Heitor Pellegrina, University of Notre Dame

"Deforestation: A Global and Dynamic Perspective"

Abstract

We study deforestation in a dynamic world trade system. We first document that between 1990-2020: (i) global forest area has decreased by 7.1 percent, with large heterogeneity across countries, (ii) deforestation is associated with expansions of agricultural land use, (iii) deforestation is larger in countries with a comparative advantage in agriculture, and (iv) larger population growth leads to deforestation.

We build a model in which structural change and comparative advantage determine the extent, location, and timing of deforestation. We show analytically and quantitatively that if agriculture is complementary in demand to other sectors, global reductions in trade costs reduce global deforestation, even if such shocks increase deforestation when experienced only by an individual economy. In our calibrated model, a 30 percent reduction in global agricultural trade costs increases steady-state forest share for world area by 0.5 percentage points, taking decades to occur. In the cross-section, countries with a comparative advantage in agriculture expand production at the expense of more deforestation there.

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Contact person: Casper Worm Hansen