STA70304 Business Analytics Malaysia Deforestation Analysis Assignment 3 2025

Case study

Forests, essential to life on Earth, play a vital role by producing oxygen, supporting rich biodiversity, and providing watershed protection. They help prevent soil erosion, absorb carbon dioxide, and mitigate climate change impacts. Covering about 31% of the Earth’s surface, forests are home to over two-thirds of all known terrestrial species, many of which are endangered. Forests also support the global economy, providing 13 million jobs and serving as a critical resource for 1.6 billion people who depend on them for food, water, shelter, clothing, and traditional medicine (WWF, 2018). However, these invaluable benefits are increasingly threatened by deforestation, driven by activities such as agricultural expansion, forest fires, urban development, logging, and climate-induced degradation (WWF, 2016).

You are interested in learning more about the determinants of deforestation in Malaysia. To understand better, please do some reading on these topics before you start on the assignment. The variables that you need to use are given below. The full dataset is available in the appendix on the assessment page.

a) Forest area (sq km)
b) GDP per capita (constant 2015 US$)
c) Population density (people per sq km of land area)
d) Agricultural land (sq km)
e) Urban population

Question 1. A

Understanding deforestation: Preliminary work

Work Required: Before answering all the questions, you are expected to clean the data set in the excel sheet by removing all the missing data, converting all the values of the variables to LN (Natural Logarithm), and naming the variables as one word or use underscore for example (LNForest or LN_forest_area).

In preparing your answers to all questions (from question 2. A onwards), only use the cleaned data. Note that you are required to save the cleaned data set and submit it as a separate file with your assessment.

Question 2. A

Performing diagnostic-tests

Work Required: You are expected to perform a comprehensive explanation of the following tests: Multicollinearity Diagnostic Test, Serial correlation, Heteroskedasticity on the variables.

In preparing your answer, you are expected to interpret the results and identify any problematic issues with the tests. What are the implications of these tests for decision-making?

Please insert all the output tables generated through SPSS. Justify your answer with evidence from a minimum of two (2) relevant literature for each test, to justify the importance of these tests.
Type your answer here (Indicative word count: approximately 600 words)

Reference list

Insert the All references list for Question 2.A here.

Question 3. A

Addressing inconsistency in a dataset

Work Required: You are expected to suggest at least one (1) corrective measure for each test. Justify your answer with evidence from a minimum of two (2) relevant literature sources for each suggestion.

Please ensure to address the following aspects: quality of sentencing and grammar, usage of clear structure, relevance of your justifications.

Type your answer here (Indicative word count: approximately 600 words)

Reference list

Insert the reference list for Question 3.A here

Question 4. A

Applying distributed lag models

Work Required: You are expected to introduce the concept of distributed lag models and explain how they can be applied in the context of the economic data that was given in this assignment.

In preparing your answer, you must implement a distributed lag model on the Forest area and GDP per capita for the last 3 years. Analyse the results and provide at least two (2) insights into how the distributed lag model enhances your understanding of the variable’s impact on decision-making.

Please insert all the output tables generated through the software in your answer. Justify each insight with evidence from a minimum of one (1) relevant literature and ensure to address the following aspects: quality of sentencing and grammar, usage of clear structure.

Type your answer here (Indicative word count: approximately 600 words)

Reference list

Insert the reference list for Question 4.A here

Question 5. A

Benefit and risk assessment of the dynamic model

Work Required: You are expected to explain how a dynamic model could help forecast future GDP values based on historical data and other relevant factors, such as population growth rates or agricultural productivity trends.
In preparing your answer, you are expected to discuss three (3) potential benefits of using dynamic models. Additionally, consider any three (3) challenges that may arise in implementing dynamic models.

Please, justify your answer with evidence from a minimum of two (2) relevant literatures and ensure to address the following aspects: quality of sentencing and grammar, usage of clear structure.

Type your answer here (Indicative word count: approximately 600 words)

Reference list

Insert All references list for Question 5.A here