on climate change, carbon emissions, and biodiversity. There is an intuitive link between economic development and overexploitation of natural resources including forests, but this relationship has proven difficult to establish empirically due to both inadequate data and convoluting geo-climactic factors. In this analysis, we use satellite data on forest cover along national borders in order to study the determinants of deforestation differences across countries. Controlling for trans-border geo-climactic differences, we find that income per capita is the most robust determinant of differences in cross-border forest cover. We show that the marginal effect of per capita income growth on forest cover is strongest at the earliest stages of economic development, and weakens in more advanced economies, presenting some of the strongest evidence to date for the existence of at least half of an environmental Kuznets curve for deforestation.