Protected areas (PAs) can mitigate climate change by reducing carbon emissions that result from forest loss. Carbon emissions from forest degradation are a large component of forest loss and are often driven by the extraction decisions of resource-dependent households. PA policies must reflect how villagers use forests to be effective. Here, a spatial Nash equilibrium of extractors’ uncoordinated forest extraction pattern decisions establishes a baseline of forest-use patterns. Using that baseline, a manager chooses the location and enforcement level of PAs to maximize the avoided forest degradation in the landscape and in the PAs. Optimal PA locations depend on the labour market and the distance between forest patches. A combination of wage-improving projects and appropriately located PAs increases avoided forest degradation.
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