Poverty, policies, and deforestation: The case of Mexico

In this article we use disaggregated data on land use and its changes to investigate the contribution of different socioeconomic and physiogeographic factors to deforestation in Mexico. The purpose is to illustrate the significance and, as far as possible, to ascertain the quantitative importance of three factors--poverty, government policies and the associated price incentives, and the security of property rights--in contributing to deforestation. Our analysis leads to three broad results: (i) we do not find any support for the assumption of the hypothesis that communal land tenure arrangements--in this case the ownership of land by the ejido--would increase deforestation (ejidos are communities, formed after the revolution of the 1920s, where until recently only usufruct rights to land existed and individual land rights were not allowed); (ii) price distortions in favor of maize, a very land intensive crop, increase deforestation while provision of technical assistance reduces deforestation; and (iii) poverty is associated with higher levels of deforestation. This implies that policy changes such as trade liberalization and elimination of government subsidies for agricultural products (as agreed under the North American Free Trade Agreement [NAFTA]) would be expected to yield not only economic but also environmental benefits, in the form of reduced pressure on existing forests. However, our analysis suggests that, despite the desirable long term effects, such a policy might negatively affect producers in poor areas where markets are highly incomplete and the spectrum of productive economic pursuits is limited. If not countered by appropriate measures, trade liberalization could be associated with an increase in rural poverty and in deforestation by the poor who, at least in the short to medium term, do not have productive alternatives. Thus, provision of safety nets in rural areas might be justified on social as well as on environmental grounds to mitigate the negative environmental implications of reduced real wages that can be associated with liberalization and elimination of subsidies in the short term, and thus to maximize their positive effect in the long term.