Food and trees in the village: economic development strategies based on food production and forest resources: a social accounting analysis

Food and trees in the village: economic development strategies based on food production and forest resources: a social accounting analysis

Comparing the impact of agricultural-led and forest resources-led growth in Mozambican villages

This paper investigates the social and economic effects of two different growth strategies (agricultural-led and forest resources-led growth) in a small village economy in Mozambique. The study uses using a Social Accounting Matrix methodology. It applies a multiplier analysis to look at the scope and magnitude of direct and indirect impacts of policy induced and/or exogenous changes on production activities, value added and income distribution. These aspects are examined under different assumptions regarding supply constraints.

Policy simulations are undertaken to assess the impacts of:

  • exogenous demand changes for food (maize)
  • exogenous demand changes for forest-based products (charcoal)
  • stricter enforcement and regulation of village charcoal production.

In contrast with other village SAM-based studies, this study is built on the authors' own household survey, and therefore the results of the SAM-based simulations can be used to go back to the household-level dataset and assess the poverty and income distribution consequences of the different policy scenarios.

The analysis suggests that the two growth strategies (agricultural-led and forest resources-led growth), appear to produce different outcomes for the village economy as a whole and for the different household groups:

  • agricultural-led and forest resource-led economic growth have different effects on the income distribution of the four household groups. Economic growth based on agriculture has stronger repercussions on income distribution for household groups who have sufficient or surplus food. Forest resource-led growth has stronger effects on the income distribution of the household groups who are charcoal producers, and also positive, but more moderate on income distribution for household groups deficient in food.
  • the important contribution to income distribution of activities such as environmental services, and commerce; and the moderate contributions of activities such as unskilled labor and food processing
  • the village total gross domestic product tends to be higher for the agriculture-led growth based strategy even in the case of agricultural land constraints. On the contrary, under forest constraints the forest resources-led growth based strategy generates only moderate increase in village total gross domestic product
  • agricultural-led growth reduces poverty incidence under all the different supply constraint scenarios, but fails to reduce the poverty gap in the case of labor constraints. A drawback is that agricultural-led growth tends to increase income inequalities among the poor. In the unconstrained case, the comparison was difficult as both strategies behave very similar. However, as soon as one introduces the existence of supply-constraints, the agricultural-led growth strategy is clearly superior to the forest resources-based strategy.
  • by looking at the overall or summary indicator (the Sen index), agricultural-led growth also ended up as a better choice from the point of view of the social welfare. On the contrary, in the forest resources-based economic growth strategy, poverty incidence and poverty gaps were not reduced when increased demand faces supply constraints. Only in the unconstrained case, the forest resources-led growth reduced poverty incidence and poverty gaps compared to the base case.