| Motivated by the assumption that commercial logging catalyzes the deforestation process, the trade in forest products, foreign assets, and stress from foreign debt are evaluated for depleting influences on tropical forest stocks. A conceptual optimal control model incorporating an endogenous forest clearing function, foreign capital, and a unique measure of financial distress is solved to evaluate influences on tropical deforestation. The results underscore the importance of foreign capital, foreign debt, and the forest product trade in conditionally depleting forest stock.;A simultaneous equation time series model, conditioned on estimation of an index of financial distress from foreign debt, is developed to assess forest product trade and economic influences on the forest area industrially logged. The model is estimated for Ghana over 1967-1994. The FS index accounts for four different determinants of financial distress: profitability, import availability, debt ratio, and the debt service ratio. It is introduced in the simultaneous forest clearing model as a shifter via the income effect.;The empirical results support the hypothesis that the international trade in forest products has depleting influences on Ghanaian forest area industrially logged. Moreover, the marginal influence of total foreign reserves on the forest area cleared is positive, indicating a role for traded forest goods in generating foreign capital. Ghanaian domestic policy reform, real exchange rate depreciation, and relative wood price increase pressure on commercial forest area, while a ban on log exports reduces pressure on forest stock. Surprisingly, increasing distress from foreign debt appears to reduce pressure on Ghana's forest stock; however, the significance of the associated negative sign is minimized due to an exceedingly small elasticity of forest area industrially logged with respect to financial distress.;The implications of the research are: (i) foreign capital is needed to finance economic progress, (ii) unless other resource-using economic alternatives are found, tropical forest countries will continue to liquidate forest resources to generate foreign capital, and (iii) the global public good nature of tropical forests is endangered if alternative sources of capital financing are scarce. |
