Longitudinal Effects of Technical Change, Capital Accumulation and Labor Market Dynamics on Deforestation in the Low-Income tropics

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This research uses household data to study how technical change in agriculture affects rates of tropical deforestation. Data come from surveys conducted in the Philippines over the period 1995-2001. The timing and coverage of the data provide an opportunity to study the direct and indirecteffects of irrigation on agricultural production and labor allocation, while controlling for a number of agronomic features of the sample farms and important social factors such as tenure security. It is also possible to trace the causal chain of impacts leading from technology changes to changesin employment, incomes, and activities undertaken by households living along the forest margin. The analysis links three bodies of economic theory regarding agricultural development, labor market dynamics, and environmental management. Specific objectives include (1) assessing labor hiring and labor selling decisions in a dynamic context and their implications for capital formation, subsequent factor use, labor market participation, and forest pressure; (2) identifying the importance of transaction and supervision costs, as well as tenure security and site-specific factor productivity, for labor hiring and selling decisions; and (3) testing and correcting for attrition bias in the sample, especially as influenced by tenure security and factor productivity. Results will provide an empirical foundation for assessing competing theories regarding poverty and the environment, and will also inform broader debates regarding the distributional effects of growth and development and their implications for important aspects of household behavior. Results should have implications for a range of social and environmental outcomes including economic development, poverty reduction, biodiversity protection and carbon sequestration.