An analysis of land use systems using Policy Analysis Matrix (PAM) in a small watershed in Wat Chan Northern Thailand

8 crops in 6 farming systems grown by Karen highland communities in Wat Chan, Mae Chaem watershed, Chiang Mai, Thailand were investigated for their private and social profitability using the Policy Analysis Matrix (PAM) framework. The 8 crops were paddy rice, upland rice, ginger, taro, Japanese pumpkin, lettuce, green pepper and gladiolus. The latter 4 crops were the newly introduced crops by the Royal Project. They were found to be both privately and socially profitable and should be expanded. The other 4 crops were both traditional crops (paddy rice and upland rice) and commercial crops (ginger and taro). These were found to be privately unprofitable but when assessed using adjusted social prices, paddy rice and taro became socially profitable. Ginger and upland rice remained socially unprofitable crops and should be discouraged as a crop in the highlands, unless their productivity or prices improve. The examination of PAM ratios found that in all cases, there was a net negative transfer on these crops meaning that the government or the society were “taxing” the Karen highland farmers without adequate compensation. The net “taxes” came either in lower output prices, higher input prices or higher factor prices, even after transportation costs were taken into account. Policy corrections to address these net “taxes” were called for. Markets for capital, credit, output and input need to be improved to benefit these highland farmers to a greater extent. Policy Analysis Matrix (PAM) is a tool to analyze land use systems both in terms of private costs/benefits as well as in terms of social costs/benefits (Pearson and Monke, 1989). Profitability will be assessed as it faces farm operators and again as it faces the society as a whole. Effective subsidies and taxes will be revealed through this analysis with implications for policy corrections. Effects of different policies on distortions of costs, benefits and thus profitability will be traced differentiating between market failures, efficient policies, and distorting policies. This study has as its objectives 1) to examine land use systems among farmers in a typical Northern Watershed of Thailand in Wat Chan areas and assess them in terms of private and social profitability using PAM as the framework and 2) to explore policy implications of these studies

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