Elsevier

World Development

Volume 33, Issue 7, July 2005, Pages 1115-1128
World Development

Can Income Programs Reduce Tropical Forest Pressure? Income Shocks and Forest Use in Malawi

https://doi.org/10.1016/j.worlddev.2005.04.008Get rights and content

Summary

Seasonal household data from Malawi are used to study links between income shocks and forest use. A Tobit model is estimated to examine whether household forest use responds to receipt of a positive income shock (delivered as a technology assistance package), and the characteristics of households reliant on forests for shock coping. Results show households experiencing an income boost had lower forest extraction compared to households that did not receive such a shock, ceteris paribus. We find households most dependent on forests for natural insurance are those located near woodlands and headed by an individual who is relatively young and male.

Introduction

In rural parts of low-income countries, income and consumption risk are pervasive among the poor, and markets that serve to mitigate income shocks—such as those for insurance and credit—are generally absent, ill functioning, or inaccessible to the most vulnerable groups. Research has pointed to the potential negative consequences of adverse income shocks to nutrition and health status (Foster, 1995) and excess mortality (Rose, 1999). More optimistically, a variety of coping mechanisms often emerge to protect consumption when households experience idiosyncratic or covariate shocks. Examples of such mechanisms include precautionary saving of grain, livestock, and financial assets, borrowing in informal credit markets, remittances from family members or relatives residing elsewhere, and reallocation of household labor from the family farm to the wage labor market. These strategies are well documented in the literature (Besley, 1995, Kochar, 1999, Paxson, 1992, Rose, 2001, Rosenzweig, 1988, Udry, 1995).

In this paper, data from southern Malawi are used to study how low-income households at forest margins withstand income shortfalls and the potential consequences for forests. The study is motivated by two research questions: Do rural Malawian households cope with economic disruptions such as crop failure or illness of household members in part by temporarily increasing rates of forest extraction to earn cash?1 And if they do, what are the characteristics of households most reliant on forests for shock coping? Addressing these questions is important from both an environmental and a development standpoint. In places like Malawi, where forest resources are being extracted at a level that exceeds sustainable yield, use of forests for risk mitigation and shock coping contributes to forest degradation. From a human welfare perspective, the concern is that if shocks are frequent and severe, reliance on forests for informal insurance may ultimately represent a strategy that prevents the poor from escaping their poverty, since forest activities generally offer relatively low returns to effort. A downward spiral is possible in which successive adverse shocks are associated with rising poverty, increased reliance on forests for shock coping, and reinforced resource degradation (Zimmerman & Carter, 2003).

Why might low-income households residing at forest margins turn to forests in the face of misfortune? A first reason is that forests are often held under state or communal tenure with forest resources essentially freely available to local populations, either due to government failure to enforce property rights or weakened traditional systems of resource-use regulation (Baland & Platteau, 1996).2 A second reason is that extraction of forest goods generally requires little in the way of financial and physical capital (Neumann & Hirsch, 2000). Third, forest resources are diverse, providing a range of products and opportunities for income generation. In addition, forest products are often available at times when other income sources are not, for example, when crops fail (Byron and Arnold, 1999, Pattanayak and Sills, 2001). Finally, other coping mechanisms may be less accessible. Poor households often possess few liquid assets to sell at critical times, and may face collateral-related constraints to borrowing in credit markets.

Two recent studies provide empirical evidence that low-income households use forests to cope with risk ex ante and shocks ex post. Pattanayak and Sills (2001) estimate event-count models of forest collection trips using survey data from households in the Brazilian Amazon. Their empirical model includes a measure of risk (the coefficient of variation of households’ reported manioc output of previous years) and a shock variable (household reported agricultural production shortfall). They find positive correlations between forest collection trips and both agricultural shortfalls and agricultural risk.

Takasaki, Barham, and Coomes (2004) examine several strategies used by Peruvian smallholders to cope with covariate and idiosyncratic income shocks. These shock-coping mechanisms include forest product gathering and fishing. They find that forest gathering was important for coping with covariate flood shocks, with 22% of sample households reporting collection as a coping mechanism. Using a two-stage Tobit model, they find that households employing resource extraction to cope with covariate flood shock possessed relatively few physical assets and had relatively more adult household members.

The present paper complements these previous studies in a number of ways. This is the first to employ seasonal household data to examine smallholder use of forests for enduring hardships; earlier work uses cross-sectional data summarizing annual household experiences. In addition, while the studies of Pattanayak and Sills (2001) and Takasaki et al. (2004) concern tropical rainforests, the present study was undertaken in another important tropical ecosystem: dry deciduous (miombo) woodlands, the dominant vegetation type in Sub-Saharan Africa (Campbell, Frost, & Byron, 1996). The analysis involves estimating a random-effects model of commercial forest extraction with household data from Malawi. We construct a measure of a positive income shock based on the observation of whether or not a household received an agricultural assistance package consisting of a free packet of seed and fertilizer, locally known as a “starter pack”. By employing a positive shock measure, we are able to explore a more optimistic narrative than the one described earlier. We ask whether programs designed to reduce the economic vulnerability of low-income households can improve human welfare and reduce forest pressure.

Section snippets

Background on Malawi’s forests

Malawi’s forests are dominated by closed, deciduous woodland known colloquially as miombo. These woodlands are the most common vegetation type in central, southern, and eastern Africa (Campbell et al., 1996) and provide a wide range of products and services essential to the well-being of rural communities (Cavendish, 2000, Dewees, 1994, Fisher, 2004). Across Sub-Saharan Africa the interplay of forest dependence, rapid population growth, poverty, and weak forest management has resulted in highly

Modeling approach and research hypotheses

This paper examines direct consequences for forests of household income shocks. We ask if rural Malawian households cope with income shortfalls partly through increased forest commercialization and, if so, who is most reliant on this coping mechanism? To investigate these questions, a regression strategy is developed making use of seasonal household data from Malawi. The empirical model is a random-effects Tobit model where the dependent variable Q is the forest extraction index described above.

Forest extraction results

Table 3 reports coefficients, standard errors, and marginal effects for the forest extraction equation.13 Calculated Wald statistics shown at the bottom of the table provide

Conclusions and discussion

This paper examined links between income shocks and forest pressure in southern Malawi. We estimated a random-effects Tobit model of forest extraction to investigate whether households living at the tropical forest margin depend on forests to cope with income shocks. Results suggest a negative association between receipt of a positive income shock and forest extraction, in support of our hypothesis that rural households rely on forests for coping with income shortfalls. The implication may be

Acknowledgement

We thank Duncan Chikwita, Busiso Chilambo, the late G.T.N. Kathindwa, R.J. Kaphesi, the late S.A.R. Mjathu, and colleagues at the University of Malawi’s Center for Social Research for excellent advice and research assistance during fieldwork in Malawi. Many thanks are due to our respondents at the study sites. Steve Buccola, Ken Foster, Edna Loehman, Will Masters, and three anonymous reviewers provided valuable comments on an earlier version of the paper. This research is based upon work

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