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Abstract

Most thinking on poverty and deforestation in developing countries does so in terms of the influence of one on the other, in either direction. However, the two have common determinants in the underlying economic and institutional conditions that set factor and product prices and the incentives for migration and natural resource-depleting activities. These determinants include property rights failures (open access to forest lands) but also 'government failures' in the form of economic policies that indirectly promote deforestation and retard poverty alleviation. A general equilibrium approach permits the analytical identification of the influences that such distortions exert on poverty and deforestation pressures. Using a numerical general equilibrium model, we consider the likely effects of the reform of industrial and agricultural protection policy, a key component of modern Philippine economic development strategy, on the determinants of poverty and deforestation.

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