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The paper presents a theory of the deforestation of common property forest over space and tests this theory using data from 319 Mexican ejidos. One of the main implications of the model is that at a parcel level, the deforestation decision depends on the qualities of that parcel relative to the others within the community and on aggregate, the decision of how much forest to convert to pasture or agricultural land depends upon the entire distribution of land quality and distance in the ejido. The theory also relates the physical characteristics of the converted land to its marginal value. Aggregate community characteristics affect the demand for forest conversion, in particular, inequality can operate both through individual incentives as well as by increasing cooperation. Empirically, we see that within a given ejido, parcels of forest that are relatively closer, of lower slope and altitude are at higher risk of deforestation, and that communities with large tracts of low-sloped, accessible land have considerably higher overall forest loss. This suggests that payments in exchange for standing forest should be higher for land within an ejido with these types of characteristics and between ejido targeting should focus on those with large tracts of accessible forests on land of good quality for agriculture or pasture. We also find that expanding the agricultural/pastoral frontier into increasingly remote and highly sloped land has negative effects on the value of this land. At a community level, we find that demand is increasing with the number of ejido members, but that this effect can be mitigated by higher inequality. The inequality effect operates both through individual incentives and by influencing overall cooperation: users at the lower end of the land distribution use the commons less intensively than those at the high end, and communities with high inequality have lower participation rates but a higher likelihood of implementing rules for commons management. This suggests that the formation of groups responsible for commons management, with members composed of those with the highest stake in the resource, can lead to more effective resource exploitation.


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