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.