Spatial spillovers and the relationship between deforestation and malaria: Evidence from the Peruvian Amazon

Of all forest species that transmit disease to humans, mosquitoes are considered the most responsive to ecosystem changes caused by deforestation. This study examines the relationship between deforestation and malaria cases in the Peruvian Amazon region while addressing spatial interdependence among districts by using a Spatial Durbin Model. Our primary results suggest that the total effect of a decline of 1,000 hectares of forest cover is associated with an additional 69 malaria cases. The spatial model allows us to further determine that both direct and spillover effects are positive. Following the Avoided Cost approach in Barbier et al., we estimate that the cost of the additional malaria cases could approach USD 24.8 million, an amount similar to the recent health program funded by the Peruvian government to combat malaria. Our findings suggest that policy makers should consider the trade-offs between the economic benefits of deforestation and the cost associated with increased malaria incidence.