Does economic performance matter for forest conversion in Congo Basin tropical forests?FMOLS-DOLS approaches

Abstract

Deforestation through forest conversion is a significant threat to the environment that leads to biodiversity loss, land degradation, soil erosion, and climate change. We add to the literature by analyzing the aggregated (with the basic model estimated using GDP as a proxy for economic activity) and disaggregated (with the extended models using agriculture and mining as proxies for economic activities) effects of economic performance on deforestation in the Congo Basin, which is the world's second-largest contiguous block of tropical forest that has experienced an increase in deforestation in recent years. To solve the problems of small sample bias and series correlation, forest conversion data are explained using FMOLS-DOLS estimators with data from 1990 to 2020. The results show an inverted U-shaped pattern when mining and agriculture are considered indicators for economic activities while a U-shaped relationship when GDP is used as a proxy for economic activities. We also found that population, openness, forest rents, and institutions were significant determinants of deforestation in the Congo Basin. Hence, we suggested that deforestation rates can be reduced by enhanced educational attainment in collaboration with agricultural and mining technology improvement while strengthening governance will curtail deforestation and pave the way for sustainable exploitation of forest resources.