MANAGING THE ENVIRONMENTAL CONSEQUENCES OF GROWTH Forest Degradation in the Indian Mid-Himalayas

This paper assesses the relation between living standards and forest degradation in the Indian mid-Himalayas, and related policy issues. The analysis is based on detailed household, village and ecology surveys in a sample of 165 villages in Uttaranchal and Himachal Pradesh. Our prior fieldwork in this region indicates that forest degradation rather than deforestation is the key problem, and that this has been driven primarily by collection of firewood and fodder by residents of neighbouring villages. An econometric model relating household collections to relevant characteristics of households, villages and forests is estimated. We find that collections are inelastic with respect to income, and unit elastic with respect to population; hence growth in living standards will have little impact on anthropogenic pressures on the forest, but population growth will aggravate the problem substantially. We subsequently assess the impact of forest degradation on local living standards. An increase in collection time by one hour, representative of changes observed over the past two decades, will lower income of neighbouring households by less than 1%. Hence the size of the local externality is small, providing an explanation for lack of collective action among local villagers to regulate forest use. The argument for external policy interventions thus depends on the significance of associated non-local externalities related to ecological effects of Himalayan forest degradation. A Rs 200 subsidy per LPG cylinder is estimated to raise the proportion of households in these villages using LPG from 7% to 78% , and lower wood use by 44%, at a cost of approximately 4% of average consumption.