Democracy and deforestation: The role of spillover effects

Abstract

This paper is a replication and extension of Buitenzorgy and Mol (2011). We recreate the data and analyses from that paper on the impact of democracy on deforestation from 1990 through 2000 with great precision before extending the data set and analyses to include the period from 2000 through 2010. We find that the original results of Buitenzorgy and Mol (2011) were spurious and inconsistent in the replication once heteroskedasticity robust standard errors were employed. When combining the two time periods and running analyses on panel data and differenced data for robust outcomes and better policy inferences, we find different results for the effect of democracy on deforestation, indicating that model specification is critical to studying this relationship. The more econometrically sound method, the differenced models, reject the Environmental Kuznet's Curve (EKC) hypothesis for democracy and deforestation, instead indicating that democracy decreased deforestation rates. When adding democracy spillover effects to the model, i.e., the impact on deforestation rates due to changes in democracy levels in neighboring countries, we still find that democracy leads to decreased rates of deforestation. We also find that having more democratic neighbors leads to further decreases in democracy. These outcomes have far-reaching implications for the blocs examined, which are highlighted in this study.