Time Series Analysis of Economic Factors Influencing Deforestation in Tanzania

Abstract

Climate change is a significant contributor to environmental harm and the rise in Atmospheric carbon dioxide, which raises the earth’s surface temperature. As forests are the primary mechanism for absorbing carbon dioxide gas and protecting the earth from global warming and unpredictable weather patterns, a high rate of deforestation is to blame for this. In this study, the economic drivers causing deforestation in Tanzania include per capita income, per capita purchasing power, inflation rate, per capita purchasing power, poverty rate, and electricity consumption are investigated. Autoregressive models with exogenous variables (VARX (1) – VARX (3)) models are formulated to analyze the effect of economic variables and forecast the rate of deforestation in Tanzania. The time series data used from 1994 to 2014 were collected in Tanzania, nature of the data suggests the increase in the rate of deforestation as time progresses. In this study, the best model VARX (3, 0) was obtained, and the relationship between the variables through granger causality was obtained. Also, forecasting was carried out for the next 10 years using the best model VARX (3, 0) and Kalman Filters. It was observed that economic variables, especially the poverty rate, have an impact on the rate of deforestation in Tanzania. Furthermore, the graph shows the increasing trend in the rate of deforestation in the coming years in Tanzania.