The relationship between forest restoration and economic development in Vietnam: Evidence and policy implication

1073 THE RELATIONSHIP BETWEEN FOREST RESTORATION AND ECONOMIC DEVELOPMENT IN VIETNAM: EVIDENCE AND POLICY IMPLICATION Luu Tien Dung (PhD) Lac Hong University Email: dunglt@lhu.edu.vn Tran Hoang Minh (MBA) Lac Hong University Email: minhth@lhu.edu.vn Abstract Protection, development and recovery of forest are vital strategies for developing countries to achieve sustainable development. Since the 1990s, Vietnam has been interested in restoring forests in the face of severe forest degradation. Understanding the relationship between forest cover and economic development is a challenge for researchers and policymakers in Vietnam. Based on the framework of economic theory and practice in Vietnam, the study used a multivariate linear regression model to assess the economic factors affecting forest cover. The study uses the secondary data period 1990-2017 in Vietnam. Research results confirmed: Rural population and GDP per capita (Low / High economic development level) have an impact on forest cover and these relationships following the shape of Kuznets environmental curves. Keywords: Forest degradation; Forest restoration; Economic development; The environmental Kuznets curve (EKC). 1. Introduction Belov (1976), The forest system on the earth is providing 37 billion tons of biomass (70%), its flora produces oxygen to serve for the humans, animals and insects (44% oxygen from forest trees). Each year a person needs 4.000 kilograms of oxygen to correspond with the amount of oxygen which produced by 1.000 to 3.000 square meters of trees in a year. Forests regulate the global climate by significantly reducing the heat from the sun to the earth due to the forest canopy cover is very large and more useful than types of land using, especially the very important role of forests in maintaining the carbon cycle on the earth by which it directly affects to the global climate changes. Therefore, the existence of forest ecosystems plays a significant role to against the global warming and regulate the climate. The world experience shows that the maintaining, developing and protecting forests have the relationship with 1074 economic development levels. The study focuses in: i) Theoretical and experimental basis of the relationship between forest restoration and economic development levels; ii) The Vietnam’s environmental Kuznets curves are evidence for the forest degradation with the relationship between forest degradation and the economic development levels; and iii) and policy implications for the forest development in Vietnam. 2. Theoretical and experimental basis of forest restoration and economic development Kuznets (1955) discussed: The Gini index and the economic development (GDP/person) have a relation like the U-inverted in long-term. Figure 1 show that: in the first-stage, the economic development levels are still low, the GDP per capita is increased and the Gini index is also increased. When the economic development levels will be increased, the Gini will be lowdown. Fig. 1. The Kuznets curve According to Yandle, Vijayaraghavan and Bhattarai (2002), the environmental Kuznets curve (EKC) was popularly using in the world from 1991. Fig. 2. The environmental Kuznets curve GDP/person Gini index The environment pollution GDP/person 1075 The environmental pollution status could be measured by the level of air- pollution or water-pollution. When the economic development levels are low, the GDP is high, the environmental pollution status is high; but when the economic development levels will be more increasing, the environmental pollution status will be decreased due to the technology level and high-tech products are more and more produced and replaced for traditional fuel products. Samuelson formed theoretical basis and applied the Kuznets curve into forest degradation and forest restoration. In the Figure 3a, the status of forest degradation and the economic development level had the relationship in same direction but it liked the U-shaped invertation. People used forest products in the early stages of development, but after the per capita income is increasing, forest products are replaced by some other substitutes that do not harm the forest. And, the higher growth population and agricultural expansion to result in deforestation and this trend can be stopped through a depth agricultural development and build appropriate political and social institutions (Laurance, 2007; Rudel & et al., 2005; Culas, 2007). In the rural areas of developing countries, fuel fuels, especially firewood from forests was used wisely (Balat & Ayar, 2005). As the higher income, households change from using dirty fuels to clean fuels (Alam, Sathaye, Barnes, 1998; Davis, 1998; Leach, 1992). Therefore, the using of fuel wood was assumed that it was decreased with highly increased per capita income by replacing it from alternative energy sources such as electricity and gas. The amount of wood used in furniture, buildings or construction would be reduced due to the alternative materials for wood (Barbier & et al., 2010; Forest degradation GDP/người Forest restoration GDP/person Fig. 3a. The Kuznets curve of forest degradation Fig. 3b. The Kuznets curve of forest restoration 1076 Lambin & Meyfroidt, 2010). Moreover, the governments are conducting reforestation programs and the highly increased per capita income, education and environmental awareness also will be enrich, all