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A Micro-Economics Primer for Agroforestry Related Issues in Developing
Countries
By D.Dosman and M.K Luckert
Price:  [Z$55]

In trying to facilitate the development of indeginous economies, a number of
policies may be employed.  Two commonly used types of policies that may promote development include changing land use designations or introducing capital and/or
technology with aid projects.  The discipline of economics can supply information
regarding values of resources and behaviour of households to help in designing
both of these types of policies.

Economics can inform centrally planned land use decisions with estimates of
benefits and costs associated with alternative land use designations.  Successful
aid projects that  promote alternative land uses must address community priorities
and may incorporate economic incentives to pursue these goals. The compatibility
of the aid projects with community goals may be assessed by weighing the costs
and benefits with the projects and without.  To assess how a project may affect
the welfare of a community, values of the resources and land, and how they change
the project, are required.  The values are based on the perceived need,
importance and scarcity of the resources in the community.

Scenarios associated with alternative development projects have underlying
assumptions regarding how households will respond to changes caused by projects.  Accordingly the success of projects is also dependent on the types of incentives
which are created, and an understanding of how households respond to alternative incentives.  Policies that incorporate an understanding of economic incentives may,
therefore, be successful in achieving desired objectives.

The purpose of this paper is to present some elements of micro-economic theory as
they apply to natural resource/agroforestry issues. We examine the basic
assumptions made in valuing a resource; how markets determine value of goods,
services and resources; problems that arise in market valuations; how valuations
may be obtained in the absence of markets; the use of benefit cost analysis in
project decisions; and a framework for understanding the role of property rights.