Few land-allocation models consider the impact of off-farm income on
tropical deforestation. We provide a concept to integrate off-farm income
in a mechanistic multiple-objective land-allocation model, while distinguishing
between farms with and without re-allocation of on-farm labor
to obtain off-farm income. On farms with re-allocation of labor we found
that off-farm income reduced farmers’ financial dependency on deforestation-
related agricultural income leading to less tropical deforestation.
The influence of off-farm income covered two aspects: availability of
additional income and re-allocation of on-farm labor to off-farm activities.
The labor effect tended to reduce deforestation slightly more than the
income effect. On farms without re-allocation of on-farm labor we showed
how farmers can use off-farm income to purchase additional labor to
accelerate deforestation. Our study highlights the importance of considering
off-farm income in land-use models to better understand, model
and possibly curb tropical deforestation.