Trading away forests: embodied deforestation in agriculture and livestock through a gravity model

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Abstract Global trade in agricultural and livestock commodities plays a significant role in driving deforestation, as land-use changes in producer countries often supply consumption in distant regions. Although numerous studies have quantified deforestation embodied in traded products, much less is known about the underlying economic and institutional factors that explain why some countries export or import more of it than others. This study addresses these questions by examining the determinants of embodied deforestation in international trade flows. Drawing on Factor Endowment Theory, we test whether income levels, land availability, and institutional quality influence the distribution of embodied forest loss between exporting and importing countries. Using a gravity model estimated through Poisson Pseudo Maximum Likelihood (PPML), we assess how GDP, distance, trade composition, and governance shape embodied deforestation patterns in agricultural and livestock commodities. Results highlight a prominent role of GDP per capita as a driver of deforestation: a 1% increase in per capita GDP is associated, on average, with a 0.28% decrease in deforestation embodied in exports, but with a 0.88% increase in embodied deforestation imports, reflecting an outsourcing of land-use pressures. While developing countries embody comparatively more deforestation in their exports, higher-income importing countries increasingly shift the environmental burden of their consumption to other regions through imports. Domestic consumption factors, such as higher per capita meat demand, are also positively associated with embodied deforestation inflows: a 1 kg increase in yearly meat consumption per capita is linked to a 1.8% rise in embodied deforestation inflows. Overall, the findings highlight the structural asymmetries of global trade and underscore the responsibility of affluent nations in driving deforestation beyond their borders. They also suggest that both production- and consumption-side policies are needed to mitigate embodied deforestation in high-impact commodity sectors.