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The collection of forest products by indigenous communities is the main cause of deforestation and a major obstacle to efficient forest management. This study develops a time allocation model for a representative household living in the peripheries of the forest. It is assumed that the household allocates their labour time between three activities: agriculture, forest product extraction, and off-farm activities. Households maximize their net income subject to the available forest resources. Using the Optimal Control Theory and applying the unique and global maxima, the results of the comparative static and dynamic analyses suggest that higher agricultural efficiency, agricultural output prices, and higher off-farm wages maximize the forest stock. Besides that, knowledge of forest extraction and farming may also yield the higher equilibrium of forest stock while higher forest and input prices encourage forest resource extraction. The result from the tobit analyses of a socio-economic survey from the Malakand Division forest in Pakistan provides supportive empirical evidence.

Conservation of forest through provision of alternative sources of income; evidence from rural households in Northern Pakistan