Pii: S0921-8009(98)00101-3

This paper examines the impact of early market integration on the extraction of forest resources by traditional forest-based households, with emphasis on the commercial-subsistence dichotomy. Empirical analysis of resource use transition among the Huaorani People of the Ecuadorian Amazon shows that as markets become more accessible production patterns change but do not seem to affect subsistence production. Huaoranis increase the production of animal resources from forests. However, the extraction of harvested and primarily of farmed commodities seems not to be affected. Data also suggest that trade relies on limited specialization. Trade among the Huaorani communities studied depends on raising the production of some of the same commodities that are found in the subsistence basket. These changes are clearly explained if a flexible-labor theory of early market integration is used. This period is characterized by labor and land abundance and a relative ease to move labor from low return to more productive activities. Under these conditions, market participation need not be accompanied by a reduction in the production of subsistence commodities or commodity specialization. High risks and uncertainty and high transportation costs keep poor forest households from shifting completely to commercial activities. This contrasts with a long presumption that production of individual commodities responds quickly to price changes, based on demand shifts between products, but that total output is slow to respond. Only after all the surplus labor has been allocated to productive activities total output becomes less flexible. At this point increased production requires commodity or technological specialization. © 1999 Elsevier Science B.V. All rights reserved.