Primary objective

Contribute to the understanding of the effects of structural change and urbanisation on tropical deforestation by publishing research papers in leading economics journals.

Secondary objective

Strengthen the Norwegian research environment on development economics and spatial economics by creating international links and build competence on the use of GIS-data.

Project Summary

Tropical deforestation has attracted attention due to accumulation of greenhouse gases in the atmosphere.

Two aspects of economic development interact in important ways with tropical deforestation: a shift of resources from agricultural sectors to manufacturing and service sectors (structural change) and increased concentration of economic activity (urbanisation).

The research project will contribute to the understanding of the links between deforestation and economic development in two main ways:

1. The process of economic development entails important sectoral and spatial shifts that are important for deforestation, and theoretical models will be formulised to trace out the relevant mechanisms.
2. The hypothesized mechanisms will be tested in the data. By taking advantage of two sources of exogenous variation in economic growth (onshore oil exploration/production and economic growth in urban agglomerations), the empirical strategy will deal with the main empirical research challenge in the literature; empirical identification of causal effects.

The novelty of our empirical approach liesin the use of the spatial dimension, connecting data on forest cover, economic activity (for example, nighttime lights), and oil wells at a high spatial resolution (smaller than 1 km² pixels). The empirical research will use Brazilian data.

The research project will generate research papers within the areas of:

• structural change and deforestation;
• urbanisation and deforestation;
• political institutions and deforestation.

Given the potential importance of climate change and the significant contribution of tropical deforestation, policy efforts and substantial funds are currently mobilised to reduce tropical deforestation.

Our research will be informative for policy by highlighting the key trade-offs involved in preserving tropical forest and how such trade-offs depend on the economics of other sectors.