The environmental effects of trade: timber export & deforestation in the case of ASEAN By Alounxay Naphayvong A thesis submitted for the partial fulfillment of the requirements for the degree of MASTERS OF ARTS IN INTERNATIONAL DEVELOPMENT at the INTERNATIONAL UNIVERSITY OF JAPAN 2008
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The environmental effects of trade: timber export & deforestation
in the case of ASEAN
By
Alounxay Naphayvong
A thesis submitted for the partial fulfillmentof the requirements for the degree of
MASTERS OF ARTS ININTERNATIONAL DEVELOPMENT
at the
INTERNATIONAL UNIVERSITY OF JAPAN
2008
i
The thesis of Alounxay Naphayvong is approved by the thesis examining committee.
_______________________________
Nawalage S. Cooray (Examiner)
______________________________
Yuqing Xing (Supervisor)
INTERNATIONAL UNIVERSITY OF JAPAN
2008
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ACKNOWLEDGEMENTS
I gratefully acknowledge the contributions of my supervisor, Prof. Yuqing
Xing. He has made an enormous contribution with his useful suggestions and
invaluable support throughout this study. I am also highly thankful to Prof Nawalage
S. Cooray for valuable suggestions for this thesis.
I would like express my sincere appreciation to JICA and JICE from granting
the opportunity to study in Japan under the JDS scholarship programme.
This acknowledgment would not be complete without sincere thanks to all the
students that I have met in IDP who have discussed and shared ideas with me during
my study in IUJ. Moreover, my sincere thanks go to all the Lao students who shared
their happiness, sadness and experiences with me. In addition, I would like to thank
an anonymous reviewer for all the constructive comments provided on this study.
Finally, I would like to express my gratitude to my parents and brother for their
love and encouragement throughout my life.
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Table of Contents
ACKNOWLEDGEMENTS ..................................................................................... iiTable of Contents.................................................................................................... iiiList of tables ........................................................................................................... ivABSTRACT .............................................................................................................vCHAPTER ONE: INTRODUCTION....................................................................... 1
1.1.1.2.1.3.1.4.1.5.
Scope of the Study.................................................................................... 1Research Issues ........................................................................................ 3Purpose of this study ................................................................................ 3Methodology ............................................................................................ 4Organization............................................................................................. 5
CHAPTER TWO: OVERVIEW OF ASEAN’S DEFORESTATION AND TIMBERTRADE ................................................................................................................... 6
2.1.2.2.
Overview of deforestation in Southeast Asia............................................. 6Forest productions and trade in Southeast Asia ......................................... 9
2.2.1.2.2.2.
ASEAN’s roundwood production ..................................................... 9ASEAN’s roundwood export and import......................................... 10
2.3. Deforestation policies trend in ASEAN .................................................. 12CHAPTER THREE: LITERATURE REVIEW...................................................... 16CHAPTER FOUR: DATA AND MODEL SPECIFICATION ............................... 23
4.1. Specification of variables........................................................................ 234.1.1.4.1.2.
Annual change in forest area........................................................... 23Explanatory variables...................................................................... 24
4.2. Data sources ........................................................................................... 27HAPTER FIVE: THE ECONOMETRIC MODEL AND RESULTS ...................... 29
5.1.15.1.2.
The econometric model ...................................................................... 29Results and discussion ........................................................................ 31
***Significant at 0.01 level; **Significant at 0.05 level; *Significant at 0.10 level.Standard errors are in (parenthesis)
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All coefficient independent variables in three regression methods are presented, as
well as their standard deviation and the probability estimation.
Population factor and deforestation
The results confirm that the increase in population growth is associated with
spoil of forest area. The coefficient relating population growth to forest area change
(all about1 = -0.7) shows a negative relationship and is significant at 0.01 and 0.05
level for pool regression and random effects, and fixed effects, respectively. A
negative coefficient indicates that ASEAN’s countries with high population growth
rate also have high rate of deforestation. Therefore, the study’s finding strengthens
previous studies showing that population growth is positively correlated with forest
degradation (Cropper et al 1997; Katila 1995; Kummer and Sham 1994; Panayotou
and Sungsuwan 19994). In ASEAN’s countries, population factor plays an important
role in deforestation.
Income and deforestation
GDP growth in connection with increasing natural resources consumption has
been regarded as one factor of deforestation. The results of our study indicate that the
coefficients for GDP per capita growth ( 2 = 0.059, 0.079 for pool regression and
random effects, and fixed effects, respectively) are positive and significant at the
0.05 level. A positive correlation implies that an increasing GDP growth is
associated with decreasing deforestation. According to Palo and Lehto (1996), higher
income in Latin America countries is significantly associated with lower
deforestation. Our result confirms this study. Our finding, however, is different from
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Capistrano's results (1990) that state that higher income is associated with more
forest and agriculture products, resulting in greater loss of forest area.
Roundwood export and deforestation
The regression results find an inverse relationship between Roundwood
exports and annual change in forest area suggesting that increasing forest products
exports increase annual change of forest area, by declining deforestation rate. The
most important finding is that roundwood exports in ASEAN’s countries were not
significantly correlated to deforestation. As mentioned earlier, this result may be due
to the fact that roudwood exports contributed to a small among of forest production
in the case of ASEAN countries during the 1990 to 2005 period. Therefore, this
multi-country regression suggests that in Southeast Asia roundwood export may not
be an important reason for the decline in forest cover. This finding is consistent with
the finding by Rudel (1989) that there is no effect of timber exports on deforestation
in national country regression models. Rudel suggested that agricultural and timber
export were not associated with increasing deforestation. The demand for timber did
not account also for a large amount of deforestation in Africa and Latin American.
