Trade liberalisation and global-scale forest transition

González-Val, Rafael and Pueyo, Fernando (2012): Trade liberalisation and global-scale forest transition.

Abstract

In this paper, we develop a new theoretical model that explains the forest transition not at a local, but at a worldwide level, in a trade liberalisation scenario. Our model has economic geography foundations: transport costs affect the distribution of firms between countries. We also introduce a renewable natural resource used as an input by manufacturing firms. The results reproduce forest transition behaviour but at a global scale: a decrease in transport costs has a negative effect on the worldwide stock of the natural resource in the short-term, but in the long-term this initial effect is reversed as a consequence of industrial reorganisation between countries because of the change in transport costs.

• Item Type: MPRA Paper
• Language: English
• Keywords: Forest transition; renewable resources; industrial location; geography; trade
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q23 - Forestry; F - International Economics > F1 - Trade > F18 - Trade and Environment; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation > Q20 - General

References

Ali, J., T. A. Benjaminsen, A. A. Hammad, and Ø. B. Dick, (2005). The road to deforestation: An assessment of forest loss and its causes in Basho Valley, Northern Pakistan. Global Environmental Change, 15(4): 370–380.

Andersen, L., C. Granger, E. Reis, D. Weinhold, and S. Wunder, (2002). The dynamics of deforestation and economic growth in the Brazilian Amazon. Cambridge University Press.

Baldwin, R., R. Forslid, P. Martin, G. Ottaviano, & F. Robert-Nicoud, (2003). Economic Geography and Public Policy. Princeton, NJ: Princeton University Press.

Brander, J. A., and M. S. Taylor, (1997a). International trade between consumer and conservationist countries. Resource and Energy Economics 19: 267–298.

Brander, J. A., and M. S. Taylor, (1997b). International Trade and Open-Access Renewable Resources: The Small Open Economy Case. The Canadian Journal of Economics / Revue Canadienne d'Economique, 30(3): 526–552.

Brander, J. A., and M. S. Taylor, (1998a). Open access renewable resources: Trade and trade policy in a two-country model. Journal of International Economics, 44: 181–209.

Brander, J. A., and M. S. Taylor, (1998b). The simple economics of Easter Island: a Ricardo-Malthus model of renewable resource use. American Economic Review, 88: 119–138.

Bray, D. B., and P. Klepeis, (2005). Deforestation, Forest Transitions, and Institutions for Sustainability in Southeastern Mexico, 1900–2000. Environment and History, 11: 195–223.

Brown, G. M., (2000). Renewable natural resource management and use without markets. Journal of Economic Literature, 38: 875–914.

Carr, D., (2009). Population and deforestation: why rural migration matters. Progress in Human Geography, 33(3): 355–378.

Chomitz, K., and D. Gray, (1996). Roads, Land Use, and Deforestation: A Spatial Model Applied to Belize. The World Bank Economic Review, 10(3): 487–512.

Eliasson, L., and S. J. Turnovsky, (2004). Renewable Resources in an Endogenously Growing Economy: Balanced Growth and Transitional Dynamics. Journal of Environmental Economics and Management, 48: 1018–1049.

Farley, K. A., (2010). Pathways to forest transition: Local case studies from the Ecuadorian Andes. Journal of Latin American Geography, 9(2): 7–26.

Ferreira, S., (2004). Deforestation, Openness and Property Rights. Land Economics, 80(2): 174–193.

Foster, A. D., and M. R. Rosenzweig, (2003). Economic Growth and the Rise of Forests. The Quarterly Journal of Economics, 118(2): 601–637.

Global Forest Resources Assessment (2010). Food and Agriculture Organization of the United Nations, www.fao.org/forestry/fra2010.

Jinji, N., (2006). International trade and terrestrial open-access renewable resources in a small open economy. Canadian Journal of Economics, Vol. 39(3): 790–808.

Krugman, P., (1980). Scale Economies, Product Differentiation, and the Pattern of Trade. American Economic Review, 70(5): 950–959.

Mather, A. S., (1992). The forest transition. Area, 24: 367–379.

Martin, P., and G. I. P. Ottaviano, (1999). Growing locations: industry location in a model of endogenous growth. European Economic Review 43: 281–302.

Martin, P., and G. I. P. Ottaviano, (2001). Growth and Agglomeration. International Economic Review, 42: 947–968.

Martin, P., and C. A. Rogers, (1995). Industrial location and public infrastructure. Journal of International Economics 39: 335–351.

Myllyntaus, T., and T. Mattila, (2002). Decline or increase? The standing timber stock in Finland, 1800–1997. Ecological Economics, 41: 271–288.

Pfaff, A. S. P., (1999). What Drives Deforestation in the Brazilian Amazon? Journal of Environmental Economics and Management, 37: 26–43.

Pfaff, A., (2000). From Deforestation to Reforestation in New England, USA. Included in M. Palo and H. Vanhanen, eds. Global Prospects of Deforestation and Forest Transition. United National University, World Institute for Development Economics Research (WIDER), Helsinki, Kluwer.

Pfaff, A., J. Robalino, R. Walker, S. Aldrich, M. Caldas, E. Reis, S. Perz, C. Bohrer, E. Arima, W. Laurance, and K. Kirby, (2007). Road investments, spatial spillovers, and deforestation in the Brazilian Amazon. Journal of Regional Science, 47: 109–123.

Pfaff, A. S. P., and R. Walker, (2010). Regional interdependence and forest “transitions”: Substitute deforestation limits the relevance of local reversals. Land Use Policy, 27: 119–129.

Robalino, J., and L. D. Herrera, (2009). Trade and Deforestation: A literature review. World Trade Organization, Staff Working Paper ERSD-2010-04.

Rudel, T. K., D. Bates, and R. Machinguiashi, (2002). A Tropical Forest Transition? Agricultural Change, Out-Migration, and Secondary Forests in the Ecuadorian Amazon. Annals of the Association of American Geographers, 92(1): 87–102.

Rudel, T. K., O. T. Coomes, E. Moran, F. Achard, A. Angelsen, J. Xu, and E. Lambin, (2005). Forest transitions: towards a global understanding of land use change. Global Environmental Change, 15: 23–31.

Samuelson, P., (1954). The transfer problem and transport costs, II: analysis of effects of trade impediments. Economic Journal, 64(254): 264–289.

Schaefer, M. B., (1957). Some considerations of population dynamics and economics in relation to the management of marine fisheries. Journal of the Fisheries Research Board of Canada, 14: 635–647.

Weinhold, D., and E. Reis, (2004). Land use and transportation costs in the Brazilian Amazon. University of Wisconsin Madison Department of Agricultural and Applied Economics Staff Paper Number 467.