The Effects of Liberalism on the Terrestrial Environment

In recent decades, many countries have adopted, to various degrees, the ideologies of commercial and republican liberalism. One salient aspect of the spread of commercial liberalism in the world has been the growth in international trade. The spread of republican liberalism has manifested itself by the rise in the level of democracy in countries over time. What are the implications of trade and democracy for the terrestrial environment? Two bodies of literature are relevant to this question: one studies the effect of trade on the environment, while a second body focuses on the effect of democracy on the environment. The effects of both forces on the environment are debated theoretically and empirically. The two bodies of literature have generally developed separately, and the effects of trade and democracy have not been evaluated in the same model. This paper discusses the theoretical effects of trade and democracy on the environment, and develops a statistical model to study these effects on the terrestrial environment in the areas of deforestation and land degradation. The results indicate that a rise in trade openness reduces deforestation in autocracy and increases deforestation in democracy, and the effect is similar for the less developed countries (LDCs) and the developed countries (DCs). A rise in trade openness reduces land degradation, but the effect is not robust and does not depend on regime type. A rise in democracy increases deforestation and reduces land degradation, but these effects are weaker in LDCs than in DCs. In addition, the effect of democracy on deforestation is stronger when trade openness is high. The effect of democracy on land degradation does not depend on trade openness. The paper concludes with an examination of the implications of these results for public policy.