Contracting, market access and deforestation

Abstract

We study the impacts of market access on forest loss in Ghana through a program designed to increase smallholder participation in oil palm commodity markets. Improved market access is facilitated through production contracts in which smallholders receive credit to establish production, a guaranteed price and quantity for the contract duration, and output pickup at the village. Using a variety of difference-in-differences approaches, we find substantial increases in forest loss in targeted villages following the introduction of the contracting program. The findings suggest that the ecological impacts of reforms to market access may be sizeable.