# **4 Concluding remarks**

The basic premise of this paper – and of the land use modelling in the von Thünen tradition – is that land use changes are determined by changes in land rents. The central question to ask in order to assess how policies affect deforestation (and reforestation) is: _how do policy changes affect the land rent of agricultural uses in comparison to forest uses at the extensive margin (the agriculture-forest interface)?_ In other words, the key of any analysis of policy impact is how the basic incentives of the land users are affected.

The paper shows that while the direct effects are straightforward, they often generate feedbacks and interactions among rent curves that enlarge, modify and in some cases even reverse the initial effects. It has addressed some of the complexities involved in assessing how policy and other social changes will affect land rents and incentives, sorted out some of the key mechanisms, and put them into a von Thünen framework. This should give a more unified framework for policy analysis.

The forest transition theory suggests that there are strong forces which make forested areas lose a substantial part of their forest cover, and also – eventually – reverse this process. The period of high deforestation (forest frontier stage) is driven by an initial increase in the agricultural land rent, typically by new roads that increase demand and prices for agricultural commodities and open up for inflow of labor and capital. Self-reinforcing mechanisms further stimulate and maintain high rates of deforestation. The stabilization of forest cover is in most cases brought about by two forces: economic development, which increases the opportunity costs of labor (reduced agricultural rent), and higher demand and prices for forest products (increased forest rent).

A major problem with attempts at reducing the agricultural rent during the forest frontier stage is that they also tend to have adverse effects on rural income, e.g., reducing market access, and constraining access to capital. The mechanisms that during the next stage help to stabilize the forest cover are, on the other hand, more compatible with the aim of poverty reduction. Higher rural wages and higher prices for forest products tend to produce win-win outcomes. Thus a more acceptable strategy is to speed up the forest transition by stimulating these stabilizing forces.

# **References**

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- Agrawal, Arun, and Elinor Ostrom. 2001. Collective Action, Property Rights, and Decentralization in Resource Use in India and Nepal. _Politics & Society_ 29 (4):485-514.

- Alston, Lee J, Gary D Libecap, and Bernardo Mueller. 2000. Land Reform Policies, the Source of Violent Conflict, and Implications for Deforestation in the Brazilian Amazon. _Journal of Environmental Economics and Management_ 39:162-188.

- Alston, Lee J., Gary D. Libecap, and Bernardo Mueller. 1999. A model of rural conflict: violence and land reform policy in brazil. _Environment and Development Economics_ 4 (1999):135160.

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- ———. 2001. Playing Games in the Forest: State-Local Conflicts of Land Appropriation. _Land Economics_ 77 (2):285-299.

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