Topic Area: Deforestation

Geographic Area: Philippines

Focal Question: What affects have government policy and agricultural had on the forest margin of the Philippines?

Sources:

(1) Coxhead, I., A. Rola, K. Kim (2001). “How Do National Markets and Price Policies Affect Land Use at the Forest Margin? Evidence from the Philippines.” Land Economics 77(2): 250-267.

(2) Shively, G.E. (2001). “Agricultural Change, Rural Labor Markets, and Forest Clearing: An Illustrative Case from the Philippines.” Land Economics 77(2): 268-284.

Reviewer: Justin P. Hedge, Colby College ‘03

Review:

The Philippines is geographically broken down into two regions: the upland area and the lowland area. In these upland areas the natural forest still exists, but this natural resource has been faced with pressure from the agricultural sector. While this area has experienced output growth over the years, the extremely low yields resulting from lack of technology development suggest that this output growth in the uplands is primarily the result of increased land use. Poor farmers are primarily in control of this increasingly scarce natural resource of upland forests, as is the case in most developing nations. The rates of forest clearing and deforestation are dependent on far more than just timber trade, the desire to expand agricultural land, livestock holdings and political incentives can all put pressure on forest resources.

Historically in the Philippines, policy biases have put pressure on the forests by promoting growth at the forest margins. Given the rapid population growth in the Philippines, approximately 4.4 million jobs would be required to absorb the increase to the labor force (Shively 2001). This population growth has resulted in a migration to the uplands, where the expansion of the agricultural sector has provided the jobs necessary to support the growing population.

The degree of dependence on agriculture in the Philippines is high, even by Southeast Asian regional standards, and this is in part due to the policy path that the government has chosen. Beginning after World War II, the government officially encouraged the migration to the forested frontier areas as a means of alleviating the strain of an increasing population and stagnating technology on the rice-growing heartlands. Migration to these forest margin lands continued as the unemployed moved away from the lowland areas that were unable to absorb the population growth. Poorly defined property rights that are also difficult to enforce, further facilitated this internal migration pattern by making it easy for farmers to expand into the forest margin at a low cost (Coxhead et al. 2001).

Although the forest is not an employer in a literal sense, it is the first destination of settlers and others, and the incentives exist in the Philippines to promote clearing of the forests because of the low access costs and high returns compared with other income alternatives (Shively 2001). The existence of these high returns has largely been influenced by the actions of the government. In addition to directly promoting the migration to the uplands of the Philippines, the government has adopted trade barriers to maintain the country’s dependence on agriculture, thereby indirectly maintaining the pressure for farmers to expand at the forest margins to increase their income.

In the mid 1900’s the government adopted import bans on numerous agricultural products to ensure high prices. The Agricultural Tariffication Act of 1996 was brought about after the Uruguay Round of trade negotiations and so it was at this point the country adopted tariff rate quotas to replace its direct import bans. The in-quota tariff on corn, the largest cash crop in upland areas, remained at 35% but the out-quota tariff was initially set at 100% to support the efforts of domestic farmers. Another one of the government’s policy biases towards agricultural sector and particularly corn was its Grain Production Enhancement Program (GPEP). The program designated “key production areas (KPAs)”, primarily in the upland regions where corn is produced, and made producers there eligible for subsidies. It also provided them with the first benefits of research and development advances aimed at increasing corn yields (Coxhead et al. 2001).

Developments in agricultural technology, specifically irrigation of lowland farms, have had some positive affects on reducing the pressure on the Philippine forests. Prior irrigation, all of the lowland farms were rain fed. The introduction of irrigation projects into the region had several outcomes. The first is that farms could now produce two crops per year as opposed to the previous one. The result was higher income for these farms. With families on irrigated farms having a higher income, fewer family members needed to work, creating an increase in the demand for labor in the lowland areas. With the high labor mobility, workers came from the upland areas to meet this increased demand, and thus reduced the need for to expand their upland farms. Research has found a strong positive correlation between levels of household poverty and the probability of forest use (Shively 2001). The increased agricultural income created by the increase in technology, reduced the need for upland farmers on the margin to expand their operations.

It is clear in the case of the Philippines, that the Government has played a large role in determining the pressure on the forests of the nation. The gains for forests from the implementation in lowland areas however, can be only short-run gains unless the government takes certain actions. If the government pursues policies that reduce the costs for pesticides or machinery this could move the agricultural sector from being labor intensive to capital intensive. While this could increase income, it would negate the positive effects that have been realized under a labor-intensive production where labor shifted from the uplands to the lowlands (Shively 2001). The problem of expansion into the forest margin in the uplands is exacerbated by other environmental issues, especially the land degradation and soil erosion that is associated with the agriculture expansion. Land fallowing and crop rotation is rare in the Philippines and soil conservation measures are rarely adopted. This is a problem when combined with the use of fertilizer and pesticides, which can then enter the water supply and cause health concerns downstream.

The agriculture sector of the Philippine economy has historically placed great pressure on the forest resources of the nation. Furthermore, the expansion of the agriculture sector can be directly correlated to the governments influence on the market and creating artificial incentives for farming expansion by artificially maintaining high prices for agricultural goods. While these policies may have been useful for boosting the country’s economy and creating income, it has had a detrimental affect on the forests of the Philippines. Trade policy liberalization would have promoted growth in export non-agricultural sectors that would have been beneficial in absorbing the unemployment caused by rapid population growth without putting pressure on the forest margin through the expansion of agriculture (Coxhead et al. 2001). While some alleviations of these pressures have resulted from irrigation advances, the government must be careful in considering the environmental ramifications of its policies to ensure a sustainable future for the forests and natural resources of the Philippines.