The Environmental Consequences of Stagnation in Nicaragua
A decade of war and revolution under the Sandinistas caused macroeconomic chaos but may have been indirectly beneficial to the environment. Now the country is a ward of the international financial community with foreign debt at almost six times GDP and few policy options. The Chamorro government, elected in 1990, has reduced the role of government and restored the price system as the principal means of resource allocation and income distribution. A three-gap model is used to show that environmental deterioration is likely to accelerate as a result of pursuing neoliberal policies. The analysis is based on a distinction between intensive and extensive environmental decay.