Is Global Deforestation under Lockdown?

Abstract

The COVID-19 pandemic and associated government responses halted economic activity across the world. The environment benefited from the reduced pollution in urban areas. However, there is no evidence on the pandemic's environmental effect away from cities, specifically on deforestation. \textit{A priori}, the effect is unclear: deforestation might decrease with the restrictions on economic activity. But it might increase, given the drying up of alternative income sources. I combine bi-weekly data from 70 countries covering the entire world's tropical forest with the dates each country introduced lockdown restrictions. Using difference-in-differences strategies, I find that the average effect of lockdowns in deforestation is not distinguishable from zero. However, the effect on deforestation does vary by the share of lockdown vulnerable GDP and the level of government effectiveness. These results highlight the importance of alternative income sources and state capacity for policies that could reduce deforestation.