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Structural Adjustments and Deforestation in Nicaragua

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This paper investigates the impact of structural adjustment policies on deforestation taking place when the agricultural frontier advances into forest reserves in Nicaragua. A computable general equilibrium model incorporating deforestation by squatters is used for policy simulations. The opportunity cost of migrating to the frontier does not simply depend on wage income opportunity, but also on market prices of basic grain which determine the capacity to consume beyond subsistence food level within a certain real wage. Reducing public expenditures both conserve forests and enhance economic growth, while showing positive distributional effects. On the other hand, a strong conservation trend following a sales tax increase is driven by increasing poverty in rural areas. Noticeably, there are policies which initially intensify deforestation, but turn out to ease the pressure on forests over time. Rapid economic growth does not ensure less pressure on forest reserves.

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  • Solveig Glomsrød & Maria Dolores Monge A. & Haakon Vennemo, 1997. "Structural Adjustments and Deforestation in Nicaragua," Discussion Papers 193, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:193
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    1. Deacon Robert T., 1995. "Assessing the Relationship between Government Policy and Deforestation," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 1-18, January.
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    3. Alfsen, Knut H. & Bye, Torstein & Glomsrã˜D, Solveig & Wiig, Henrik, 1997. "Soil degradation and economic development in Ghana," Environment and Development Economics, Cambridge University Press, vol. 2(2), pages 119-143, May.
    4. Alfsen, Knut H. & De Franco, Mario A. & Glomsrod, Solveig & Johnsen, Torgeir, 1996. "The cost of soil erosion in Nicaragua," Ecological Economics, Elsevier, vol. 16(2), pages 129-145, February.
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    1. Pandey, Kiran D. & Wheeler, David, 2001. "Structural adjustment and forest resources - the impact of World Bank operations," Policy Research Working Paper Series 2584, The World Bank.
    2. Sverre Grepperud & Henrik Wiig & Finn Roar Aune, 1999. "Maize Trade Liberalization vs. Fertilizer Subsidies in Tanzania: A CGE Model Analysis with Endogenous Soil Fertility," Discussion Papers 249, Statistics Norway, Research Department.

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    More about this item

    Keywords

    Deforestation; structural adjustment; general equilibrium model; Nicaragua;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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