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IV. Analytical extensions and policy issues

This overview discusses the significant economic implications of deforestation and soil depletion in Southeast Asia, focusing on their disproportionate impact on the poorest households. It examines the strong spatial characteristics tied to uplands and forests, alongside critical institutional issues such as open access to forest resources and the unregulated disposal of pollutants. Local actions and policies, while essential, face challenges due to external market drivers and weak governance. A stylized model highlights interregional linkages that affect both upland and lowland economies.

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IV. Analytical extensions and policy issues

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  1. IV-B IV. Analytical extensions and policy issues

  2. IV-B 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

  3. IV-B Subwatersheds of Upper Manupali River, Bukidnon Source: Deutsch et al. 2001

  4. IV-B E-coli counts by sub-watershed Source: Deutsch et al. 2001

  5. IV-B Source: Deutsch et al. 2001

  6. IV-B 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

  7. IV-B 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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  19. IV-B 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.

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