Agricultural Expansion, Forest Products as Safety Nets, and Deforestation
Environment and Development Economics, Vol. 12, No. 2, pp. 235-249, 2007
Posted: 26 Sep 2007
This paper aims to address the impact on deforestation of the use of forest products as safety nets by poor agricultural households. Two safety-net uses may be implemented: the diversification strategy and the coping strategy. With both strategies, crop risk reduction, lower risk aversion and larger population increase tropical deforestation. Forest profitability always tends to increase the forest cover in the diversification case. Conversely, considering the coping strategy, two opposite effects determine the impact of forest profitability on the forest cover: a portfolio effect and an insurance effect. Finally, the household is better off and deforests less when using the diversification strategy instead of the coping strategy.
Keywords: deforestation, household model, risk aversion, agricultural expansion
JEL Classification: D13, O12, O13, Q12, Q15, Q23
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