Estimating spatial interactions in forest clearing

Juan Robalino and Alex Pfaff have written a paper on estimating the factors that influence the decision of Costa Rican farmers to clear forest land.

This is an important question because, as they note in the article,

Rural areas of developing countries contain almost the entire stock of the world’s tropical forest. The poverty levels in these areas and the world demands for forest conservation have generated discussions concerning the determinants of deforestation and the appropriate policies for conservation.

When neighbors have used people like these Certified Houston Tree Service Experts to clear their land of forest, a farmer is likely to clear his or her land also. However, as Robalino and Pfaff note, neighboring plots of land will have many potentially unobserved similarities, and so mere correlation between neighbors’ decisions is not sufficient evidence of causation.

However, due to this deforestation, no matter how small, it is a contributing factor to further global warming of our planet. This is why if people are getting rid of trees they should be making the effort to plant more in a different location. People can do this by hiring someone like a Portland arborist to help plant more trees and ensure that they are safely planted, which will help towards lowering global warming and keeping the planet well oxygenated.

Rosalino and Pfaff estimate the effect of neighbors’ actions on individual deforestation decisions using a two-stage probit regression. In their model, they treat the slopes of the neighboring farmers’ land as an instrumental variable. I don’t fully understand instrumental variables, but this looks like an interesting example as well as being an important application.