Deforestation, Production Intensity and Land Use Under Insecure Property Rights

40 Pages Posted: 17 Aug 2004

See all articles by Erkki Koskela

Erkki Koskela

University of Helsinki - Department of Political and Economic Studies; CESifo (Center for Economic Studies and Ifo Institute); Bank of Finland - Research Department; IZA Institute of Labor Economics

Gregory S. Amacher

Virginia Polytechnic Institute & State University - Department of Forestry

Markku Ollikainen

University of Helsinki - Department of Political and Economic Studies

Date Written: February 2004

Abstract

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.

Keywords: deforestation, property rights, stochastic, rotation

JEL Classification: Q23, Q15, K42

Suggested Citation

Koskela, Erkki and Amacher, Gregory S. and Ollikainen, Markku, Deforestation, Production Intensity and Land Use Under Insecure Property Rights (February 2004). CESifo Working Paper Series No. 1128. Available at SSRN: https://ssrn.com/abstract=516262

Erkki Koskela (Contact Author)

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland
+358 9 191 8894 (Phone)
+358 9 191 8877 (Fax)

HOME PAGE: http://www.cesifo.de/servlet/page?_pageid=56&_dad=portal30&_schema=PORTAL30&pa_id=7298

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Bank of Finland - Research Department ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Gregory S. Amacher

Virginia Polytechnic Institute & State University - Department of Forestry ( email )

307 Cheatham Hall
Blacksburg, VA 24061
United States

Markku Ollikainen

University of Helsinki - Department of Political and Economic Studies ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

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