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Does Free Trade Increase Deforestation? The Effects of Regional Trade Agreements

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  • Ryan Abman
  • Clark Lundberg

Abstract

This paper provides new, global evidence on the relationship between trade liberalization and deforestation. Using event studies around the enactment of regional trade agreements (RTAs) on a panel of 189 countries from 2001 to 2012, we find a large and statistically significant increase in deforestation over the 3 years following the enactment of an RTA, which coincides with an increase in agricultural land conversion. The findings are robust to a variety of controls and fixed effects. The results on deforestation and agricultural land expansion are driven by developing countries in the tropics, suggesting that trade liberalization not only increases net deforestation but may also shift deforestation into ecologically sensitive locations. We find no evidence that these effects are driven by increases in timber harvest. Our results suggest that trade liberalization efforts should be accompanied by policies to direct agricultural land expansion away from forests and sensitive habitat regions.

Suggested Citation

  • Ryan Abman & Clark Lundberg, 2020. "Does Free Trade Increase Deforestation? The Effects of Regional Trade Agreements," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(1), pages 35-72.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/705787
    DOI: 10.1086/705787
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    Citations

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    Cited by:

    1. Abman,Ryan Michael & Lundberg,Clark Christopher & Ruta,Michele, 2021. "The Effectiveness of Environmental Provisions in Regional Trade Agreements," Policy Research Working Paper Series 9601, The World Bank.
    2. Eugenio Arima & Paulo Barreto & Farzad Taheripour & Angel Aguiar, 2021. "Dynamic Amazonia: The EU–Mercosur Trade Agreement and Deforestation," Land, MDPI, vol. 10(11), pages 1-23, November.
    3. Francois, Joseph & Hoekman, Bernard & Manchin, Miriam, 2022. "Pursuing Environmental and Social Objectives through Trade Agreements," Papers 1377, World Trade Institute.
    4. Araujo, Rafael & Costa, Francisco J M & Sant'Anna, Marcelo, 2020. "Efficient Forestation in the Brazilian Amazon: Evidence from a Dynamic Model," SocArXiv 8yfr7, Center for Open Science.
    5. Felbermayr, Gabriel & Peterson, Sonja & Wanner, Joschka, 2022. "The impact of trade and trade policy on the environment and the climate: A review," Kiel Working Papers 2233, Kiel Institute for the World Economy (IfW Kiel).
    6. Berman, Nicolas & Couttenier, Mathieu & Leblois, Antoine & Soubeyran, Raphael, 2023. "Crop prices and deforestation in the tropics," Journal of Environmental Economics and Management, Elsevier, vol. 119(C).
    7. Cecilia Bellora & Jean-Christophe Bureau & Basak Bayramoglu & Estelle Gozlan & Sébastien Jean, 2020. "Trade and Biodiversity [Commerce et biodiversité]," Working Papers hal-02887592, HAL.
    8. Ayad, Hicham & Hassoun, Salaheddine Sari & Abdelkader, Salim Bourchid & Sallam, Osama Azmi Abddel-Jalil, 2024. "Assessing deforestation in the Brazilian forests: An econometric inquiry into the load capacity curve for deforestation," Forest Policy and Economics, Elsevier, vol. 159(C).
    9. He, Xi & Chen, Zhenshan, 2022. "Weather, cropland expansion, and deforestation in Ethiopia," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    10. Eisenbarth, Sabrina, 2022. "Do exports of renewable resources lead to resource depletion? Evidence from fisheries," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    11. Mihaylova, Iva, 2023. "Perpetuating the malign legacy of colonialism? Traditional chiefs’ power and deforestation in Sierra Leone," World Development, Elsevier, vol. 164(C).
    12. Bård Harstad, 2022. "Trade, Trees, and Contingent Trade Agreements," CESifo Working Paper Series 9596, CESifo.
    13. Bård Harstad, 2020. "Trade and Trees: How Trade Agreements Can Motivate Conservation Instead of Depletion," CESifo Working Paper Series 8569, CESifo.
    14. Chong, Alberto & Srebot, Carla, 2020. "Investment confidence and regional trade agreements with the United States," International Economics, Elsevier, vol. 163(C), pages 92-100.
    15. Carreira, Igor & Costa, Francisco & Pessoa, João Paulo, 2024. "The deforestation effects of trade and agricultural productivity in Brazil," Journal of Development Economics, Elsevier, vol. 167(C).
    16. Gökhan Güven, 2024. "The effects of resource export and import taxes on resource conservation and welfare outcomes: triple win or loss reconsidered," Economic Change and Restructuring, Springer, vol. 57(4), pages 1-53, August.
    17. Clark Lundberg & Ryan Abman, 2022. "Maize price volatility and deforestation," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 693-716, March.
    18. Christopher M. Dent, 2021. "Trade, Climate and Energy: A New Study on Climate Action through Free Trade Agreements," Energies, MDPI, vol. 14(14), pages 1-30, July.
    19. Hoekman, Bernard & Santi, Filippo & Shingal, Anirudh, 2023. "Trade effects of non-economic provisions in trade agreements," Economics Letters, Elsevier, vol. 226(C).
    20. Abman, Ryan & Lundberg, Clark & Szmurlo, Daniel, 2022. "Trade, Emissions, and Environmental Spillovers: Issue Linkages in Regional Trade Agreements," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322511, Agricultural and Applied Economics Association.

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