Deforestation as an Environmental-Economic Problem in the Philippines

The purpose of this paper is to outline a theoretical approach for the determination of a socially optimal use of forested land resources in the Philippine uplands. Allocation of land to different land uses is not optimal because of existing institutional, informational, and market failures. Cultivation of upland areas has caused increasing and continuous degradation of soils, and consequent adverse effects in the lowlands. These impacts are not internalized in a farmer’s decision making, especially under uncertain land tenure. A dynamic model of social and private optimization of land use concentrates on the issues of property rights, heterogeneity of land in terms of accessibility, the level of adoption of soil conservation measures, and environmental externalities.