Higher import duties on food or increased domestic production subsidies intensify the pressure to convert forests to farmland. Conversely, if foreign trade barriers or production subsidies are reduced, domestic farmers will expand production for export, which in turn will create a greater demand for farmland. Should the marginal return of farming fall, one can expect some land to be reforested. But the authors find that the conversion of forests to agriculture, especially tropical forests, is to some extent irreversible, both from a biological and commercial point of view. In summary, it appears the root causes of deforestation lie partly in the pressure to convert forests into farmland to feed a growing population, and partly in the absence of markets for various services provided by forests, such as carbon-binding and biodiversity.
Policies encouraging forest clearing, including subsidies and tax breaks, aggravate the problem.
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