Impact of agricultural employment, gross domestic product, informal economy, institutional quality on forest cover in Ecuador

Abstract

Protecting watersheds and conserving life in terrestrial ecosystems is associated with the presence of native forests. Forest conservation is an urgent environmental objective that promotes countries' sustainable development. This study empirically examines the impact of agricultural employment, Gross Domestic Product per capita, the informal economy, and institutional quality on forest cover in Ecuador. The research covers the period from 1990 to 2022. We employ advanced time series data techniques, which can accommodate time and frequency to determine the trajectory of forest cover. We provide robust empirical evidence demonstrating that agricultural employment, Gross Domestic Product per capita, the informal economy, institutional quality, and forest cover cointegrate when structural breaks, time, and frequency are considered. In the long term, agricultural employment and institutional quality have a positive impact on forest cover, whereas Gross Domestic Product per capita and the informal economy have a negative impact. Furthermore, agricultural employment and institutional quality have a Fourier causality relationship with forest cover. Environmental policymakers in Ecuador should encourage the regulation of informal economic activities and actively promote forest conservation.