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Hidden welfare effects of tree plantations

Published online by Cambridge University Press:  06 August 2020

Gustavo Anríquez Nilson Open the ORCID record for Gustavo Anríquez Nilson [Opens in a new window] ,
Gabriela Toledo Roman  and
Rodrigo Arriagada Cisternas
Gustavo Anríquez Nilson
Affiliation:
Department of Agricultural Economics, Pontificia Universidad Católica de Chile, Santiago, Chile Center for Socioeconomic Impact of Environmental Policies (CESIEP) Center for Intercultural and Indigenous Research (CIIR)
Gabriela Toledo Roman*
Affiliation:
Department of Agricultural Economics, Pontificia Universidad Católica de Chile, Santiago, Chile Center for Intercultural and Indigenous Research (CIIR)
Rodrigo Arriagada Cisternas
Affiliation:
Center for Socioeconomic Impact of Environmental Policies (CESIEP) Center for Intercultural and Indigenous Research (CIIR) Department of Ecosystems and Environment, Pontificia Universidad Católica de Chile, Santiago, Chile Center for Applied Ecology and Sustainability (CAPES) Centre for Climate and Resilience Research, CR2, University of Chile, Santiago, Chile
*
*Corresponding author. E-mail: gabitoledo@gmail.com
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Abstract

Subsidies to promote tree plantations have been questioned because of negative impacts of the forestry industry. Quantitative evidence on the socioeconomic impacts of afforestation subsidies or of tree plantations is elusive, mainly due to data scarcity. We assess the overall impact of a tree plantation subsidy in Chile, using our original 20-year panel dataset that includes small area estimates of poverty and the subsidy assignment at the census-district scale. We show that forestry subsidies – on average – in fact, do increase poverty. More specifically, using difference in difference with matching techniques, and instrumental variables approaches, we show that there is an increase of about 2 per cent in the poverty rate of treated localities. We identify employment as a causal mechanism explaining this finding, since we found a negative effect of tree plantations on employment, and therefore, on poverty. We suggest reassessment of the distributional effects of the forest subsidy and forestry industry.

Keywords

afforestation subsidiesimpact evaluationpovertytree plantations

JEL classification

Q23: Forestry Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth I32: Measurement and Analysis of Poverty
Type
Research Article
Information
Environment and Development Economics , Volume 26 , Issue 2 , April 2021 , pp. 151 - 168
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press

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