Jamaican Deforestation and Bauxite Mining -Applying the Coase theorem

Abstract: In Jamaica, bauxite mining is considered to be one of the most significant reasons behind deforestation. Within the last few decades, large areas of forest have been cleared on the island due to the open pit mining for bauxite. Because the bauxite land in many cases is owned by private landowners, the operating mining companies are forced to bargain with them to get access to the desired land. The purpose of this thesis is to analyze if the Coase theorem about optimal resource management through bargaining can be applied to the Jamaican deforestation problem caused by bauxite mining. The study was performed by interviews and observations and focus was turned to the hills of the Mocho Mountains in the parish of Clarendon. The conclusion is that there existed no practical obstacles for bargain to take place. However, since the market for bauxite mining is not characterized by perfect competition, an efficient allocation of the Jamaican forests is not achieved.