Maize price volatility and deforestation

Abstract

We develop a model of deforestation using a real option on agricultural land conversion and establish an important link between agricultural commodity price volatility and forest loss. Higher price volatility of staple commodities increases incentives to delay land conversion and is associated with lower levels of deforestation. Using satellite‐derived estimates of local deforestation and high‐frequency local maize prices across a panel of market catchments across 26 countries in sub‐Saharan Africa, we find strong empirical evidence that maize price volatility is negatively associated with forest loss. Our findings are driven by catchments in biomes that are relatively well‐suited to maize production. Instrumenting for changes in price levels and price volatility with spatially explicit temperature and rainfall anomalies yields results consistent with our main approach. The findings highlight important tensions between agricultural price stabilization policies, conservation efforts, and environmental externalities.

Study on Price Bubbles of China’s Agricultural Commodity against the Background of Big Data

“…The "surge and fall" of agricultural prices affects population welfare, increases the production costs and uncertainty of downstream enterprises, and adversely affects agricultural commodities and economic development [7]. Price stability, meanwhile, helps increase agricultural investment, avoid the poverty trap for low-income people, and reduce rural labor outflow [8]. Although China is a largely agricultural country, its agricultural base is weak, and factors such as natural disasters, animal diseases, speculation [9], and macro-control policies [10] may trigger agricultural price bubbles and generate adverse effects.…”

Market Access and Deforestation

“…Despite their promise, reducing price risk may increase deforestation through agricultural extensification. Lundberg and Abman (2022) find decreases in maize price volatility increase subsequent maize production and deforestation. To date there is little well-identified empirical evidence on the role that contracting programs in particular may have in forest loss, a gap in the literature that the present papers helps to fill.…”

Maize price variability, land use change, and forest loss: evidence from Ghana

“…(Jung et al, 2021;Austin et al, 2019;Caviglia-Harris et al, 2016;Assunção, Gandour, Rocha, et al, 2015;Busch et al, 2012;Arima et al, 2011;Morton et al, 2006;Pfaff, 1999)). The literature studying forest loss in sub Saharan Africa are mostly cross-country analysis (Lundberg and Abman, 2022;Ordway, Asner, and Lambin, 2017;Larcom, Van Gevelt, and Zabala, 2016;Rudel, 2013;Koop and Tole, 1999;Cropper and Griffiths, 1994) and with most of them focusing on the effects of deforestation on environmental, natural resource outcomes, and health and dietary quality (Galway, Acharya, and Jones, 2018;Jones, Acharya, and Galway, 2017). For instance, Galway, Acharya, and Jones (2018) posit that given the numerous ecosystem services provided by forests and biodiverse landscapes, deforestation could have important consequences for diet quality and human nutrition.…”