CIFOR’s Sven Wunder has prepared a good new book for a Happy New Year. ’The Economics of Deforestation, The Example of Ecuador’ (Macmillan Press) skillfully reviews the deforestation debates in Latin America and provides fresh material on Ecuador.

People often say ’we need to make forestry profitable so landowners will not clear their forests to plant crops’. That may hold in certain contexts, but in highland Ecuador and many other places, logging and fuelwood extraction are just the first stage in a cycle that that begins with logging and is followed by crops, pasture, and fallow. Anything that increases the value of timber and charcoal simply provides additional incentives and resources to accelerate that process.

Wunder uses price, cost, and productivity data from highland Ecuador to simulate the profitability of the typical land use cycle under different scenarios. When farmers don’t have secure land tenure, they can expect to obtain much lower profits. That may make them less likely to clear the forest. This result is consistent with a growing number of studies from Latin America suggesting that, contrary to conventional wisdom, providing secure land tenure may actually promote deforestation.

Not surprisingly, Wunder finds that access to credit and markets makes forest clearing more profitable. That makes investment in general more likely, and forest clearing is one major type of investment. Since purchasing cattle requires a lot of money, farmers without access to credit will concentrate more on forest products and crops. Farmers with limited access to markets may devote more attention to cattle because the animals can walk themselves to roads and markets.

The highlands have played a much greater role in recent deforestation in Ecuador than many people realize. Although the Amazon region holds about half of Ecuador’s 15 million hectares of forest, both the highlands and the coast still have major forest resources. The area in crops in Ecuador barely budged between 1972 and 1989, but pasture expanded by almost four million hectares, and most of that increase came in the highlands and the coast, rather than in the Amazon.

Wunder’s book also discusses links between deforestation and macroeconomics, the role of poverty and population, and the dynamics of local forest product markets. Uplands and lowlands, Central America and Brazil — it’s all there.