Essays in Natural Resources and Development Economics

There is great geographical overlap between key areas of natural resources, global biodiversity and regions of acute poverty. The world’s poorest people, including 59% of the population of Asia, Africa and Latin America live in rural areas alongside great natural resources on which they heavily rely for food source and income generation. However, proximity does not imply free unlimited access and often involves a great deal of trade-offs and risk ranging from natural weather and catastrophic shocks affecting resource availability, productivity and even human lives, to changes in governance and resource use regulations. In this dissertation, I study the linkages between natural resources use, livelihoods, governance and the environment, using the case study of Madagascar, a low-income country with great biodiversity and natural resources endowment. In particular, I study how different types of regulations and restrictions affect household resource use and well-being. In Chapter 1, I evaluate the health and wealth trade-offs of the widely practiced fire use in agriculture in Madagascar, using high-frequency satellite data to model pollution exposure taking advantage of random variation in wind direction. In Chapter 2, I study how poor households cope with natural disasters using the quasi-experiment setting of high frequency cyclones in Madagascar. In Chapter 3, I take advantage of a unique dataset coupled with the staggered rollout of a biodiversity conservation policy to study the impacts of community-based conservation on bushmeat hunting in northeastern Madagascar./nIn the first chapter, I study the impacts of agricultural fires on local health and on agricultural productivity in Madagascar. Every year, despite agricultural fires being illegal, 25% to 50% of grasslands and 7% to 10% of forests are set on fire due to slash-and-burn agriculture and livestock farming. This leads to great pollution throughout the island, yet there is limited empirical evidence on the health impacts of fires in the island. I first estimate the health impacts of fires by using high frequency and high resolution satellite data on fire location and wind speed on the day of fire to model pollution exposure around population centers. Identification comes from the random variation in wind direction and the frequent change in pollution source. I find that agricultural fires greatly impact birth outcomes and respiratory health of infants and that fires are responsible for over 4,000 “missing infants”, or 0.7% of all births across the island every year. To identify the agricultural impacts of fires, I use an instrumental variable strategy taking advantage of a rapid expansion of protected areas in Madagascar that led to tripling of protected areas and delimitation of numerous potential parks. I use proposed parks, areas that were physically delimited as potential official protected areas, as an instrument for fires. Delimitation of proposed parks led to reduced fire activity, however, since parks were not actually implemented, surrounding populations were unaffected by potential economic returns or changes in behavior that would raise concerns regarding the validity of the exclusion restriction. Grassland fires led to increased livestock production and yields for cassava and corn, whereas forest fires increased corn farming land and harvest, leading to decreased food prices. These quantity and price effects increased consumer surplus by USD1.884 billion per year, implying that, for the output gains to outweigh the mortality impacts, one would have to assume a value of statistical life of less than USD440,000, whereas typical values for VSL range from 4 million to 9 million USD. Therefore the mortality costs of fires alone, excluding hospitalization costs and morbidity, exceed the benefits from increased agricultural production. Given that land use rights are ambiguous and government resources in regulating forest fires are limited, a more cooperative and integrative approach such as payments for ecosystem services might be effective in incentivizing farmers to engage in less frequent more sustainable fire activity./nIn the second chapter, I use cyclone track data and hourly wind direction data to model cyclone exposure and study the impact of tropical storms in Madagascar. Madagascar is the second most exposed country to multi-disaster risks in Africa, and experiences multiple episodes of droughts, floods, locust invasions and cyclones every year. On average, the island yearly experiences three to five cyclones that claim 10% to 30% of annual GDP in post-disaster losses and damages. Indeed, 74% of total labor is employed in agriculture, furthermore, agricultural products including exports amount to 45% of GDP. Yet, there is little government effort in terms of risk mitigation, resilience building and even disaster relief. Looking at the impact of cyclones on household well-being along multiple dimensions, I find that both rural and urban households are negatively impacted by cyclones in Madagascar despite better infrastructure and less reliance on natural resources in urban areas. While rural areas experience more physical losses than urban areas as measured by cyclone e↵ects on housing and access to electricity, rural households are able to smooth consumption and are less prone to cyclone-driven poverty compared to their urban counterparts. In this latter group, average cyclones have no significant impact on physical assets, but lead to lower consumption and higher rates of transient poverty. I show that this is the result of a strong informal safety net between rural and urban families through informal insurance and relief in the form inter-household transfers. To provide relief to rural families, urban households reduce expenditure in non-food expenditure including education. This suggests that, while partially effective in managing risk and achieving consumption smoothing along some key dimensions, lack of formal insurance diverts resources away from potentially productive investments such as education and towards unequivocally necessary informal relief./nIn the third chapter, I use a unique household-level panel data to evaluate how community- based conservation impacts bushmeat or wildlife hunting and consumption in the northeastern rainforests of Madagascar, where lemurs, bats, carnivores, tenrecs and bush pigs are commonly consumed to satisfy nutritional needs. Taking advantage of the staggered rollout of the policy, I find that community-based conservation has decreased overall hunting in the study area by reducing opportunistic hunting and hunting by less reliant, richer house- holds. This effect was larger among relatively more educated households. Furthermore, community-based conservation successfully modified consumption patterns among poorer households such that illegal hunting (hunting of lemurs and bats) was reduced and substituted by hunting practices conforming with conservation practices (seasonal hunting of sustainable prey). While these results are encouraging given the increasing shift towards decentralization, it is important to note that, in my study setting, community-based conservation was found to have some limitations. First, effects did not persist and faded over time. Second, not all types of hunting were successfully reduced and the policy led to increased active hunting through weapons and traps as households respond by retaliating and over- extracting resources in fear of completely losing access in the future. The effectiveness of community-based conservation on opportunistic hunting and bushmeat purchase was found to be heterogeneous based on income and education. Better community integration and dissemination of community conservation design principles is therefore recommended as it has proven to effectively reduce illegal hunting and also has the potential of solving the retaliation and fear-based extraction behavior. Furthermore, given that biodiversity is a global public good, local users should not be the only bearers of conservation costs and alternative livelihood strategies need to be introduced for the long-run success of conservation efforts.

Advisor: Auffhammer, Maximilian