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Listed author(s):
  • Jean-Marie Baland


    (University of Namur)

  • Pranab Bardhan


    (University of California, Berkeley)

  • Sanghamitra Das


    (Indian Statistical Institute, New Delhi)

  • Dilip Mookherjee


    (Institute for Economic Development, Boston University)

  • Rinki Sarkar


    (Centre for Interdisciplinary Studies in Environment & Development, Bangalore)

This paper assesses the relation between living standards and forest degradation in the Indian mid-Himalayas, and related policy questions. It 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, 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 economic growth is expected to have negligible impact on anthropogenic pressures on the forest, while population growth will aggravate those pressures 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, is predicted to 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 therefore 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. These subsidies are likely to be more effective than conversion of state owned forests to local communities, on the model of the Uttaranchal van panchayats.

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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - The Institute for Economic Development Working Papers Series with number dp-161.

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Length: 50 pages
Date of creation: Dec 2006
Handle: RePEc:bos:iedwpr:dp-161
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