Abstract
This paper investigates the impact of individual rate of time preference (IRTP) on forest resources harvesting from the Sinharaja forest in Sri Lanka. The impact of IRTP on the harvest rate of forest resources was tested using a simultaneous equation model. Analyses show that low income results in a higher IRTP, indicating that poverty is an important determinant of the IRTP. Further, the results show that individuals with a higher rate of time preference harvest more forest resources. Overall, the results suggest that long-term strategies for management of nature reserves would require poverty alleviation in the peripheral communities, among other measures. <em>Sri Lankan Journal of Agricultural Economics Vol.10/11 (2008/2009) 31-60</em> DOI: <a href="http://dx.doi.org/10.4038/sjae.v10i0.4590">http://dx.doi.org/10.4038/sjae.v10i0.4590</a>
Highlights
An individual’s preference for current over future consumption, called the rate of time preference or the rate of discount,1 is an important topic in economics
We examine the relationship between individual rate of time preference (IRTP) and the harvest of forest resources by local communities
Our study examines the relationship between IRTP and harvesting nontimber forest products (NTFP) from a protected forest whereas Godoy et al, (1998), focus on forest land clearance
Summary
An individual’s preference for current over future consumption, called the rate of time preference or the rate of discount, is an important topic in economics. Higher discount rates reduce the weights attached to the needs and desires of future. This idea of using lower discount rates in natural resources and environmental projects is not new. Weitzman (1994) argues for lower and declining discount rates for long-term benefit-cost analysis, for a variety of economic reasons. He further argues (Weitzman 1998) for the lowest possible discount rate for discounting the distant future. The use of a low discount rate in the Stern Report (Stern 2006) to estimate the cost of climate change has stimulated a heated debate on the impact of discounting on natural resources and the environment
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