Secure Tenure and the Optimal Level of Deforestation: Theory, Empirical Observations, and Policy Implications

Abstract

"Tradeoffs between environment and development, particularly at the margin between forestry and lower valued agricultural land uses, create socially sub-optimal results throughout the developing world. In Latin America, the tradeoff is between livestock and tropical forests. In much of Africa, the tradeoff is between subsistence agriculture and the native forest. In South and Southeast Asia, the tradeoffs are between both subsistence agriculture and commercial timber, and the tropical forest, and the results of these tradeoffs often extend downstream as far as siltation of the offshore fisheries. From a global perspective, agricultural conversion is generally considered the largest cause of both soil erosion and tropical deforestation. The economic asymmetries define a large part of the problem: (a) Agricultural values are well represented in markets and also in the implicit utility functions of subsistence households, while many of the values of environmental services originating on the underdeveloped lands (fuelwood, forage, fodder, etc.) are less well represented. And (b) the costs of obtaining secure property rights (and the ease of enforcing them) are lower for the more concentrated agricultural land uses but greater for the more dispersed forest environmental services. Indeed, one obvious observation supporting this latter contention is that forests often display characteristics of overexploited open access resources. Our approach to this general problem begins with a variation of Howe's (1979) control model explaining resource scarcity. We call on evidence from econometric analysis (a) from the Lake States and the western U.S. in the 19th century, and (b) from commercial forestry in Costa Rica, and subsistence agricultural conversion in Malawi, Nepal, and the Philippines in the last few years to support our new conclusions regarding forest conversion to agriculture and the importance and difficulty of securing property rights to the forest. We can use this theory and these empirical results to suggest a more careful forest policy concentration on specific features of marginal land tenure, environmental investments in forest lands and forest-based resources, and agricultural policies impacting the agriculture-forest land use margin. We can also anticipate what it takes for secure tenure to arise naturally for the forest and its environmental services. Local forest values and services will compete well with agricultural land uses and the divergence between social and private optima will recede. All our empirical analyses show examples of such cases. The remaining issues have to do with the implicit increased competition for scarce inputs of very poor people, level of deterioration of environments before secure tenure arises naturally, and new mix of environmental services."