Description

This paper assesses the influences of economic policies and agricultural prices on farmers’ land use decisions and the environmental consequences. The author applies a stochastic dynamic household model to study the tree planting decisions made by small holder farmers in the Philippines. The simulation results reveal that both the relative prices and the variability of the prices significantly influence tree planting choices. Although low-income farmers are wary of the risks of tree crop adoption, the aversion to risk can be with policies that make tree crops more attractive choices. This paper also discusses the influence of cropping patterns on soil erosion and local biodiversity.