Forest and Sea as Insurance among Fijians

Abstract

This paper examines how forest and marine resources serve as insurance against a tropical cyclone using original household data gathered in rural Fiji. The fixed-effects estimator for a censored dependent variable controls for unobservable household heterogeneity that can cause bias. I propose a simple empirical strategy, which can be widely applied, to test whether a household intensifies labor activity to earn extra income to be shared under private risk-sharing arrangements. I find that while households abandon forest product gathering right after the cyclone, value-added handicrafts made of some forest products by women serve as self-insurance against crop damage after the emergency period and this is especially so among female-headed households. Fijians intensify fishing to augment mutual insurance for the recovery from village facility damage and housing damages experienced by others. I discuss how this distinct pattern emerges as private adjustments to cyclone relief delivered to the region.