Global politics, economic policy, and environmental concerns clash in the world’s greatest rainforests. The BSE working paper “To Cut or not to Cut: Deforestation Policy under the Shadow of Foreign Influence,” by Toke S. Aidt, Facundo Albornoz, and Esther Hauk, sheds light on how foreign powers shape the forest preservation policies of countries with significant rainforests. The study presents a game-theoretical model that analyzes the intricate dynamics between domestic politics, international relations, and environmental conservation.

The Amazon rainforest has been shrinking at an alarming rate. Between 2002 and 2024, Brazil lost between 1 million and 1.5 million hectares of primary Amazon rainforest annually. While logging plays a role, the primary cause is the clearing of land for crops and cattle ranching. This deforestation has far-reaching consequences, affecting global climate patterns and biodiversity.

The paper’s central premise is that deforestation policies in countries like Brazil are not solely determined by domestic factors. Instead, they are heavily influenced by the competing interests of foreign powers. On one side are nations and entities advocating for forest preservation due to its crucial role in combating climate change and preserving biodiversity. On the other are countries, particularly China, seeking to secure their food supply by outsourcing their cereals, rice, soybeans, and beef production to countries like Brazil, Argentina, or Thailand. China’s growing appetite for soybeans and beef has been a significant driver of deforestation in Brazil. Facing the challenge of feeding its burgeoning urban population with limited domestic agricultural land, China has increasingly looked to countries like Brazil to meet its food security needs. This demand has led to the conversion of vast swathes of rainforest into farmland and pastures.

In order to understand these complex interactions, the authors introduce a political economy model with three key players: the target country (T) with significant rainforest and two foreign powers (C and E) with conflicting interests. Country C seeks to influence T to adopt lax forest regulations, facilitating agricultural expansion to secure its food supply. In contrast, country E advocates for stricter forest protection policies, valuing the global eco-services provided by the rainforest.

The model yields several intriguing insights into the factors influencing deforestation policies:

• Trade Wars and Deforestation: The study suggests that trade conflicts between major powers can have unexpected consequences for rainforests. When a country like China faces trade restrictions from traditional agricultural suppliers (e.g., the US), it intensifies efforts to secure alternative sources. This can lead to increased pressure on countries like Brazil to convert forests into farmland. The authors point to the 2018 US-China trade war as an example, which coincided with a significant uptick in Brazilian deforestation.

The graph above illustrates the sharp increase in both deforestation and agricultural land use in Brazil from 2018 onwards, coinciding with the US-China trade war and Bolsonaro’s presidency.

• Domestic Politics and Foreign Influence: The political leanings of the target country’s government play a crucial role in determining forest policies. A government more aligned with agricultural interests is likely to implement laxer regulations, leading to increased deforestation. However, the model suggests that foreign influence can sometimes moderate these effects. For instance, when a pro-agriculture government comes to power, foreign powers advocating for forest preservation might intensify their efforts to counterbalance the shift.
  
• World Market Price Fluctuations: The model predicts that higher world market prices for agricultural products can lead to increased deforestation. As prices rise, there’s more incentive for both domestic farmers and foreign-backed agricultural interests to expand production, putting pressure on forest lands. This finding aligns with empirical evidence from Brazil, where periods of high soy and beef prices have corresponded with accelerated deforestation rates. Importantly, however, competition between the two foreign powers for influence over the target country’s forest regulation policy serves as an “automatic forest stabilizer,” in the sense that, due to the foreign influence, the effect of fluctuations in world market prices on deforestation rates is dampened.
  
• Geopolitical Alignment and Isolationism: The effectiveness of foreign influence depends on the target country’s geopolitical stance. A more isolationist government might be less susceptible to foreign pressure, potentially leading to stricter forest regulations. However, this effect is nuanced and depends on which foreign power the target country is more aligned with. If a less isolationist government aligns more closely with agricultural interests, it could result in policies favoring deforestation.
  
• International Environmental Awareness: The model suggests that increasing global environmental consciousness can lead to stricter forest protection policies. Foreign powers advocating for conservation may intensify their efforts as awareness grows, potentially counterbalancing pro-deforestation pressures.

The paper’s findings have significant implications for international environmental policy. They suggest that efforts to combat deforestation must consider not only domestic factors but also the complex web of international influences at play. Traditional approaches focusing solely on domestic policy or bilateral agreements may fall short of addressing the global nature of the problem: geo-political factors must be taken into account. Moreover, the study highlights the potential unintended consequences of international events seemingly unrelated to environmental issues. Trade wars, shifts in global food demand, and changing geopolitical alignments can all profoundly impact the world’s forests.

The complex interplay between economic interests, political ideologies, and environmental concerns underscores the need for nuanced approaches to managing and preserving the world’s vital forest resources and highlights the importance of taking foreign influence activities into account. For policymakers and environmental advocates, the findings underscore the need for a more holistic approach to forest conservation, such as developing international mechanisms to prevent shifts in global demand leading to deforestation or increasing efforts to raise international environmental awareness.