A tale of two communities and other deforestation stories

This dissertation contains three chapters: two explaining deforestation in common property forests in Mexico, and a third examining the relative merits of different designs of payment programs to mitigate deforestation loss. All three chapters use data collected in 2002 in Mexico.; The first chapter develops and tests two game theoretic models analyzing the deforestation decision. This dichotomy is based upon the observation that communities that extract wood for sale, as opposed to those living from agriculture, behave in very different manners. The model in the latter case allows for simultaneous cooperative and non-cooperative groups within the same community. We confirm empirically that a larger cooperative group leads to lower deforestation. In the former situation, a dynamic model explains how investment in community public goods is used as a payoff to those in the village without rights to forestry profits. This payoff minimizes their incentive to encroach upon the forest. In these communities, econometric results show that larger investment in public goods does lead to less forest conversion.; The second chapter explores the questions of both where and how much deforestation occurs in total within community boundaries. The model shows that this is a joint decision for the community. In contrast to the single-user, single parcel approach common in the land-use change literature, individual forest parcels in a given property are ordered according to their value in pasture and deforested to the point where the total deforestation requirements of the community are satisfied. Empirical results confirm these predictions.; In the third chapter, principles of environmental payment schemes are formalized into three programs that are then simulated: payment of the opportunity cost for forests at risk: a flat payment scheme with a cap on allowable hectares; and opportunity cost payments for forest at risk with highest environmental benefit per dollar paid. The last is most efficient and the second most egalitarian. Larger and more remote communities receive most of the budget from the most efficient program. Under this program more, but lower, payments go to poor and indigenous communities, and these are more efficient than those allocated to the non-poor and non-indigenous.