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Poverty and environmental degradation under trade liberalization: searching for second-best policy options


  • Pascual, Unai
  • Martinez-Espineira, Roberto


Forest based agricultural systems in the tropics are being opened up to international trade at an unprecedented rate. This is the case of tropical agriculture in Mexico under the North American Free Trade Agreement (NAFTA), which is also having significant impacts on the decentralized land use decisions of small-scale farmers and on the natural resource base on which they depend. This paper develops a bioeconomic model of a typical forest-land based farming system that is integrated with the non-farm labour sector, as typically found in tropical regions. The data used to generate the simulations were gathered in two communities of Yucatan (Mexico) in 1998-2000. Through a systemdynamics framework, the agro-ecological and farming economic subsystems are integrated and the current situation of price liberalization that is negatively affecting soil capital and income levels is compared to a scenario that precludes an «optimal path to extinction» through careful policy intervention. This second-best case is based on a targeted policy mix that seeks to maintain the system viable for as long as possible above an irreducible poverty level. The policy intervention involves, simultaneoulsy, subsidizing off-farm wage rates, intensification of land use, and the control of households’ rights to the forest commons. The model shows that such policy intervention can result in a large positive discounted net payoff basedon the increased incomes for the farming community after deducting the implementation costs of such intervention. Los sistemas agro-forestales tropicales están siendo expuestos al comercio internacional a un ritmo sin precedentes. Este es el caso de la agricultura en México en el contexto del Tratado de Libre Comercio de América del Norte (TLCAN) que está teniendo impactos importantes sobre las decisiones descentralizadas de los campesinos y la base de los recursos naturales de los cuales dependen. El presente artículo desarrolla un modelo bio-económico basado en un típico sistema agro-forestal del trópico que, a su vez, se encuentra integrado con el sector laboral no-agrícola. Los datos empleados para generar las simulaciones han sido obtenidos en dos comunidades campesinas de Yucatán (México) entre los años 1998-2000. Mediante un marco teórico dinámico se integran el subsistema de producción campesina y el agro-ecológico. El objetivo es poder comparar la situación actual, con políticas macroeconómicas de liberalización de precios agrícolas (p.ej. maíz) que están afectando negativamente tanto el capital natural y el nivel de renta de los hogares campesinos, con un posible escenario basado en intervenciones de política económica con el objetivo de evitar una posible “senda óptima de extinción” del capital natural. Se trata de poner en práctica de forma simultánea varias políticas “second-best” manteniendo viable el sistema productivo durante el mayor tiempo posible y manteniendo, a su vez, los hogares por encima del umbral de pobreza. La conjugación de varias políticas implica (a) intervenir los salarios nominales fuera de la agricultura, (b) la intensificación del uso de la tierra, y (c) el control de los derechos de propiedad de los hogares sobre la tierra comunal. El modelo demuestra que este tipo de intervención “second best” es rentable si se tienen en cuenta la renta generada por las comunidades campesinas y el coste de la puesta en práctica de dichas políticas. Palabras clave: Liberalización, modelo bio-económico, roza-corta-quema, degradación de la tierra, pobreza rural, México.

Suggested Citation

  • Pascual, Unai & Martinez-Espineira, Roberto, 2006. "Poverty and environmental degradation under trade liberalization: searching for second-best policy options," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 6(12).
  • Handle: RePEc:ags:earnsa:7992

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    References listed on IDEAS

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    More about this item


    rural povery; soil degradation; slash-and-burn; land-use model; liberalization; Mexico; Environmental Economics and Policy; International Relations/Trade; Q12; Q23; D13; I3;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty


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