IV-B 1 IV. Analytical extensions and policy issues

IV-B 2 Deforestation and soil depletion Large economic magnitudes in SE Asia Disproportionately large involvement of the poorest households Strong spatial elements: uplands & forests Institutional issues –‘Open access’ to forests –Free disposal of soil runoff and other pollutants Economy-wide ‘drivers’ –Prices and policies –Intersectoral and interregional labor markets

IV-B 3 Source: Deutsch et al Subwatersheds of Upper Manupali River, Bukidnon

IV-B 4 Source: Deutsch et al E-coli counts by sub-watershed

IV-B 5 Source: Deutsch et al. 2001

IV-B 6 Can local actions and policies solve watershed problems? Local actions -- by households and governments -- are certainly necessary But not sufficient, when institutions and markets have external drivers –Land and forest tenure laws may be weak/unenforced –Farm prices set in national or global markets

IV-B 7 A stylized upland-lowland model Lowland economy: –Manufacturing and ‘lowland food’ production Upland economy: –‘upland food’ production and non-food crop –Land produced by forest clearing Interregional linkages: –Labor market –Food market (food is non-traded)

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IV-B 19 Concluding remarks U-L model combines two ‘small’ models to obtain richer specification and results Predictions of comparative static effects depend on key parameter values –Can define different economic ‘types’ based on alternative parameter sets (see OEE Chapter 3) Empirical and micro research should guide structural and parameter assumptions.