Is there an environmental Kuznets curve for deforestation?

This paper examines the relationship between deforestation and gross domestic product (GDP) per capita; in particular, whether an inverted-U relationship (indicative of worsening then improving deforestation) exists between them. We note that previous work has used models with restrictive assumptions, and recommend a more flexible random coefficients specification which allows for a greater degree of cross-country heterogeneity. Empirical results using data for 76 developing countries between 1961–1992 suggest that the inverted-U shaped relationship observed in other studies does not appear to be an empirical regularity with our less restrictive specification. Statistical tests indicate that this specification is supported by the data. We argue that such results are not surprising in view of the wide diversity of physical and social characteristics that exist across countries.