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Development and deforestation: Evidence from Costa Rica

Suzi Kerr, Alexander Pfaff, G. Arturo Sanchez Azofeifa

[2003]

Abstract: We estimate a deforestation equation for Costa Rica during the 20th century. Following the land- use literature our model of clearing for agriculture is dynamic, with irreversibilities, but we are not focused on the testing of individual dynamics. Our econometric approach addresses irreversibilities in deforestation by focusing solely upon the area that is still in forest at the beginning of a given time interval. Further, our empirical approach and data over time facilitate a novel effort to test for ‘dynamics of development and deforestation’ including: national trends; local endogenous development following early clearing; adjustment costs given shocks to profitability; and early use of the best lands. Our results confirm the impacts of agricultural productivity and market access (although upon rates of deforestation, not upon forest stocks as in the literature). The trends results suggest that within a development setting agricultural/forest land use is out of equilibrium as defined solely by local observable drivers. Given trends controls, we also find significant ‘dynamic’ effects. These results help to understand agricultural clearing patterns and could provide a basis for baseline carbon projections within global regulation.