The appropriateness of CGE modelling in analysing the problem of deforestation

Abstract

Purpose – The paper reviews recent developments in utilising computable general equilibrium (CGE) models to analyse forestry policies. The paper highlights the application of CGE modelling to deforestation and forestry issues. Design/methodology/approach – The analysis is carried out by comparing different CGE models available in the literature, which have analysed the economic consequences of deforestation and changes in forestry policies. Findings – The use of CGE models in analysing forestry issues is still in its early stages. There is room for innovation and improvement in the various models used. Practical implications – The paper emphasises the relevance of general equilibrium analysis in the evaluation of both micro- and macro-economic policies on forestry. It encourages researchers to use general equilibrium analysis in their study of environmental problems. Originality/value – The paper highlights the contribution and possible benefits of utilising CGE models in analysing environmental problems such as deforestation, especially in the context of environment-economics trade-off.