Deforestation, Production Intensity and Land Use under Insecure Property Rights
University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Bank of Finland - Research Department; Institute for the Study of Labor (IZA)
Gregory S. Amacher
Virginia Polytechnic Institute & State University - Department of Forestry
University of Helsinki - Department of Political and Economic Studies
CESifo Working Paper Series No. 1128
We propose a framework with endogenous allocation of land between agricultural production, sustainable forest management, and unsustainable forest exploitation in the form of illegal logging to explore deforestation and agricultural and timber supplies when property rights are insecure. Uncertainty over property rights arises through risk of confiscation on sustainably-managed forest land, and through illegal logging activities on frontier native forest land. Confiscation risk is shown to increase deforestation by increasing both land conversion to agriculture and illegal logging. Contrary to current wisdom, we find that higher timber prices do not necessarily lead to an increase in the land used for sustainable forestry, because higher prices stimulate illegal logging activity. Increased monitoring and stronger enforcement reduce illegal logging, and thus deforestation. Confiscation risk decreases timber supply from unsustainable forestry practices while the affect of timber price on timber supply is ambiguous.
Number of Pages in PDF File: 40
Keywords: deforestation, property rights, stochastic, rotation
JEL Classification: Q23, Q15, K42working papers series
Date posted: August 17, 2004
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