What does gold do to green forests?

Deforestation in tropical areas accounts for up to 12 per cent of human CO2 emissions. Researchers at NHH are trying to understand the correlations between economic development and deforestation.

11.05.2015 - Text: Olav Slettebe.

Thorfinn Harding is one of the researchers behind the new project "Tropical Deforestation and Economic Development" - a joint project between researchers from NHH, Oxford and several other recognised institutions.

The research group is concentrating on the Amazonian rainforest in Brazil, an area larger than Western Europe.

Deforestation of the Amazonian rainforest has led to large CO2 emissions over the last 25 years, but Brazil has experienced rapid economic growth in recent years and has reduced deforestation significantly since 2005.

Opposing forces

With a background from Statistics Norway and Oxford, Harding has been an associate professor at NHH since 2014. He believes an economic approach is well suited to understanding deforestation, but points out that it is not obvious how deforestation and economic growth are related.

"Imagine a city near the rainforest experiencing growth. It could mean that people formerly engaged in agriculture in the forest areas get jobs in the service sector. This suggests that good economic development can reduce deforestation. But other forces pull in the opposite direction. For example, growth will result in a higher demand for timber products, food and fuel, which can increase the felling of trees. Which effect dominates is not a trivial question", he says.

Investigating oil exploration

The group is currently working on two projects. The first deals with how effective government regulations have been. The regulations involve protection of vast areas, increased monitoring and control of the rainforest as well as money transfer programmes, which basically mean paying landowners not to fell forests.

"We want to understand what these measures have meant for deforestation. Eventually, we can also see how they have influenced, for example, the welfare level. There is also a cost side to this", says Harding.

The second project deals with the effects of oil exploration in Amazonia. Harding has many questions he wants answered in this respect.

"Many oil wells are located along the Amazon River. What direct impact do they have? How much forest has to be removed in order to explore for oil, or can the developers manage if they remove only small amounts? The indirect effects of oil drilling are also significant", says Harding.

Biological expertise

The research group is not made up purely of economists; the team also includes biologist Liana Anderson from Brazil, who works with "remote sensing". Briefly, this is about how to convert a satellite image into data.

Harding believes it is crucial to have someone who knows the data well, and mentions one of the questions that have cropped up:

"There is a difference between the primary forest, which absorbs most CO2, and newly planted forest, which from an environmental perspective is not as attractive. It is not always easy to distinguish between them on a satellite photo. For us it is very helpful to have someone who really understands the data quality", he says.

Growth and heat

The discussion about global warming has often been presented as a trade-off between what is good for economic growth, and what is good for the planet. Here it is implied that it is difficult to achieve both. Harding believes it is not as cur and dry as all that.

"By way of an illustration, let us look at Brazil in the last ten years. The country has experienced an economic boom, but has also managed to reduce deforestation considerably. In recent years, growth has levelled off, while deforestation is on the rise. This proves nothing, of course, but it is an interesting observation. Our job, as economists, is to find out how different mechanisms impact deforestation. A great deal of research has been carried out on this, but we believe there is still much to learn", says Harding.

Read about the project Deforestation and economic development