Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315257 
Year of Publication: 
2024
Citation: 
[Journal:] Environmental and Resource Economics [ISSN:] 1573-1502 [Volume:] 87 [Issue:] 10 [Publisher:] Springer Netherlands [Place:] Dordrecht [Year:] 2024 [Pages:] 2795-2831
Publisher: 
Springer Netherlands, Dordrecht
Abstract: 
This paper investigates the impact of trade-related illicit financial flows (IFFs) on tropical deforestation. To adjust for pre-exposure differences in deforestation rates between countries exposed to IFFs and their counterfactuals, this study adopts propensity score matching and doubly robust weighted regression estimators. The results suggest substantial increases in forest loss in countries exposed to large IFFs. Specifically, the treated countries exposed to IFFs experience an annual increase in forest loss of approximately 10,344.167 hectares compared to their counterfactual controls. This finding  is largely driven by macro-financial instability resulting from real currency depreciation and tax revenue losses due  to illicit financial outflows.  The results highlight the merit of capital controls and state ownership of assets in mitigating the impact of exposure to IFFs on forest loss.
Subjects: 
Illicit financial flows
Deforestation
Forest cover loss
Tropical countries
JEL: 
F2
F4
O13
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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