ASSESSING THE RELATIONSHIP BETWEEN GOVERNMENT POLICY AND DEFORESTATION

The effects of public policies on deforestation are assessed in a gene ral equilibrium framework. A forest can be left in its natural state t o provide a consumption benefit, such as biodiversity or carbon absorp tion. In its natural state it is subject to free access, however. Alte rnatively, it can be converted to a market input needed to produce a v aluable final product. The utility of consumers depends on the amount of the forest left standing, on consumption of the forest-using commod ity, and on consumption of a numeraire that is produced from non-fores t inputs only. Final commodities are traded with the outside world at constant prices. The model is used to evaluate claims in the literatur e regarding the effects of government policies on deforestation in dev eloping countries. The policies examined include transportation improv ements, taxes and royalties on timber harvests, controls on log export s, a variety of agricultural policies, tax incentives to promote domes tic processing industries, and employment opportunity enhancement. (C) 1995 Academic Press, Inc.