From Dutch disease to deforestation - a macroeconomic link? A case study from Ecuador | Land Portal

Resource information

Date of publication: 
January 1997
Resource Language: 
ISBN / Resource ID: 
eldis:A26284

In the literature about macroeconomics and deforestation, it is often supposed that strong foreign exchange outflows (e.g. debt service) increase deforestation, as higher poverty augments frontier migration and natural resources are squeezed to generate export revenues. This paper analyses the opposite phenomenon, i.e. the deforestation impact of substantial foreign exchange inflows, which is analysed in the "Dutch Disease" macroeconomics literature. This framework is applied to Ecuador, which from 1974 to 1982 faced a foreign exchange boom from oil exports and foreign borrowing, and then compared to the somewhat scattered data on Ecuadorean deforestation. The results do not support the initial hypothesis of 'more foreign exchange - less deforestation'; it is more likely that deforestation increased during the boom. Oil production facilitated new colonization; road construction programmes heavily spurred deforestation; soaring budgets of development agencies facilitated cattle expansion. Factors that worked in the opposite direction (such as higher rural-urban migration, competitiveness loss in
land-extensive agriculture, and more money available for forest conservation) were insufficient to reverse the picture. As an overall conclusion, the Ecuadorean case reveals a complexity of links from macroeconomics to sectoral growth and deforestation, in particular because of the catalytical role of economic policies: With the Ecuadorean state's explicit strategy of infrastructural and agricultural expansion financed by oil revenues, the boom could not possibly lead to reduced deforestation. This implies that no easy conclusions can be drawn from the external and macroeconomic framework to deforestation: Much depends on the specific sectoral structure and on domestic policy responses. [Author's abstract]Also available in WordPerfect 6.1 for Windows 3.x format

Authors and Publishers

Author(s), editor(s), contributor(s): 

Sven Wunder

Publisher(s): 

DIIS is an independent research institution for international studies, financed primarily by the Danish state. We conduct and communicate multidisciplinary research on globalisation, security, development and foreign policy and within these areas we aim to be agenda-setting in research, policy and public debate. DIIS participates in academic networks and publish in high-ranking academic journals, always striving to excel in academic scholarship. We continuously assess Denmark's foreign and political situation and inform the Danish media, politicians and the public about our work.

Data provider

eldis (ELDIS)

Eldis is an online information service providing free access to relevant, up-to-date and diverse research on international development issues. The database includes over 40,000 summaries and provides free links to full-text research and policy documents from over 8,000 publishers. Each document is selected by members of our editorial team.


Share this page