Impact of international transfers dedicated to forest protection

indonesia timber product

Analyzing long and complex economic data set allows us to link the relation of international transfer with deforestation. A research paper reveals how international transfers dedicated to forest protection can upturn the positive link between tighter monetary policies and deforestation.

The paper was published by a french-based research center. According to the authors, most of countries covered by natural forests are developing countries, with limited ability to levy taxes and restrained access to international credit markets; consequently, they are amenable to draw heavily on two sources of government financing, namely seigniorage and deforestation revenues.

Researchers developed a theoretical model emphasizing a substitution effect between seigniorage and deforestation revenues. They also used a panel-data econometric analysis over the 1990-2010 period to confirm the findings.

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