Economic Causes of Tropical Deforestation - A Global Empirical Application

The paper investigates the complex system of causes affecting tropical deforestation at a worldwide level. There is no generally accepted theory in the deforestation literature to indicate which variables should be included in a model of deforestation at an aggregate global level. The paper begins, therefore, by presenting an analytical structure based on formal farm household economic modelling literature. The empirical findings derived from a global regression model tend to confirm the profit maximising market approach to deforestation, i.e. policy and structural variables at the macro-level that stimulate agricultural production provide farmers with incentives to deforest and expand their arable land areas. However, subsequent statistical tests suggest that the causes of tropical deforestation are difficult to identify and quantify at a global level, and that these should be analysed at a more disaggregated level.