Development, Trade and Resources in Asia
Chapter 4: Deforestation and Upland Land Degradation in an Open Economy: Empirical and Analytical Foundations
4.1 INTRODUCTION In Chapter 2 we discussed the general equilibrium modelling of environment, policy and development with reference to a highly abstract model of an economy subject to environmental damage. In Chapter 3 we considered some special characteristics of Asian developing countries not captured in such generic models, and ways in which these structural features might condition environmental and economic responses to policy and other changes. In this chapter we return to a formal modelling approach in order to focus on the likely eﬀects of market and policy changes aﬀecting developing Asian countries; speciﬁcally, in the ‘representative’ economies described in section 3.5. In constructing models of the representative economies we retain the emphasis on natural resource issues, primarily deforestation and land degradation (though the models can be extended with relative ease to address other environmental issues, such as industrial emissions). The focus on natural resource issues is not intended to imply that other types of environmental problems are unimportant. Rather, it is because a high degree of stylization and simpliﬁcation is necessary in order to provide a coherent yet concise problem statement for modelling purposes. The trade-oﬀ permits us to identify and explain the main economic processes, generate predictive statements, and motivate the more detailed, yet less transparent, extensions and empirical applications found in Chapters 5–8. 4.2 MODELLING TRADE AND ENVIRONMENTAL PROCESSES: STYLIZED FACTS We begin in this section with a model that can be used to explore and understand, in stylized form, environment–economy...
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