that will help to reduce deforestation rates. So, if selecting forest rehabilitation targets (forest coverage rate) replace forest degradation targets in the model of the U-shaped invertation, Figure 3b will the relationship between the forest restoration and the economic development like the U-shape. Shafik and Bandyopadhyay (1992), conducted an empirical research on the inverted U-shaped relationship in 1992. Koop and Tole (1999) analyzed the case of the developing nations’ forest degradation, it showed an economy with more inequality, the forest degradation would be more serious. Basing on database of 66 nations, in the period of 1962 - 1986, Winslow (2005) showed that the forest degradation had a correlative relationship with the economic development as the Kuznets curve. In Mather (2007), the Asian countries’ economic growth affected to the forest degradation. According to Bhattarai and Hammig (2001), Ewers (2006), Scrieciu (2007), the forest degradation and the economic development had a relationship in the U-shaped invertation in developing countries. Results of the Miah et al. (2011) also showed the Bangladesh’s forest degradation in a relationship with the economic development with the U-shaped invertation. To Jesús et al. (2017), found evidence that factors affected to the forest restoration, included: per capita income, per capita income with the high economic development status, the economic growth rate, percentage of rural population and the population growth rate. 3. Research model in Vietnam To base on the theories, experimental studies in the world and some evidence in Vietnam, we chose model of several following factors to affect the forest restoration status: Fig. 4. Research model FOREST RESTORATION Income/person (When the economic development levels are low.) Income/person (When the economic development levels are high.) The rural population 1077 Table 1: Variables definition in the model Order Name Definition Measurement Expecte d signs I Dependent variables FC (Rate of forest cover) Forest coverage rate Acreage of forest coverage/ acreage of natural soil (%) II Independent variables 1 YP (GDP per capita) GDP/person Price of 2010 -/+ 2 YPS (GDP per capita) square (GDP/person) square Assuming GDP/person in a high economic development level + 3 PR (Percentage of rural population) Percentage of rural population % - 4 GP (Growth of population) Growth of population % - The study used model of multivariate linear regression and database in 27 years (1990 - 2017). The database has processed from sources of General Statistics Office (1990 - 2017); World Bank (2010 - 2018); Annual reports on socio-economic situation of General Statistics Office (1990 - 2018); Some relation studies to the forest degradation in Vietnam (1990 - 2020). 4. Results and discussions 4.1. Trends of forest restoration With effective policies in protection and forest restoration by the Government of Vietnam through periods, especially the policy of greening bare land - bare hills from 1991, the forest restoration achieved amazing achievements. In the Figure 5, the year 1943, the forest coverage rate was 43%, and it was 33.6% in 1976. From 1976 to 1993, Vietnam was one of the nations has the serious forest degradation in world (the forest coverage rate was 26.1% in 1993). In the Figure 5, the line went-down with a serious slope down. From 1994 to 2017, the forest coverage rate went-up, to the year 2017, the forest coverage rate was 41%, nearly equal the year of 1943. 1078 Fig. 5. The status of forest coverage in Vietnam (1943 - 2020) Source: Authors processed from sources of General Statistics Office and some relation studies in Vietnam. When we compared the Vietnam’s forest coverage rate with some nations in the region, fig. 6 showed that in 25 years ago, Vietnam and China are increasing significantly the proportion of forest area/natural soil area, while other nations in the region, this rate slowly decreased (Indonesia, Thailand, Cambodia) and Laos, Malaysia, Philippines are going-up in the recent years. That affirmed Vietnam becomes one of the region's top countries in paying attention to economic development associated with sustainable development. Fig. 6. Trends of changing in the forest acreage rate/ the acreage of natural soil in some countries 1990 - 2015 (%) Source: World Bank (WB, 2018) 43.0 33.8 30.2 30.0 27.827.928.0 26.1 27.0 28.2 29.0 29.5 32.0 33.2 34.4 35.0 35.836.0 36.737.0 37.9 38.838.7 39.1 39.539.7 40.741.040.4 40.8 41.241.5 20.0 21.0 22.0 23.0 24.0 25.0 26.0 27.0 28.0 29.0 30.0 31.0 32.0 33.0 34.0 35.0 36.0 37.0 38.0 39.0 40.0 41.0 42.0 43.0 44.0 45.0 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Years The forest coverage rate (%) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 90.0 1985 1990 1995 2000 2005 2010 2015 2020 Years Forest area (% of land area) Vietnam Laos Malaysia Cambodia Thailand China Philipines Indonesia 1079 If we measured by the forest restoration status (100 - the forest coverage rate), the line is as U-shaped inverted of Kuznets. This shows that it was associated with the economic development achievements for over time, the forest restoration status has trends to correspond with the high level of economic development. At the Figure 7 showed that the relationship between the forest coverage rate and the Vietnam’s economic development level are U-shaped and it went-up. However, we lack of data before 1990, so the shape is not as completed as the U. Fig. 7. The relationship between the forest coverage rate and GDP per capita (1990 - 2017) Source: Authors processed from sources of General Statistics Office and some relation studies in Vietnam. 