Forest loss and oil drilling: a matter of governance?

In this first global analysis of the effect of oil activities on forest loss, we find vast differences across countries. We utilize a global dataset of satellite images to estimate forest loss, combined with a global database of oil exploration wells. Drilling of exploration wells in non-democratic countries are associated with the highest forest loss. To move beyond correlations, we utilize quasi-random discovery rates to identify the effect of oil activities such as extraction. We find that countries with below average measures of democracy can see significantly increased rates of deforestation for a given well. Furthermore the effects also vary by the type of company conducting the drilling. Our findings highlight that the impact of natural resource extraction on the local environment crucially depends on political institutions.

This work is part of a large project examining the relationship between economic development and tropical deforestation: Economic Development and Tropical Deforestation project

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