A two-sector model of land use and deforestation: Funding urban development with a tax on urban and rural employment
We model a small country with an urban manufacturing sector and a rural agricultural sector. Government taxes rural and urban employment to finance urban infrastructure which contributes to urban production. The manufacturing wage is fixed, leading to urban unemployment. Expansion of cultivated area involves deforestation at frontiers. An increment to urban infrastructure may draw resources into the city but a large enough addition to infrastructure may cause the tax rate to rise by more than urban labor productivity, which would exacerbate frontier deforestation. Improvement of rural transportation raises rural wages, reduces the urban unemployment rate, and extends the area under cultivation, causing deforestation; it also reduces the employment tax rate, which permits expansion of fixed-wage urban manufacturing. Such a wide, sectoral distribution of benefits may help explain the popularity of such policies despite their damage to frontier forest resources.
- Research Organization:
- Oak Ridge National Lab., TN (United States)
- Sponsoring Organization:
- USDOE; USDOE, Washington, DC (United States)
- DOE Contract Number:
- AC05-84OR21400
- OSTI ID:
- 7021168
- Report Number(s):
- CONF-9108221-1; ON: DE93000429
- Resource Relation:
- Conference: 1991 symposium on some mathematical question in biology, San Antonio, TX (United States), 8 Aug 1991
- Country of Publication:
- United States
- Language:
- English
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