Effect of Deforestation on Climate Change: A Co-Integration and Causality Approach with Time Series

Abstract

Climate change is one of the greatest threats of the 21st century due to its global economic, social, and environmental causes and consequences, which affect developing countries to a greater extent. It is worrying that climate models project a temperature increase of more than 2 °C if the current trend in emissions continues, so it is necessary to progressively reduce the annual flow of emissions from approximately seven tons to two tons per capita in the next 40 years. In this sense, this research is aimed at evaluating the effect of deforestation on climate change in Ecuador between 1990–2020, based on data from the Food and Agriculture Organization of the United Nations, for which control variables were added (livestock and agriculture). The Johansen co-integration test, a VAR Model, a VEC Model, and Granger causality were estimated to examine the short-term and long-term relationships and the direction of causality of the variables. The results showed that deforestation does not directly affect climate change; however, it does so indirectly as the existence of a short- and long-term relationship between the variables included in the model was determined. In addition, a causal relationship was determined that goes from agriculture to deforestation and in conjunction with livestock and climate change. It is worrying that variations in climate change occur in the short term because it is in danger to comply with the objectives proposed at the global level regarding climate change. Finally, intensive reforestation is recommended in conjunction with public and educational institutions, as well as the implementation of green buildings. In addition to this, government support in terms of credits, subsidies, training, and technology allow the emission of polluting gases to be reduced as much as possible.