Alexander Pfaff, Suzi Kerr, Romina Cavatassi, Benjamin Davis, Leslie Lipper, G. Arturo Sanchez-Azofeifa, J. Timmins
Economics of poverty, environment and natural resource use (chapter 6).

PDF link iconWe review many theoretical predictions that link poverty to deforestation and then examine poverty’s net impact empirically using multiple observations of all of Costa Rica after 1960. Countrywide disaggregate (district-level) data facilitate analysis of both poverty’s location and its impact on forest. If the characteristics of the places the poor live are not controlled for, then poverty’s impact is confounded with differences between poorer and less poor areas and we find no significant effect of poverty. Using our data over space and time to control for effects of locations’ differing characteristics, we find that the poorer are on land whose relative quality discourages forest clearing, such that with these controls the poorer areas are cleared more. The latter result suggests that poverty reduction aids the forest. For the poorest areas, this result is weaker but another effect is found: deforestation responds less to productivity, i.e., the poorest have less ability to expand or to reduce given land quality.