2017 Climate and Environment Other

The Impact of Foreign Aid on Local Deforestation

Nicklas Nordfors

The aim of the thesis is to answer the question: does foreign aid have an impact on local environmental degradation, specifically deforestation, in recipient countries?

The study link geocoded data on aid projects in Uganda to high resolution satellite data on deforestation over the time periods 2000 to 2014, creating a unique panel data set over deforestation.

Main findings

  • The study find that aid projects do have an impact on local deforestation in recipient countries.
  • The results from the main regressions show that the estimated impact of experiencing at least on aid project is negative with respect to deforestation, meaning that foreign aid decreases the rate of local deforestation.
  • Sub-sample estimations by the four larger administrative regions reveal an interesting pattern, where the Central and Western regions, roughly corresponding to the southern half of Uganda, appear to be driving the results.

Nicklas Nordfors, Master’s Student, Department of Economics, Stockholm University