Changing Political Regimes and Tropical Deforestation

Abstract

Expansion of agriculture is a main cause of tropical deforestation. Government policies and weak property rights contribute to this process by encouraging landowners and landless to accelerate land clearing. Using panel data common to previous studies, we add the dimension of new political regimes, democratic and non-democratic, and investigate how the rate of agricultural land expansion in tropical countries depends on the nature and persistence of each regime. We find that both new autocratic and democratic regimes have accelerated the expansion of agricultural land, thus yielding support to some of the findings in the earlier literature. Interesting differences emerge between regions, with the impact being most pronounced in Latin America. We interpret these results mainly in the context of increasing tenure and ownership insecurity, which in turn is driven by the tendency of new regimes to implement land reforms as a form of social and economic policy or voter payback. The argument is developed more formally using a simple competitive land use model that incorporates political regime dependent confiscation risk and agricultural subsidy policy.

Appendices

Appendix 1

The Bellman equation is

$$\begin{aligned} V\left( L_{a} ,\psi _{i} \right) ={\mathop {\max }_{h}} \left\{ {R\left( L_{a} ,h,\psi _{i} \right) +\beta \mathop \sum \limits _{j} p_{ij} \left[ {V\left( g\left( L_{a} ,h \right) ,\psi _{j} \right) } \right] } \right\} \end{aligned}$$

(11)

The first-order condition in regime $i$ is

$$\begin{aligned} s-k^{\prime }\left( h \right) +\beta \left[ {p_{ii} V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) +p_{ij} V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) } \right] \end{aligned}$$

(12)

where $V_{1}$ denotes the derivative of the value function with respect to the first argument. By Envelope theorem:

$$\begin{aligned} V_{1} \left( L_{a} ,\psi _{i} \right)&= -R_{f}^{\prime } \left( 1-L_{a} \right) +R_{a}^{\prime } \left( L_{a} ,\psi _{i} \right) +\beta \left[ p_{ii} V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) \right. \\&\left. +\,p_{ij} V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) \right] \end{aligned}$$

Combining the above two, we get

$$\begin{aligned} s-k^{\prime }\left( h \right) +V_{1} \left( L_{a} ,\psi _{i} \right) +R_{f}^{\prime } \left( 1-L_{a} \right) -R_{a}^{\prime } \left( L_{a} ,\psi _{i} \right) =0 \end{aligned}$$

Forwarding this by one period for regime state $i$

$$\begin{aligned} s-k^{\prime }\left( h_{i}^{+} \right) +V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) +R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) -R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) =0 \end{aligned}$$

and for regime state $j$

$$\begin{aligned} s-k^{\prime }\left( h_{j}^{+} \right) +V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) +R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) -R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) =0 \end{aligned}$$

Rearranging:

$$\begin{aligned} V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{i} \right)&= k^{\prime }\left( h_{i}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) -s-R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) \\ V_{1} \left( g\left( L_{a} ,h \right) ,\psi _{j} \right)&= k^{\prime }\left( h_{j}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) -s-R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) \end{aligned}$$

Substitute these back to the original FOC:

$$\begin{aligned}&s-k^{\prime }\left( h \right) +\beta p_{ii} \left[ {k^{\prime }\left( h_{i}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) -s-R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) } \right] \\&\quad +\,\beta p_{ij} \left[ {k^{\prime }\left( h_{j}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) -s-R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) } \right] =0 \end{aligned}$$

Rearranging:

$$\begin{aligned}&\left( 1-\beta p_{ii} -\beta p_{ij} \right) s-k^{\prime }\left( h \right) +\beta p_{ii} \left[ {k^{\prime }\left( h_{i}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) } \right] \\&\quad +\,\beta p_{ij} \left[ {k^{\prime }\left( h_{j}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) } \right] -\left( p_{ii} +p_{ij} \right) \beta R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) =0 \end{aligned}$$

Noticing that $p_{ii} +p_{ij} =1$, we get:

$$\begin{aligned}&\left( 1-\beta \right) s-k^{\prime }\left( h \right) +\beta p_{ii} \left[ {k^{\prime }\left( h_{i}^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{i} \right) } \right] \\&\quad +\,\beta p_{ij} \left[ k^{\prime }\left( h_{j}^{+}\right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi _{j} \right) \right] -\beta R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) =0 \end{aligned}$$

Finally, using the expectation operator, we can simplify the above expression to yield Eq. (6):

$$\begin{aligned} (1-\beta )s+\beta E_{i} \left[ {k^{\prime }\left( h^{+} \right) +R_{a}^{\prime } \left( g\left( L_{a} ,h \right) ,\psi \right) } \right] =k^{\prime }\left( h \right) +\beta R_{f}^{\prime } \left( 1-g\left( L_{a} ,h \right) \right) \end{aligned}$$

(13)

Appendix 2: Countries

Angola, Belize, Benin, Bolivia, Botswana, Brazil, Burkina Faso, Burundi, Cambodia, Cameroon, Central African Republic, Chad, Colombia, Comoros, Dem. Rep. Congo, Rep. Congo, Costa Rica, Cote d’Ivoire, Djibouti, Dominican Republic, Ecuador, El Salvador, Ethiopia, Fiji, Gabon, Gambia, Ghana, Guatemala, Guinea, Guyana, Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Liberia, Madagascar, Malawi, Malaysia, Mali, Mauritania, Mauritius, Mexico, Mozambique, Nicaragua, Niger, Nigeria, Panama, Papua New Guinea, Peru, Philippines, Rwanda, Senegal, Sierra Leone, Sri Lanka, Sudan, Tanzania, Thailand, Togo, Uganda, Venezuela, Vietnam, Rep. Yemen, Zambia, Zimbabwe.