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Environmental foe or friend: The influence of the shadow economy on forest land

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  • Nguyen, Canh Phuc
  • Nguyen, Binh Quang

Abstract

Previous studies indicate that the shadow economy is truly an environmental foe, with positive linkages with energy intensity, air pollution, and emissions. This study extends the literature by considering the environmental influence of the shadow economy on one of the most important components of the ecosystem, the forest. The analysis is carried out for a global sample of 148 countries from 1991 to 2017 using various panel techniques. Analyses are also conducted for four subsamples by income level and seven subsamples by region. The results are robust and consistent. Increases in the shadow economy seem, surprisingly, to have a positive impact on forest land in the short run. The effects are documented as consistent across four income groups and six out of seven sub-regions. However, the shadow economy appears to exacerbate deforestation in the long run. The results reveal asymmetric linkages between the shadow economy and forest area. More attention is then given to the consequences of the shadow economy on forest reservation, especially for long-term policy setting.

Suggested Citation

  • Nguyen, Canh Phuc & Nguyen, Binh Quang, 2023. "Environmental foe or friend: The influence of the shadow economy on forest land," Land Use Policy, Elsevier, vol. 124(C).
    • Handle: RePEc:eee:lauspo:v:124:y:2023:i:c:s0264837722004835
    DOI: 10.1016/j.landusepol.2022.106456
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    More about this item

    Keywords

    Informal economy; Environment; Ecosystem; Forest; Sustainable development; JEL code; O17; Q23; Q51; Q56; Q57;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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