seeks to relocate to and a destination he may have to settle for. In addition, these costs vary both at the village level through measures of, among others, ease of access to the nearest urban center or the capital city and at the individual level by things like educational attainment. As long as the attributes that make an individual more or less likely to migrate to a higher cost-higher return country are uncorrelated with the likelihood of occurrence of environmental shocks or natural disasters, this should hold.

# **5.2 Estimation**

We present the first-stage relationship between this constructed per capita remittance variable and the observed per capita remittance in Table 4. We test this relationship under a number of specifications controlling progressively for all of the exogenous village level characteristics. Overall, there appears to be strong positive correlation between the two as one would expect. In all specifications, we cannot reject the hypothesis that the exogenous variables jointly explain significant degree of variation in remittances. The F-statistic ranges from 9.07 to 17.6. Note that in addition to the size of the staying population, we also control for the size of the young population in the village and separately for males of this particular age group. The idea is that individuals - particularly males - of ages between 15 and 29 are most likely to be work related migrants. An increase in openness and opportunity to migrate is likely to affect the size of this particular age group the most. The size of this age group that remains within a village is also likely to have the strongest implications for wages and may have differential proclivities toward use of forest resources.

In Table 5 we present our results from the reduced form regression results for forests. We consider two measures of forests: forest area per household and forests share of total village land area. We instrument remittances, population and road density variables with synthetic remittance, population in 1991 and road density in 1975 respectively. We control for time trend and the presence of community forestry user groups in all specifications and present results from the OLS, FE and FE-IV specifications for both measures of forest land.

Remittances and population appear to have a strong negative association with forests per household in the pooled OLS specification. However, when we control for fixed effects, remittance becomes insignificant while population continues to remain significant and has a negative sign. Controlling for the endogeneities, the FE-IV specification shows a positive and significant relationship between remittances and forests. That the OLS underestimates the effect of remittances on forests confirms the possibility that unobservable shocks that affect forests negatively must have an opposite effect of remittances. Similar pattern is observed for forest share of total land as well. The OLS coefficient starts out negative, becomes less negative controlling for fixed effects and switches over to become positive and significant in the FE-IV specification. Population continues to appear with a negative sign but is imprecisely measured. The same is true for the share of 15-29 age group in the population 24