Producers' Well-Being and Natural Resource Extraction: The Eaglewood Trade in Papua New Guinea
Nicolas Gerber and
Agricultural and Resource Economics Review, 2017, vol. 46, issue 1, 21-43
We illustrate how natural resource dependent and isolated communities manage their forest stock. Our model is based on field observations of the Eaglewood trade in Papua New Guinea. Using a dynamic model of household utility maximization and simulations, we analyze the impact of variations in the (monopsonistic) resource price on the householdsâ€™ consumption choices and their allocation of effort across depletive and nondepletive activities. The stock of forest is embedded directly in the householdsâ€™ utility function (existence value) and in their (nonseparable) production and consumption functions. We show that poverty (in production assets) does not inevitably lead to stock depletion.
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