Tropical deforestation, tenure insecurity, and unsustainability

This article explores the effects of tenure insecurity on the migrant's dec ision to convert tropical frontier forestland to unsustainable agriculture. We develop and extend a Faustmann model to explore the effects of insecure property rights and unsustainability on the migrant's decision to convert tropical forestland to crop production, to maintain it for long-term timber production, or to mine the forest for timber and then abandon the land. We then provide a numerical simulation of the migrant's land-use decision bas ed on data from the Amazon to compare the returns to mahogany plantation as opposed to agricultural conversion or timber mining. Increasing insecurity of land tenure leads to a decline in the value of timber relative to agric ultural production land, thus creating an incentive for forest conversion. However, when land is easily degraded and tenure insecurity is high, timber mining and land abandonment may be a particular problem. Finally, we exami ne the role of private and government investment in establishing and mainta ining secure land tenure. Once government "arrives" at the frontier, it can encourage sustainable timber production through providing secure harvestin g rights and setting an optimal concession fee.