Coronavirus, macroeconomy, and forests: What likely impacts?

Abstract

Much uncertainty persists about how the coronavirus (COVID-19) and its derived crisis effects will impact both the economy and forests. Here we conceptualize a recursive model where an initial COVID-19 supply-side shock hits first the Global North that, mediated by country-specific epidemic management strategies and other (fiscal, monetary, trade) policy responses feeds through to financial markets and the real economy. Analytically we distinguish two stylized scenarios: an optimistic V-shaped recovery where effective policy responses render most economic damages transitory, versus a pessimistic pathway of economic depression, where short-run pandemic impacts are dwarfed by the subsequent economic breakdown. Economic impacts are transitioned from the global North to the South through trade, tourism, remittances and investment/capital flows. As for impacts on tropical forests, we compare the effects of past economic crises to early indicators for incipient trends. We find national income and commodity price effects to be torn between three forces: a contractive-inflationary supply-side shock, deflationary pandemic demand-side effects, and expansive-inflationary monetary and fiscal policy responses. We discuss how global forest outcomes will depend on how these macroeconomic battles are resolved, but also on geographical differences in deforestation dynamics. Reviewing recent fire and deforestation alerts data, as well as annual tree-cover loss data, we find that deforestation-curbing and -enhancing factors so far just about neutralized each other. Yet, country impacts vary greatly. Changing macroeconomic scenarios, such as fading out of huge economic stimulus packages, could change the picture significantly, in line with what our model predicts.

Has global deforestation accelerated due to the COVID-19 pandemic?

“…Conversely, as shown in the time series, deforestation in Brazil annually peaks in or after the middle of the year, corresponding to the dry and burning season beginning in late June (Moutinho et al 2020 ), which could explain the differential increase found by Saavedra ( 2020 ). While our results confirm a stark increase in Brazilian deforestation alerts from 2019 to 2020, as reported by others (Daly 2020 ; Fair 2020 ; Weisse and Goldman 2021 ; Wunder et al 2021 ), we found that this increase aligned with our projection. That is, based on the historical data, this increase in deforestation was expected for the year.…”

“…Conversely, according to Kaimowitz and Wunder ( 2021 ) and Wunder et al ( 2021 ), the effects of COVID-19 in the early phases could have facilitated a decline in deforestation due to the economic recession induced by the confinement period. This idea is based on a decline in commodity demand due to the economic uncertainty faced by consumers and a dramatic fall in commodity prices between February and March 2020.…”

Forest Attendance in the Times of COVID-19—A Case Study on the Example of the Czech Republic

“…The increase in attendance in selected forests in connection with the coronavirus pandemic was confirmed in European localities by [ 28 , 29 , 32 ]. Wunder et al [ 37 ] also pointed to a change in the behaviour of visitors, when not only the time of forest visits during the day changed, but also the presence of visitors who did not visit forests at all before the COVID-19 pandemic (especially young people, people with a place of residence outside the monitored locality). This is, probably, comparable to our results, which show that the group of people who did not visit the forest at all in 2020 has significantly decreased.…”

Drivers of Spatial Heterogeneity in the Russian Forest Sector: A Multiple Factor Analysis

“…Another crucial recent trend is the supply shortage on the world timber market due to the lockdowns caused by COVID-19 [73]. High timber prices provide an opportunity to rethink the current forest policy and to strengthen the positions on the domestic and global markets.…”