4.2. The impacts of protection policy - forest restoration Since Law on Forest protection and development was issued (National Assembly of Vietnam,1991), the forest area was increased due to zoning, to promote natural regeneration and new planting in some years ago, that’s always higher than the forest area before by legal or illegal exploitation. Policies of forest allocation (Prime Minister, 2001), Ministry of Defence coordinated with local governments to identify forest areas that are seriously deforested, especially in the central highlands, southeast and north central regions for organizing military units stationed, locked, built defense and security areas associated with forest protection, force layout, permanent means for readying to take part in anti-deforestation (Ha Cong Tuan, 2009), forest area is increased in the sustainable trend. 25.0 27.0 29.0 31.0 33.0 35.0 37.0 39.0 41.0 43.0 500 1000 1500 2000 2500 3000 GDP/person (price of 2010, 10 thousand Vietnam Dong) The forest coverage rate (%) 1080 On the basic practice of policy impacts in protecting and forest development, the study built following hypothesis: H0: There is no difference between the forest coverage rate (%) and the forest restoration and protection policies’ impact. H1: There is difference between the forest coverage rate (%) and the forest restoration and protection policies’ impact. Table 2: The definitions of the inspection model’s variables. No. Variable symbols Contents Measurement 1 PI (Policy Impact) Policy impact Yes =1; No = 0 2 FC (Forest cover) Forest coverage rate % In 1991, Law on forest protection and development was issued and some guidelines, policies were also issued. Assumption study has policy impact from 1994. Database from 1943 to 2017. According to Kendall and Stuart (1979), used t- test for independent samples is suitable. Table 3: The results of testing for independent samples. Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t df Sig. (2- tailed) Difference average Difference standard errors 95% Confidence Interval of the Difference Lower Upper The forest coverage rate (%) Assuming variance is equal. .048 .827 3.659 30 .001 6.365 1.739 2.812 9.917 Assuming variance is not equal. 3.277 12.025 .007 6.365 1.942 2.133 10.596 In the Table 3, the difference average ratio of the yearly forest coverage rate has policy impacts and was not 6.365%, estimate the confidence level: 95% is [2.8%; 9.9%]. Levene testing was 0,827 > 0,05, t-testing with the total variance was 0.01 < 0.05. Assuming H1 was suitable. So, it affirmed the Government's policies impact make sense to restore forests in Vietnam. 1081 4.3. Results of regression model The results in the Table 4 showed that GP variable impacted to FC variable did not statistically significant. The variables of YP, PR, YP square impacted to the forest coverage rate with the confidence level was over 95%. The model was tested: ANOVA, residual correlation, residual variance and R2 adjusted = 0.97 (97% change of the forest coverage rate was explained by independent variables). PR (Percentage of rural population, %) has an adverse impact to FC. When the percentage of rural population is growth, the forest coverage rate will be decreased. YP (GDP/person) has an adverse impact to FC. The more the YP’s big, the more the forest coverage rate will be decreased. YPS (YP square) has the same directional impact FC. The more the YP’s big, the more the forest coverage rate will be increased (as the economic development level is high). Table 4: Regression coefficient Unstandardized coefficients Standardized coefficients t Sig. B Standard errors Beta (Constants) 99,556 27,952 3,562 0,002 PR (Percentage of rural population, %) -1,242 0,322 -1,155 -3,859 0,001 (GP) Growth population GDP (%) -0,938 1,280 -0,031 -0,733 0,471 YP (GDP/person) -1,128 0,182 -1,695 -6,204 0,000 YP square 17,193 1,981 1,482 8,680 0,000 Dependent variable: FC (Forest coverage rate, %) ANOVA: Value F = 288,81; Sig. = 0,000. R2: 0,97; Sig. = 0,000. d (Durbin - Watson): 1,477 Spearman testing: All regression coefficients have Sig. > 0,05. The result showed that the relationship between the forest restoration status and the economic development is as the U-shaped or the relationship between the forest degradation status and the economic development is as the U-shaped invertation Kuznets. 1082 5. Policy implications The study results affirmed three problems that we must to solve basing on the relationship between the economic development and the forest restoration status, as the following: Firstly, to focus on maintaining economic growth and improve labor productivity for upgrading the economic development level (GDP/person) will be the core of maintaining forest restoration in Vietnam. Secondly, to accelerate the process of industrialization and urbanization in rural areas for decreasing the proportion of rural population will be the best method to maintain the sustainable restoration of forests. Thirdly, laws and the Government’s policies affected to the forest coverage rate. The Government should be completed forest protection and restoration policies in current conditions. Specially, attention to maintain the coordination with Ministry of Defence and the local authorities in key provinces that it has a large forest area in protection and afforestation. 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