International Trade and Land-Use Change

This paper measures the environmental footprint of trade-related activities that use land intensively. By combining detailed data on forest cover at the municipal level in Colombia with exports at the same level of disaggregation, the study measures the extent to which the exports of agriculture, mining, and livestock are associated with deforestation. It establishes a causal link by relying on a measure of foreign demand as a source of exogenous variation for the export variable. While exports in some sectors have led to deforestation, this effect is mitigated when production is located in protected areas, indicating that there is no linear relationship between agricultural exports and deforestation. This, in turn, suggests several areas for public policy intervention.