Forest Loss and Economic Inequality in the Solomon Islands: Using Small-Area Estimation to Link Environmental Change to Welfare Outcomes

John Gibson

Working Papers in Economics from University of Waikato

Abstract: To study welfare effects of environmental change, data from household surveys may be linked to remote sensing data. If linking uses spatial aggregation there is risk of ecological fallacy, since surveys are only representative for large areas that may not correspond to the spatial scale of the decision-making units. This paper uses survey-to-census imputation to estimate welfare indicators for small areas in order to study the effect of deforestation on subsequent inequality in the rural Solomon Islands. This country depends on logging for almost half of foreign exchange and one-sixth of government revenue, and most forested land remains under customary ownership. A sharp increase in log exports, to seven times the sustainable yield, and a major shift in export destinations as other countries withdrew from the tropical log trade represents an exogenous shock that helps to identify effects of deforestation on inequality rather than the reverse relationship. Using data for rural wards, that have about 400 households each, a standard deviation increase in the rate of forest loss over 2000 to 2012 raises the Gini index for household consumption in 2013 by one-third of a standard deviation. This precisely estimated effect would not be apparent using more spatially aggregated data.

Keywords: deforestation; inequality; poverty; small-area estimation (search for similar items in EconPapers)
JEL-codes: O15 Q23 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2017-07-19
New Economics Papers: this item is included in nep-agr and nep-env
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https://repec.its.waikato.ac.nz/wai/econwp/1714.pdf (application/pdf)

Related works:
Journal Article: Forest Loss and Economic Inequality in the Solomon Islands: Using Small-Area Estimation to Link Environmental Change to Welfare Outcomes (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:wai:econwp:17/14

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