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Forest Loss and Economic Inequality in the Solomon Islands: Using Small-Area Estimation to Link Environmental Change to Welfare Outcomes

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Abstract

To study welfare effects of environmental change, data from household surveys may be linked to remote sensing data. If linking uses spatial aggregation there is risk of ecological fallacy, since surveys are only representative for large areas that may not correspond to the spatial scale of the decision-making units. This paper uses survey-to-census imputation to estimate welfare indicators for small areas in order to study the effect of deforestation on subsequent inequality in the rural Solomon Islands. This country depends on logging for almost half of foreign exchange and one-sixth of government revenue, and most forested land remains under customary ownership. A sharp increase in log exports, to seven times the sustainable yield, and a major shift in export destinations as other countries withdrew from the tropical log trade represents an exogenous shock that helps to identify effects of deforestation on inequality rather than the reverse relationship. Using data for rural wards, that have about 400 households each, a standard deviation increase in the rate of forest loss over 2000 to 2012 raises the Gini index for household consumption in 2013 by one-third of a standard deviation. This precisely estimated effect would not be apparent using more spatially aggregated data.

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  • John Gibson, 2017. "Forest Loss and Economic Inequality in the Solomon Islands: Using Small-Area Estimation to Link Environmental Change to Welfare Outcomes," Working Papers in Economics 17/14, University of Waikato.
    • Handle: RePEc:wai:econwp:17/14
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    1. Leopoldo Fergusson & Santiago Saavedra & Juan F. Vargas, 2020. "The perils of misusing remote sensing data: The case of forest cover," Documentos de Trabajo 18152, The Latin American and Caribbean Economic Association (LACEA).
    2. Okumu, Boscow & Muchapondwa, Edwin, 2020. "Welfare and forest cover impacts of incentive based conservation: Evidence from Kenyan community forest associations," World Development, Elsevier, vol. 129(C).
    3. Carlo Fezzi & Mauro Derek J. Ford & Kirsten L.L. Oleson, 2022. "The economic value of coral reefs: climate change impacts and spatial targeting of restoration measures," DEM Working Papers 2022/5, Department of Economics and Management.
    4. Xiaoshi Zhou & Wanglin Ma & Gucheng Li & Huanguang Qiu, 2020. "Farm machinery use and maize yields in China: an analysis accounting for selection bias and heterogeneity," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1282-1307, October.
    5. Hai‐Anh H. Dang, 2021. "To impute or not to impute, and how? A review of poverty‐estimation methods in the absence of consumption data," Development Policy Review, Overseas Development Institute, vol. 39(6), pages 1008-1030, November.
    6. John Gibson, 2020. "Deforestation and Resource Conflicts in Papua New Guinea," Working Papers in Economics 20/02, University of Waikato.
    7. Shang Xu & H. Allen Klaiber & Daniela A. Miteva, 2023. "Impacts of forest conservation on local agricultural labor supply: Evidence from the Indonesian forest moratorium," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(3), pages 940-965, May.
    8. Fezzi, Carlo & Ford, Derek J. & Oleson, Kirsten L.L., 2023. "The economic value of coral reefs: Climate change impacts and spatial targeting of restoration measures," Ecological Economics, Elsevier, vol. 203(C).

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    More about this item

    Keywords

    deforestation; inequality; poverty; small-area estimation;
    All these keywords.

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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