A Tale of Two Communities: Explaining Deforestation in Mexico

Deforestation policies in Mexico need to recognize heterogeneity in community's management schemes. In communities that extract wood from the forest for profit, forestry projects generate funds whose investment in public goods increases the value of standing forest to those not receiving direct dividends from the projects. Increases in such investment help decrease deforestation. In communities with other livelihoods, deforestation decreases with the community's ability to form a coalition that cooperates in reducing forest clearing. This is easier in smaller communities with more experienced leaders. Analysis using data collected in 2002 combined with satellite imagery verifies the models' predictions.