Policy alternatives for balancing conservation and agricultural expansion in the tropics

Abstract

Scope and Method of Study: The purpose of this study was to analyze domestic environmental policy as a solution for balancing the need to promote conservation in Costa Rica with the opportunity of increasing the production of beef for international markets. The study is divided in three sections. The first one builds a biophysical model to describe the relationship between deforestation and river chemical pollution. The second one develops an economic model that determines what the optimum land cover distribution is, based on cost-benefit analysis. The final section analyzes the political implications of two environmental policies to promote conservation.

Findings and Conclusions: The environmental model suggested that tropical deforestation can increase river chemical pollution by factors of 3.5 to 8 compared to a totally forested watershed. The relocation of current pastures to areas of low erodibility can result in pollutant concentration reductions of 12% to 35%. And finally, agricultural intensification can reduce pollution, provided that manure is handled in a responsible way. The economic model showed that under conditions of high profitability from managing forest preserves, society would benefit by maximizing the area forested. The ability of the private sector to generate profits from increasing forested area is the most important factor in the determination of the optimum land cover distribution. When that profitability is high, the current subsidy scheme in place in Costa Rica is an effective tool to promote conservation. When the profitability is low, both an increase in the subsidy rate for forests and in the property tax for pastures could promote conservation. The increase in subsidies is a superior alternative based on policy legitimacy criteria.