Deforestation and Debt. It has been theorized that developing countries cut down

Question

Deforestation and Debt. It has been theorized that developing countries cut down their forests to pay off foreign debt. Two researchers examined this belief using data from 11 Latin American nations. (Data from R. T. Gullison and E. C. Losos, "The Role of Foreign Debt in Deforestation in Latin America," Conservation Biology 7(1) (1993): 140-7.) The data on debt, deforestation, and population appear in Display 11.22. Does the evidence significantly support the theory that debt causes deforestation? Does debt exert any effect after the effect of population on deforestation is accounted for? Describe the effect of debt, after accounting for population. DISPLAY 1122 Foreign debt, annual deforestation area, and population for 11 Latin American countri Debt Deforestation Population Countr (millions of dollars) (thousands of hectares (thousands of people Brazil Mexico Ecuador Colombia Venezuela Peru Nicaragua Argentina Bolivia Paraguay Costa Rica 86,396 79,613 6,990 10,101 24,870 10,707 3,985 36,664 3,810 1,479 3,413 12,150 2,680 1,557 1,500 1,430 ,250 550 400 300 250 90 128,425.0 74,194.5 8,750.5 27,254.0 16,170.5 18,496.5 3,021.5 29,400.5 5,970.5 3,424.5 2,439.5

Explanation / Answer

#### By using R

> Debt=c(86393,79613,6990,10101,24870,10707,3985,36664,3810,1479,3413)
> Debt
[1] 86393 79613 6990 10101 24870 10707 3985 36664 3810 1479 3413
> Deforest=c(12150,2680,1557,1500,1430,1250,550,400,300,250,90)
> Deforest
[1] 12150 2680 1557 1500 1430 1250 550 400 300 250 90
> Popl=c(128425,74194.5,8750.5,27254,16170.5,18496.5,3021.5,29400.5,5970.5,3424.5,2439.5)
> Popl
[1] 128425.0 74194.5 8750.5 27254.0 16170.5 18496.5 3021.5 29400.5
[9] 5970.5 3424.5 2439.5
> fit=lm(Deforest~Debt)
> summary(fit)

Call:
lm(formula = Deforest ~ Debt)

Residuals:
Min 1Q Median 3Q Max
-4062.7 -379.2 194.5 555.7 4827.1

Coefficients:
Estimate Std. Error t value Pr(>|t|)
(Intercept) -71.11733 914.62324 -0.078 0.93972
Debt 0.08559 0.02393 3.577 0.00596 **
---
Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 2337 on 9 degrees of freedom
Multiple R-squared: 0.5871, Adjusted R-squared: 0.5412
F-statistic: 12.8 on 1 and 9 DF, p-value: 0.005957

Here the pvalue for the debt is 0.00596 which indicates that the slope of Debt is significant in the regression model. Hence there is a sufficient evidence at 5% level of significant that debt causes Deforestation.

> fit1=lm(Deforest~Debt+Popl)
> summary(fit1)

Call:
lm(formula = Deforest ~ Debt + Popl)

Residuals:
Min 1Q Median 3Q Max
-1649.68 -498.47 -70.13 685.81 1417.98

Coefficients:
Estimate Std. Error t value Pr(>|t|)   
(Intercept) -63.2303 393.0666 -0.161 0.876188   
Debt -0.0970 0.0304 -3.191 0.012790 *  
Popl 0.1538 0.0241 6.382 0.000213 ***
---
Signif. codes: 0 ‘***’ 0.001 ‘**’ 0.01 ‘*’ 0.05 ‘.’ 0.1 ‘ ’ 1

Residual standard error: 1005 on 8 degrees of freedom
Multiple R-squared: 0.9322, Adjusted R-squared: 0.9153
F-statistic: 55.01 on 2 and 8 DF, p-value: 2.112e-05

Here the pvalue for the Population is 0.000213 which indicates that the slope of Population is significant in the regression model. Hence there is a sufficient evidence at 5% level of significant that Population has eefect on Deforestation. When Population is included in the model Pvalue for the slope of Debt 0.012790 indicates that Debt effect significantly on the Deforestation.

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