Analysis of economic factors and policy influence on deforestation in Tanzania

This study is focused on analysis of the influence of economic factors and policy on the rate of deforestation in Tanzania over a period of twenty years from 1994 to 2014. The secondary data for the factors influencing deforestation were obtained from NBS and TFS. A multiple linear regression model was formulated and the effect of each factor on deforestation is explained. The Ordinary Least Squares method was used to estimate the model parameters. The results have revealed that per capita income over time, purchasing power over time and electricity price over time were positively correlated to deforestation, while inflation rate over time and poverty rate over time were negatively correlated. Some national policies were also found to significantly influence deforestation in Tanzania. Sensitivity analysis results suggested that deforestation was most significantly affected by changes in electricity price over time, and was likewise least sensitive to the poverty rate over time. Furthermore, per capita income over time has predictive power of 0.8601 which accounts as the most important factor in causing deforestation by . This implies that one standard deviation of per capita income will cause 0.8601 standard deviation increase in deforestation. Thus the study suggests that since economic activities increases rate of deforestation, then policy-making and decision-making should link with country’s desire for economic growth and environmental management.