The Kyoto Protocol and forests: Implications for sustainable development

Abstract

This study examines the influences of the Kyoto Protocol of 2005 on forestation using panel data for 163 countries from 1990 to 2020. A difference-in-differences (DID) research design is applied to estimate the effects of the protocol on forestation outcomes, measured by forest area and forest rents. On average, the Kyoto Protocol increases forest area by about 2.3% over the pre-Kyoto average. There is also a decrease in the economic exploitation of forests as the protocol is associated with about a one-third reduction in forest rent values on average. To address threats of identification in standard two-way fixed effects, we complement the estimates with alternative estimators, including synthetic and heterogeneous DID estimators developed by de Chaisemartin and D’Haultfœuille (Rev Econ Stat 1–45, 2024) and DID estimates with multiple treatment timings developed by Callaway and Sant’Anna (J Econ 225(2):200–230, 2021). Robustness checks using equivalence and placebo tests further validate the model specification.