A policy preference function analysis of the forest sector in the Cote d'Ivoire Public Deposited

http://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/jm214r02x

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  • The main objective of this study was to offer an alternative methodology for forest sector modeling in developing economies. To this effect, a policy preference function was developed and estimated using data from the forest sector of the Cote d'Ivoire. The justification for this alternative framework for forest sector analysis is twofold. First, forest sector policies in developing countries are often guided by the results of market-simulating studies. Although these market-based planning models are valuable, they fail to take into account the political economic environment in which the planning of the forest sector takes place. This omission may partially explain the poor performance of many forest industrial projects in the Third World. Second, policy evaluations based solely on economic efficiency criteria are incomplete in general, and more specifically so in the setting of developing economies. As Rausser (1990) points out, the integration of both economic and political factors is essential in understanding and formulating recommendations for governments in developing countries in order to achieve real economic policy reforms. This study formulated the problem facing public forestry policy makers in terms of expected discounted welfare maximization, subject to a set of stochastic constraint equations describing the forest economy. The revealed-preference-inverse-control technique was used to estimate the model. Marginal utilities and utility elasticities were derived that indicated that private profit, government revenues, and reforestation have intrinsic values to forestry policy makers in the Cote d'Ivoire. Employment and foreign exchange earnings and savings did not appear to be directly valued. The interpretation is that public policy makers compromise on employment and foreign exchange earnings in order to achieve their revenue, profit, and environment protection objectives. Large sample standard errors were computed for the PPF parameter estimates. Although the individual policy preference weights did not appear to be measured with much accuracy, a subsequent hypothesis test (Chisquare test) rejected, at the 1% level, the hypothesis that all the estimates of the objective function parameters equal zero. The implication is that although individually the estimates of the PPF parameters may not be measured accurately, they do, when taken together, suggest that the elements specified in this model are useful in explaining the behavior of forestry policy makers in the Cote d'Ivoire. The model was validated using a validity test that focuses on the predictive ability of the model. The validated PPF was then used to evaluate alternative policy scenarios over a short planning horizon during which the estimated PPF weights can be assumed constant.
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