Do Trees Grow with the Economy? A Spatial Analysis of the Determinants of Forest Cover Change in Sichuan, China

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This paper aims to identify the relationship between economic growth and forest cover change in Sichuan, China. Using a set of panel land use data based on Landsat TM/ETM digital images, we show that during the late 1980s and 1990s, Sichuan's forest cover initially decreased and then rose. We also note that the rising and falling trends occurred at the same time that Sichuan's economy was going through a period of rapid and sustained growth. We use multivariate analysis to identify the determinants of forest cover change. In addition to using a first-differenced estimator, we also utilize spatial error and spatial lag models to obtain consistent and efficient estimates of the determinants of forest cover. Our analysis demonstrates the importance of economic growth on the forest cover change; the results show that there is a U-shaped relationship between forest cover and GDP per capita. However, despite the nature of the empirical relationship between forest cover and income, the high turning point of the U-shaped relationship suggests that there is no evidence for the existence of the Environmental Kuznets Curve for forests in Sichuan Province. Hence, policy interventions may be necessary to stop the decrease of forests. © 2011 Springer Science+Business Media B.V.

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Environmental and Resource Economics