Economic Shocks, Diversification, and Forest Use in Uganda

Abstract

We investigate household outcomes arising from economic shocks in rural Uganda, focusing on patterns of income diversification and forest use, and the role of assets in shaping ex post response to shocks. Income-poor households and those with below-average landholdings are observed to have more diversified income portfolios than their cohorts. Households encountering above-average losses tend to have more diversified income portfolios subsequent to the losses. Larger negative shocks are associated with greater use of the forest in subsequent periods, especially among asset-poor households. Findings suggest that development of better safety nets would reduce both vulnerability and forest pressure. (JEL O12, Q23)