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The Rise of Transnational Financial Crimes and Tropical Deforestation

Author

Listed:
  • Yacouba Kassouri

    (Halle-Jena-Leipzig
    Leipzig University
    Prague University of Economics and Business)

Abstract

This paper investigates the impact of trade-related illicit financial flows (IFFs) on tropical deforestation. To adjust for pre-exposure differences in deforestation rates between countries exposed to IFFs and their counterfactuals, this study adopts propensity score matching and doubly robust weighted regression estimators. The results suggest substantial increases in forest loss in countries exposed to large IFFs. Specifically, the treated countries exposed to IFFs experience an annual increase in forest loss of approximately 10,344.167 hectares compared to their counterfactual controls. This finding is largely driven by macro-financial instability resulting from real currency depreciation and tax revenue losses due to illicit financial outflows. The results highlight the merit of capital controls and state ownership of assets in mitigating the impact of exposure to IFFs on forest loss.

Suggested Citation

  • Yacouba Kassouri, 2024. "The Rise of Transnational Financial Crimes and Tropical Deforestation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(10), pages 2795-2831, October.
    • Handle: RePEc:kap:enreec:v:87:y:2024:i:10:d:10.1007_s10640-024-00905-7
    DOI: 10.1007/s10640-024-00905-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Illicit financial flows; Deforestation; Forest cover loss; Tropical countries;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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