Maize price variability, land use change, and forest loss: evidence from Ghana

This paper documents the relationship between maize price variability and forest loss in Ghana. Using the fixed effects regression technique while controlling for weather variables and accounting for spatial dependence, the study finds that an increase in maize price variability is associated with an increase in forest loss. Drawing on nationally-representative panel household survey data, the analysis further reveals that an increase in maize price variability contributes to forest loss through changes in household land use decisions. The finding indicates that an increase in maize price variability in the previous year positively correlates with a household’s total cultivated farm size. This increase in cropped area is primarily due to a rise in the household cultivated area of cocoa – an export crop with a guaranteed price set annually by the government. The study highlights an important linkage between agricultural price stabilization policies and environmental externalities.