Do Tropical Forests Provide Natural Insurance? The Microeconomics of Non-Timber Forest Product Collection in the Brazilian Amazon

Subhrendu K. Pattanayak and Erin O. Sills


Tropical forests may contribute to the well-being of local people by providing a form ofnatural insurance.We draw on microeconomic theory to conceptualize a model relating agricultural risks to collection of non-timber forest products. Forest collection trips are positively correlated with both agricultural shocks and expected agricultural risks in an event-count model of survey data from the Brazilian Amazon. This suggests that households rely on forests to mitigate agricultural risk. Forest product collection may be less important to households with other consumption-smoothing options, but its importance is not restricted to the poorest households. (JEL Q23)

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