The following paper investigates the economic determinants of land degradation in developing countries. The main trends examined are rural household's decisions to degrade as opposed to conserve land resources, and the expansion of frontier agricultural activity that contributes to forest and marginal land conversion. These two phenomena appear often to be linked. In many developing areas, a poor rural household's decision whether to undertake long–term investment in improving existing agricultural land must be weighed against the decision to abandon this land and migrate to environmentally fragile areas. Economic factors play a critical role in determining these relationships. Poverty, imperfect capital markets and insecure land tenure may reinforce the tendency towards short–term time horizons in production decisions, and may bias land use decisions against long–term land management strategies. In periods of commodity booms and land speculation, wealthier households generally take advantage of their superior political and market power to ensure initial access to better quality resources, in order to capture a larger share of the resource rents. Poorer households are confined either to marginal environmental areas where resource rents are limited, or only have access to resources once they are degraded and rents dissipated.
Overall trends in land degradation and deforestation are examined, followed by an overview of rural household's resource management decisions with respect to land management, frontier agricultural expansion, and migration from existing agricultural land to frontiers. Finally, the discussion focuses on the scope for policy improvements to reduce economic constraints to effective land management.