Deforestation and the Environmental Kuznets Curve in Developing Countries: A Panel Smooth Transition Regression Approach

Abstract

Deforestation is a serious environmental problem in many developing countries. This study re-examines whether the Environmental Kuznets Curve (EKC) relationship between deforestation and real income exists for 52 developing countries during the 1972-2003 period by applying the recently developed panel smooth transition regression (PSTR) model. This paper also considers the potential endogeneity biases and other explanatory variables as a robustness check of the EKC hypothesis. The empirical results indicate the existence of a strong threshold effect between deforestation and real income, and that evidence of the EKC hypothesis for deforestation is apparent. Along with an increase in real income, deforestation increases initially, and after reaching certain income levels, deforestation drops. The turning points are US$3,021 and US$3,103, which the PSTR model endogenously determines. La déforestation constitue un problème environnemental préoccupant dans de nombreux pays en développement. Dans le présent article, nous avons tenté d'établir s'il existe ou non une relation en U inversé (courbe de Kuznets) entre la déforestation et le revenu réel, en appliquant la nouvelle méthode d'estimation d'effets de seuil avec transition lisse en panel (PSTR)à unéchantillon de 52 pays en développement au cours de la période de 1972à 2003. Nous avonségalement examiné les biais endogènes possibles et d'autres variables explicatives pour vérifier la robustesse de l'hypothèse de Kuznets. Les résultats empiriques montrent qu'il existe un effet de seuil robuste entre la déforestation et le revenu réel, et que l'évidence de l'hypothèse de Kuznets dans le cas de la déforestation est apparente. Lorsque le revenu réel augmente, la déforestation augmente aussi, mais lorsque le revenu atteint certains niveaux, la déforestation diminue. Les points de retournement sont de 3021$US et de 3103$US, ce que la méthode PSTR a déterminé de manière endogène.

An empirical analysis of forest transition and land-use change in developing countries

“…Until now, the wide empirical macroeconomic studies on deforestation (using panel data on deforestation at a country level, provided by FAO) have given useful results concerning the factors that account for periodic deforestation rates (annual or over a five-year period). First, the literature questioned the impact of economic development on deforestation, by investigating the existence of an Environmental Kuznets Curve for deforestation (most recently Culas (2012); Busa (2013); Chiu (2012)). Those studies bring very contrasted results, as shown in the meta-analysis by Choumert et al (2013).…”

Nonlinear Effect of Public Infrastructure on Energy Intensity in China: A Panel Smooth Transition Regression Approach

“…The PSTR model was first applied by González et al (2005) to examine the effect of capital market imperfections on investment. This methodology has been commonly used in finance [61] and recently, in energy and environmental economics [62][63][64][65]. However, the public infrastructure-energy intensity relationship has not been studied from this perspective.…”

Regional analysis of the relationship between CO<SUB align="right">2 emissions and financial development

“…On the one hand, PSTR can be thought of as a regime-switching model that allows for a small number of extreme regimes to be associated with the extreme value of a transition function and where the transition from one regime to another is smooth. Second, we follow Chiu (2012), who applied the PSTR model to examine the Environmental Kuznets Curve (EKC) for 52 developing countries from 1972 to 2003. Duarte et al (2013) also employed the PSTR model to analyse the relationship between water use per capita and income per capita of 65 countries over the period of 1962 to 2008.…”