Poverty and the management of natural resources: A model of shifting cultivation

It is frequently asserted in the environment/development literature that severe poverty causes the neglect of worthwhile investments, resulting in deforestation and other resource degradation. While microeconomic theory does suggest a relationship between poverty and the evaluation of investments, the environmental impact is not so simple. This paper develops a dynamic theory of “shifting cultivation,” with special attention to an environmental impact variable: the length of time a given field is cultivated before a shift to the next. The model indicates that poverty reduction will lead in some ways to accelerated extraction of a natural resource, but also to a longer extraction period. The results therefore provide support for claims of an indirect environmental benefit from the primary goal of alleviating rural poverty. The impact of discount rates, prices, and other parameters are also explored.