The Complex Causes of Deforestation

By: Ben Groom*

The causes of deforestation are numerous and vary considerably with the particular context at hand. Despite this some general statements can be made. The actors involved are invariably loggers, farmers or cattle ranchers, and the way in which their activities determine land use and deforestation is governed by the prevailing institutions, markets and sometimes policies. Chief among the institutional determinants are property rights, e.g. to land and timber, and their enforcement. Of the many economic determinants, the nature of land markets, local labour markets and in and out migration are key. Where institutions are weak and markets fail to reflect the full economic value of standing forest, which due to global concern for climate change and biodiversity conservation are in large part held globally, cause for concern is warranted.

Insecure or poorly defined property rights to land are perhaps the most important precursors to inefficient land use. Examples abound. Where forest land is under an open access regime clearing of forests will be undertaken sooner than is desirable since actors fear that others will do the same.  In such cases, for instance in Brazil during the 80s and 90s and presently in Bolivia, ownership to land and timber is conditioned on clearing of land, a so-called ‘use it or lose it’ property rights regime (e.g. Alston et al 2000). Such uncertainties provide additional reasons for land clearing than would exist if tenure were secure, or where forest land is held under a functioning common property regime.

Market failures are also important. For instance, imperfect or non-existent markets for off-farm labour tend to act as a centripetal force on agricultural labour. Evidence from China and Africa shows that in order to cope with such constraints, households and farms apply residual labour to agriculture causing its expansion into formerly forested land. The flip side of this dynamic is that attempts to relax constraints on migration can release the pressure on the forest frontier. This appears to be how the Sloping Lands Conversion Programme (SLCP) was successful in reducing poverty, and how deforestation was reduced in Mexico, the Philippines, China and Nepal (Groom et al 2010).

As if the story were not complicated enough already, market imperfections often occur together in developing countries. Credit rationing and liquidity constraints can conspire to limit migration or investment, in intensive agriculture or cattle ranching for instance. Furthermore, the absence of functioning banks leads ranchers to overstock cattle as a means of accumulating wealth or saving in precaution for the uncertain future.

In developing countries then, the important actors determining land use decisions organise their activities around local, and sometimes global, institutional and market constraints. In some cases there are policies which encourage deforestation, such as subsidies. In such environments it is difficult to predict how these actors will respond to policies and incentives to reduce deforestation. Most prominent among such initiatives is the Reduced Emissions from Deforestation and Degradation (REDD) scheme, whose motivation is to correct a global market failure in carbon by paying for reduced deforestation below some baseline. However, where off-farm labour markets and migration is constrained, for instance, payments to reduce deforestation may simply increase the local supply of labour, reduce local wages and increase the profitability of other deforesting activities, such as cattle ranching. In other cases such payments may encourage out migration of labour and reduce the pressure at the forest frontier, a phenomenon witnessed in China in a similar compensation scheme (Groom et al 2010). However, outmigration may provide remittances which overcome local credit constraints on agricultural production or cattle ranching, and hence ultimately be counter-productive with regard to forests. So even if enforcement and monitoring of forest property rights is perfect, which it generally is not, simple labour market responses could potentially weaken or undo the effect of REDD payments.

The determinants of deforestation are relatively complicated. Interventions which try to reduce deforestation via compensation may well be successful in achieving their objectives. But evidence from around the world suggests that the opposite of what is intended is eminently possible unless the local institutional context and market conditions are well understood.

For your reference:

Alston, L. G. Libecap & B. Mueller (2000) “Land Reform Policies, the Sources of Violent Conflict, and Implications for Deforestation in the Brazilian Amazon.” Journal of Environmental Economics and Management,  39(2): 162-188.

Groom, B., P. Grosjean, A. Kontoleon, T. Swanson & S. Zhang (2010) “Relaxing Constraints with Compensation: Evaluating Reforestation Policy in China.” Oxford Economics Papers, 62(1): 132-156.

*Dr. Ben Groom is Lecturer in Environment and Development at the Department of Geography and Environment at the London School of Economics. He can be reached by e-mail at: b.groom@lse.ac.uk.

This article was first published in the development communications magazine “Sociedad que Inspira” No. 17, August 2012.