Spatial spillovers and the relationship between deforestation and malaria, evidence from the Peruvian Amazon

Mosquitoes are considered as one of the forest species transmitting diseases to humans most responsive to ecosystem changes caused by deforestation. We focus our analysis on malaria and deforestation because the former is a major health concern and on the latter because it is a major consequence of development policies in tropical areas. In the Peruvian Amazon, almost one million clinical cases of malaria and 2.7 million hectares of forest loss were reported in the last two decades. While the prior literature has established a relationship between deforestation and malaria incidence, limited attention has been given to the potential for spatial dependencies and spatial spillovers which suggest deforestation in a given locality (i.e., a district) could affect malaria incidence at the adjacent localities. The objective of this study is to examine the relationship between deforestation and malaria cases in the Peruvian Amazon region in a spatial panel analysis that uses a Spatial Durbin Model to address spatial interdependence among districts. Our results suggest that a decline of 1,000 hectares of forest cover is associated with an additional 69 malaria cases, the total effect, and both direct and spillover effects are positive. Back of the envelope calculations suggest 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 maker should consider the trade-offs between the economic benefits of deforestation and the cost associate with increase malaria incidence.