Rural Poverty, Household Responses to Shocks, and Agricultural Land Use: Panel Results for El Salvador

This paper addresses factors influencing agricultural land use by rural households in El Salvador, paying particular attention to the effects of income.

It states that:

• The following linkages between 1) the area a household farms and 2) the income per capita are critical:
  1. There is a precautionary demand for land that can be used for subsistence agriculture and this demand declines as income rises;
  2. The area a household is able to farm goes up as income increases.
• Together, these two linkages imply that the relationship between agricultural land use and per-capita income takes the shape of an Environmental Kuznets Curve (EKC).

The paper uses panel data from four biennial surveys of a nationally representative sample of rural households to analyze:

• Agricultural land use at the household level;
• Evidence of an EKC that relates farmed area to per capita income;
• Other factors that influence a household’s use of natural resources.

It offers the following conclusions:

• Functional relationship between living standards and deforestation indeed seems to shaped like an inverted U;
• Study does not address the possibility that, as migration occurs, land previously farmed by one household may be cultivated by another; thus, variations in farmed area at the household level may or may not add up to an increase or decrease in overall agricultural land use;
• Additional research can yield sharper insights into the effects on farmed area at the household level.