Agriculture land and production, and deforestation
The coefficients in the agriculture land and production are statistically
significant at 0.05 and 0.1 levels, respectively. But they were not found significant
when the fixed effects method was used. In line with this study model, higher levels
of agriculture land and production are related with an increased the loss of forest
area, thereby with higher deforestation. This finding is consistent with most previous
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results that showed that agriculture land and production imply an expansion of land
for crop use. Increasing agriculture land leads to an increase in deforestation (Kant
and Redantz 1997; Mainardi 1996). Higher food production is associated with lower
loss in forest area (Bergess 1991; Palo et al 1987). According to our results, a 1%
increase in agriculture production decreased forest area by 0.015%. And a 1 million
hectares increase in agriculture land led to an increase deforestation by 0.0585%.
Protected area and deforestation
Government policy and restriction leading to an expansion of protected area
has been considered as one major contributor to the growth of forest area. Higher
protected area is associated with lower deforestation. However, the coefficient of
protected area ( 2 = 0.059, 0.079 for pool regression and random effects, and fixed
effects, respectively), although positive as expected, is not statistically significant.
This implies that there is no correlation between deforestation and protected area in
the case of Southeast Asia. This supports the argument that protection area might be
ineffective regarding protected area management. In fact, illegal logging is known to
take place in protected area because of poor law enforcement (Najam et al 2007).
Croper et al (1997) have shown that protected forest area did not decrease the chance
of forest decline in Thailand.
Hausman test
This study has used panel data regressions to build a multi-country
deforestation model for developing countries. Fixed effects and random effects were
employed to estimate cross-section data from 1990 to 2005. In the case of
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correlation, a fixed effect estimation is necessary when there is a risk of bias due to
omitted variables. In contrast, in case there is no correlation, the random effects
method is appropriate (Greene, 1997). When there is a need to choose between the
random effects and the fixed effects approaches under panel data estimation, the
Hausman technique is employed.
the Hausman test provided Prob>chi2 = 0.9904. According to Stock and
Watson (2003), when there is an insignificant P-value, which is defined as Prob>chi2
greater than 0.05, using the random effects method is appropriate. But, when the P-
value is significant, the random effects method should be preferred to the fixed
effects method. Therefore, the random effect is the preferred approach to produce
estimates in the panel data regressions.
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CHAPTER SIX
CONCLUSION
This work used a quantitative model to study the effect of GDP per capita
growth, population growth, agricultural land change and production in forest
products, on deforestation, across ASEAN countries over the 1990 –2005 period of
time. Results from regression suggest that population growth, agricultural land use
and agricultural production directly aggravate deforestation. However, timber export
is not likely to influence deforestation. Also, protected area change tends not to
hamper loss of forest area.
A panel-data analysis for Southeast Asia countries, excluding Singapore,
showed that the random effects method is appropriate to study deforestation in
ASEAN. The conclusions from this study are that population growth, agricultural
land use and production can influence deforestation. These results are consistent with
previous findings that there is a positive relationship between deforestation and
population growth, agricultural land use and production. An interesting finding of
this study was that roundwood export had no statistically influence on deforestation
for the Southeast Asia case. As discussed above, this result may be due to the size of
roundwood export in the ASEAN.
In the past 16 years, forestry policies have increased rapidly in Southeast
Asia. In fact, the increase in protected area may be regarded as a measure to counter
severe deforestation. However, protected area does not necessarily lead to reduced
deforestation. This can be explained by the fact that governments are not always able
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to enforce regulation on protected areas such as punishment for illegal logging. Thus
forestry policy needs to be strengthened in ASEAN countries.
Considering the significant effect and negative sign of the growth of GDP per
capita on deforestation as appeared in all pool regressions, fixed effects and random
effects methods, the results from this study suggest that strengthening poverty
reduction would reduce deforestation. One percent increase in GDP will reduce
deforestation by 0.06 to 0.08 percent. Thus, it might be more effective to focus
efforts on poverty reduction for controlling deforestation, rather than to limit
population growth, agricultural land use and agricultural production. Therefore, the
paper brings out a number of policy implications. The most significant is the
importance of poverty reduction in Southeast Asia countries for effective forest
conservation in long term.
It is recommended that further studies are conducted to better understand the
effect of political, institution and government policies in the field of forestry policies.
It is suggested that modeling techniques should improve in the future, as will data
quality for use in regressions on deforestation. Further models will certainly be more
appropriate to overcome the limited degrees of freedom of the regressions.
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Variable Mean SD Min Max Obs
Rate of annually change in forest area -0.807 1.266 -3.196 2.522 135
Population growth 1.893 0.645 0.7 3.526 135
GDP per capita growth 3.539 3.888 -14.238 12.467 134Roundwood export 1.194 3.184 0 19.511 144
Agriculture production index 90.298 21.040 33 142.8 144
Agriculture land 12.148 12.712 0.013 47.8 144Protected area 8.211 12.141 0.011 46.536 144
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APPENDICES
Appendix 1: List of countries
Brunei DarussalamCambodiaIndonesiaLao PDRMalaysiaMyanmarPhilippinesThailandViet Nam