Impact of Credit Policy on Agricultural Expansion and Deforestaion

Research output: Contribution to journalArticle

Abstract

The causes of tropical deforestation are classified into three levels: direct (first-level), intermediate (second-level) and indirect (third-level). The direct causes include expansion of agricultural land, cattle ranching, logging, etc. The intermediate causes are the decision parameters influencing the direct causes. Some possible examples are agricultural input and output prices, level of technology, land distribution, wage levels, property rights, etc. The indirect causes are macro-level variables and policy instruments that influence deforestation through the other two levels. Agricultural expansion is the major direct cause of deforestation. The model of Angelsen et al. (Journal of Development Economics (1999) 58, 185-218) hypothesizes the effects of several of the intermediate causes on agricultural expansion and deforestation. The model discusses two approaches, i.e., subsistence versus market approaches, behind forest clearing (deforestation) for agricultural production. However, the model does not explicitly consider the effect of agricultural credit on the farmer's decision making with respect to the purchase of the optimal amount of fertilizer and its effect on deforestation. Since agricultural credit programmes have been an important policy tool for improving agricultural productivity and the incomes of traditional farmers, it is argued that the model needs to be extended to incorporate the effect of credit constraint on agricultural expansion and deforestation. While extending the theoretical model for this aspect, this paper also derives a fertilizer demand function with respect to credit and other socio-economic factors, and presents empirical evidence on the effect of the removal of credit subsidy for fertilizer use. The evidence from Zambia suggests that the credit constraint of farmers needs to be considered explicitly in the theoretical model of agricultural expansion.
Original languageEnglish
Pages (from-to)275-287
Number of pages13
JournalTropical Agricultural Research
Volume15
Issue numbern/a
Publication statusPublished - 2003

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Credit policy
Deforestation
Credit
Fertilizer
Farmers
Credit constraints
Agricultural production
Cattle
Decision making
Demand function
Income
Policy tools
Agricultural productivity
Subsistence
Logging
Socioeconomic factors
Tropical deforestation
Wage distribution
Subsidies
Purchase

Cite this

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title = "Impact of Credit Policy on Agricultural Expansion and Deforestaion",
abstract = "The causes of tropical deforestation are classified into three levels: direct (first-level), intermediate (second-level) and indirect (third-level). The direct causes include expansion of agricultural land, cattle ranching, logging, etc. The intermediate causes are the decision parameters influencing the direct causes. Some possible examples are agricultural input and output prices, level of technology, land distribution, wage levels, property rights, etc. The indirect causes are macro-level variables and policy instruments that influence deforestation through the other two levels. Agricultural expansion is the major direct cause of deforestation. The model of Angelsen et al. (Journal of Development Economics (1999) 58, 185-218) hypothesizes the effects of several of the intermediate causes on agricultural expansion and deforestation. The model discusses two approaches, i.e., subsistence versus market approaches, behind forest clearing (deforestation) for agricultural production. However, the model does not explicitly consider the effect of agricultural credit on the farmer's decision making with respect to the purchase of the optimal amount of fertilizer and its effect on deforestation. Since agricultural credit programmes have been an important policy tool for improving agricultural productivity and the incomes of traditional farmers, it is argued that the model needs to be extended to incorporate the effect of credit constraint on agricultural expansion and deforestation. While extending the theoretical model for this aspect, this paper also derives a fertilizer demand function with respect to credit and other socio-economic factors, and presents empirical evidence on the effect of the removal of credit subsidy for fertilizer use. The evidence from Zambia suggests that the credit constraint of farmers needs to be considered explicitly in the theoretical model of agricultural expansion.",
keywords = "Agricultural credit, Agricultural expansion (deforestation), Causes of tropical deforestation, Fertiliser use, Profit oriented farmers, Subsistence farmers",
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year = "2003",
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Impact of Credit Policy on Agricultural Expansion and Deforestaion. / Culas, Richard.

In: Tropical Agricultural Research, Vol. 15, No. n/a, 2003, p. 275-287.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Impact of Credit Policy on Agricultural Expansion and Deforestaion

AU - Culas, Richard

N1 - Imported on 12 Apr 2017 - DigiTool details were: Journal title (773t) = Tropical Agricultural Research. ISSNs: 1016-1422;

PY - 2003

Y1 - 2003

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AB - The causes of tropical deforestation are classified into three levels: direct (first-level), intermediate (second-level) and indirect (third-level). The direct causes include expansion of agricultural land, cattle ranching, logging, etc. The intermediate causes are the decision parameters influencing the direct causes. Some possible examples are agricultural input and output prices, level of technology, land distribution, wage levels, property rights, etc. The indirect causes are macro-level variables and policy instruments that influence deforestation through the other two levels. Agricultural expansion is the major direct cause of deforestation. The model of Angelsen et al. (Journal of Development Economics (1999) 58, 185-218) hypothesizes the effects of several of the intermediate causes on agricultural expansion and deforestation. The model discusses two approaches, i.e., subsistence versus market approaches, behind forest clearing (deforestation) for agricultural production. However, the model does not explicitly consider the effect of agricultural credit on the farmer's decision making with respect to the purchase of the optimal amount of fertilizer and its effect on deforestation. Since agricultural credit programmes have been an important policy tool for improving agricultural productivity and the incomes of traditional farmers, it is argued that the model needs to be extended to incorporate the effect of credit constraint on agricultural expansion and deforestation. While extending the theoretical model for this aspect, this paper also derives a fertilizer demand function with respect to credit and other socio-economic factors, and presents empirical evidence on the effect of the removal of credit subsidy for fertilizer use. The evidence from Zambia suggests that the credit constraint of farmers needs to be considered explicitly in the theoretical model of agricultural expansion.

KW - Agricultural credit

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KW - Fertiliser use

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KW - Subsistence farmers

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JO - Tropical Agricultural Research

JF - Tropical Agricultural Research

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