The Safety-Net Use of Non Timber Forest Products
Cahier du LEF No. 2008-04
30 Pages Posted: 3 Dec 2008 Last revised: 27 Mar 2009
Date Written: December 2, 2008
Incompleteness of insurance markets is a crucial weakness of developing countries. In this context, the poor households of rural regions often exploit common property resources, such as forests, as insurance in case of economics stress. The aim of this paper is to derive the implications of this insurance use on the forest cover, and thus on deforestation. The land-use choice between agricultural land and forest therefore resembles a portfolio diversification. However, I also show that this insurance strategy may lead to resource overexploitation and constitute a poverty trap.
Keywords: deforestation, household model, risk aversion, agricultural expansion, forest products
JEL Classification: O12, O13, Q12, Q15, Q23
Suggested Citation: Suggested Citation