How Do National Markets and Price Policies Affect Land Use at the Forest Margin? Evidence from the Philippines

Abstract

Agricultural growth in uplands of tropical developing countries is associated with deforestation, land degradation, and diminished watershed function. Using time-series price data from an upland Philippine watershed, we examine market integration and quantify product market links through which policy and macroeconomic shocks –– including instability from the Asian financial crisis of 1997–98––are transmitted to farm gate prices. If market-driven incentives dominate farmers’ decisions, then our results indicate the desirability of using a broader range of policy instruments to address upland problems, and the need for upland projects to devote increased attention to national-level information dissemination and policy advocacy. (JEL Q11, Q23)