Alleviating energy poverty for forest conservation: It seems to work, but what are we missing?

Abstract

The literature mostly agrees that alleviating energy poverty can protect forests. This study nevertheless shows a conundrum, in that the policy of energy poverty alleviation may cause deforestation and forest rents after a threshold. Specifically, the impacts on forest area and forest rents of four proxies of energy poverty (i.e. access to clean fuels and technologies for cooking, access to electricity, and electricity consumption) are analysed using a global sample of 74 developing countries from 2002 to 2016. Several estimates for panel data are applied, providing robust and consistent findings. Energy poverty alleviation and forest area appear to have mutual causalities, while energy poverty alleviation appears to have unidirectional causality on forest rents. There is no evidence of the Environmental Kuznets Curve for deforestation, but economic development appears to increase forest area and reduce forest rents. Notably, the analysis shows that the alleviation of energy poverty appears to have inverted U-shaped effects on forest area, and U-shaped effects on forest rents. The results mean that energy poverty alleviation seems to cause a reduction in deforestation and forest rents until a threshold, and from that tipping point, energy prosperity likely increases deforestation and forest rents in developing countries. The findings are discussed along with important policy implications.