An exploration of the positive effect of inequality on common property forests

Abstract

This paper analyzes the household level forces driving the positive impact of inequality on common property forest cover in Mexico. A game theoretic model demonstrates that when common property goods are complementary to private inputs in production, an increase in wealth inequality can lead to a decrease in exploitation of the commons. Data from 350 Mexican common properties show that as inequality increases, those on the lower end of the land distribution are less likely to use the commons. The data also show a negative correlation between inequality and poverty. Alternative hypotheses for these results are considered.