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This paper explores the linkages of environment and economic development in the floodplain of large rivers. There is considerable evidence that even the most vital floodplains in the world are not being managed efficiently and both economic and ecological factors need to be considered for effective management. Floodplain management policies in Bangladesh emphasize structural changes to enhance agricultural production. However, these structural changes reduce fisheries production, where the fishery is an important natural resource sector and a source of subsistence for the rural poor. We develop a model where net returns to agriculture and fisheries are jointly maximized taking into account the effect of flooding depth and timing on production. Results for a region in Bangladesh show that optimal production in a natural floodplain yields higher net returns compared to a floodplain modified by flood control structures. This finding has important implications for management policies -- neglecting the bio-economic relationship between fisheries and land use may significantly affect the long-run economic role of a river floodplain, particularly in a poor country.


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