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Hidden Welfare Effects of Tree Plantations

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  • Anriquez, G.
  • Toledo, G.
  • Arriagada, R.

Abstract

Subsidies to promote tree plantations have been recently questioned because of potential negative social and environmental impact of the forestry industry. Quantitative evidence on the socioeconomic causal impacts of afforestation subsidies or of tree plantations is elusive, mainly due to data scarcity. We assess the overall impact of such a subsidy in Chile by using an original 20 years panel data set that includes small area estimates of poverty and relate it to the subsidy assignment at census-district scale. We show, with a battery of impact evaluation techniques, that forestry subsidies -on average- do, in fact, increase poverty. More specifically, using difference in difference with matching techniques, and instrumental variable approaches we show that there is an increment of about 2% in the poverty rate of treated (with subsidized tree plantations) localities. We also identify a causal mechanism by which tree plantations induce higher poverty, which is a negative effect on employment. Our research indicates the existence of negative welfare effects of the afforestation subsidy on local populations suggesting a reassessment of the distributional effects of the subsidy and the industry. Acknowledgement :

Suggested Citation

  • Anriquez, G. & Toledo, G. & Arriagada, R., 2018. "Hidden Welfare Effects of Tree Plantations," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277284, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae18:277284
    DOI: 10.22004/ag.econ.277284
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    References listed on IDEAS

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    2. Sunderlin, William D. & Dewi, Sonya & Puntodewo, Atie & Müller, Daniel & Angelsen, Arild & Epprecht, Michael, 2008. "Why forests are important for global poverty alleviation: A spatial explanation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(2).
    3. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    4. Cragg, John G. & Donald, Stephen G., 1993. "Testing Identifiability and Specification in Instrumental Variable Models," Econometric Theory, Cambridge University Press, vol. 9(2), pages 222-240, April.
    5. James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(2), pages 261-294.
    6. Suich, Helen & Howe, Caroline & Mace, Georgina, 2015. "Ecosystem services and poverty alleviation: A review of the empirical links," Ecosystem Services, Elsevier, vol. 12(C), pages 137-147.
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    Cited by:

    1. Bopp, Carlos & Engler, Alejandra & Jara-Rojas, Roberto & Arriagada, Rodrigo, 2020. "Are forest plantation subsidies affecting land use change and off-farm income? A farm-level analysis of Chilean small forest landowners," Land Use Policy, Elsevier, vol. 91(C).

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