The roots of deforestation in the Philippines: a market approach
Date
2006-04
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Abstract
This paper is an economic study of the causes of deforestation in the Philippines. It uses the market approach, and focuses on the factors influencing the decision-making of deforesters (loggers and farmers) with an emphasis on agricultural activities that convert forests for planting purposes. The linear regression model of the paper employs forest cover as dependent variable, and prices of major agricultural products, gross value added per hectare of agriculture (GVAH), timber export price, fertilizer price, Gross National Product per capita (GNPPC), and agricultural credit as independent variables.
The regression results suggest the significance of GNPPC (used as proxy for the availability of alternative job opportunities), GV AH, and the price of rice as factors that influence the decision-making of deforesters. The significance of these three variables implies that the market approach is applicable in the Philippine case. The fit of the approach, however, is quite limited since other agricultural prices are deemed insignificant and the adjusted R2 is relatively low.
GNPPC is positively related to forest cover, while GV AH and price of rice are negatively related. The paper then recommends that government efforts focus on job creation and the development and implementation of an intensive farming system. Moreover, the paper serves as warning against the government's protectionist policies and price controls in agriculture, which make deforester activities artificially profitable.
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Keywords
Deforestation, Environmental economics, Forest, Forest conservation, Land conversion