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Journal Articles Economic Modelling Year : 2018

Public spending, credit and natural capital : Does access to capital foster deforestation?

Abstract

Improving access to man-made capital through domestic credit and public spending is a step towards development. Developing countries rely also on natural capital, which may generate possible conflicts between environment and development targets. Taking the case of land-use and deforestation, this paper revisits the links between man-made and natural capital. Relying on a model of income maximization, we theoretically assess how better access to man-made capital through public spending and credit, influences forest cover loss. Econometric investigations, over the period 2001–2012, show that forest cover loss is positively influenced by credit and public spending. A better access to capital is thus detrimental to the forest. This can be interpreted as a Tinbergen rule : the development objective of facilitating access to man-made capital cannot be tackled without facing the objective of environmental protection.
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hal-01805161 , version 1 (01-06-2018)

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Jean-Louis Combes, Philippe Delacote, Pascale Combes Motel, Thierry Urbain Yogo. Public spending, credit and natural capital : Does access to capital foster deforestation?. Economic Modelling, 2018, 73, pp.306-316. ⟨10.1016/j.econmod.2018.04.006⟩. ⟨hal-01805161⟩
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