Elsevier

World Development

Volume 36, Issue 3, March 2008, Pages 527-540
World Development

Does Charcoal Production Slow Agricultural Expansion into the Peruvian Amazon Rainforest?

https://doi.org/10.1016/j.worlddev.2007.04.011Get rights and content

Summary

Using a recursive optimization model, we analyze how the incorporation of charcoal production by pioneer farmers in the Peruvian Amazon rainforest would affect household net returns and the rate of deforestation at the early stage of forest colonization. Because charcoal production diverts scarce dry-season labor from land clearing for agriculture, deforestation by pioneer farmers may be slower. The model predicts that after 10 years, a representative pioneer farmer who produces charcoal would earn 17% higher net income and clear 17% less forested area. A sensitivity analysis predicts that any additional labor would be chiefly devoted to charcoal production, reinforcing the conservation effect.

Introduction

As in many tropical countries, agricultural expansion has been a primary cause of deforestation in the Peruvian Amazon, especially in the area of Pucallpa (Fujisaka, 1997, IIAP, 1996, Yanggen, 2000). Although agriculture continues to expand, charcoal production in the forest margins of Pucallpa is changing the deforestation process. Before 1995, charcoal production was not a financially feasible activity for pioneer farmers, who typically sell some timber but mainly convert primary forests directly to agricultural uses. Imperfect markets, high transport costs and the abundance of other forest income sources discouraged charcoal production.

A reduction in charcoal supplies from northern coastal forests has increased the value of many Amazonian tree species for charcoal production (MINAG, 2001). Since strong national demand exists for charcoal (Malleux, 2001), effects on the rainforest may continue for many years. The short-term financial attractiveness of producing high-quality Amazonian charcoal is changing the longer term forest-agriculture dynamics in the region.

The high-quality charcoal from selected Amazonian species provides a superior fuel with excellent heat output and can withstand rough transport without pulverizing. Restaurants serving barbecued meat in the coastal cities of Peru constitute a large market that demands this type of charcoal thereby creating high and stable market prices. Traditionally, this demand was met from the northern dry forest of the country. However, overexploitation of the northern dry forest led to a government prohibition of forest extraction in the region (INRENA, 1993). Consequently, the policy constrained charcoal supplies and raised its market price. A direct consequence of this policy is the recent wave of charcoal production from a few timber species found in the primary Amazon forest.

This “new” activity among Pucallpa pioneer farmers increased annual charcoal production in the area from less than 1,000 metric tons (mt) in the 1980s to more than 11,000 mt in 1998, accounting for approximately 80% of national charcoal production in Peru (INRENA, 2000). The incorporation of this new activity at an early stage of the forest colonization process raises an important question: Do the financial incentives of charcoal production cause pioneer farmers to increase or to reduce cutting of the primary rainforest? Underlying this question are issues of government policy, farm management strategies, and the resulting impacts upon human welfare and forest cover.

The objective of this paper is to analyze potential changes in the traditional forest conversion process and household welfare in response to increased charcoal production. To achieve this general objective, conceptual and empirical models are developed to analyze both agriculture and forest management decisions in the pioneer settler context. A representative pioneer farm common to the forest margins near Pucallpa, Peru, serves as a case study.

The paper first provides brief background about deforestation in the Peruvian Amazon. Section 3 develops a conceptual model for understanding the integration process of charcoal into a farmer’s production options. Section 4 develops an empirical optimization model to simulate behavior by a representative pioneer farmer. Section 5 presents the results of the empirical analysis, and Section 6 discusses results and offers conclusions and policy recommendations.

Section snippets

Deforestation in the Peruvian Amazon

As agricultural colonization of forest areas has increased, deforestation in the Peruvian Amazon has become a major concern (Fujisaka, 1997, Labarta, 1998, Yanggen, 2000). According to Peruvian statistics, by 2000 deforestation had reached 9,559,817 ha (12.7%) in the Peruvian Amazon and about 877,713 (9.1%) only in the area around Pucallpa (INEI, 2000). It was also estimated that primary forest in the Peruvian Amazon has been lost during 2000–05 at a rate of 0.4% per year (FAOSTAT).

The expansion

Conceptual framework and general model formulation

We develop a model to represent a pioneer household entering into a forested area. Following Singh, Squire, and Strauss (1986), a household is assumed to maximize utility, which is derived from consumption of agricultural goods (X), other consumption goods (OC) and leisure (ℓ). “Other consumption goods” include products purchased off-farm with income earned from farming or charcoal production as well as natural products gathered from the forest. Household utility is defined asU=U(X,OC,).

A recursive multi-period programming model

A recursive multi-period linear programming model incorporates all observed crop production enterprises along with charcoal production. The objective function is the maximization of the sum of discounted household net income generated from the different enterprises during the 10-year pioneer stage of forest colonization. Following other studies, the analysis employs a 10% discount rate (Vosti, White).

The model introduces monthly labor requirements for every crop farming activity in the area

Results

The model predicts that at the end of the pioneer stage of forest colonization, a farm producing charcoal will reduce household deforestation from 21.8 ha to 18.1 ha compared to a farm following the exclusive agricultural path (Table 2).

Furthermore, the deforestation path under the charcoal scenario is always less than the deforestation path of the exclusive agricultural expansion scenario (Figure 2). After year 7, when the first fallowed land is expected to become available for agriculture, the

Discussion, conclusions, and policy recommendations

This analysis shows that colonization of the forest margins during the pioneer stage currently provides higher returns to labor than the market wage (Table 2), so farmers perceive no incentive to refrain from exploiting the primary forest. However, the findings that charcoal production decreases household deforestation by 17% and also increases discounted farm earnings by 17% (Table 2) are not negligible. The aggregate effect of current pioneers behaving like the modeled representative farmer

Acknowledgments

The authors would like to thank Robert Walker, John Hoehn, James Oehmke, Sam Fujisaka, and Efraín Leguía for helpful input and comments. This research was partially funded by the Spanish Agency for International Cooperation (AECI) and the Canadian International Development Research Centre (IDRC) through its Desarrollo Participativo Amazónico project. Ricardo Labarta is also grateful to the Department of Agricultural Economics at Michigan State University for financial support while developing

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