Abstract
A Ricardian trade model is used to generate hypotheses about the effect of markets on indigenous people's loss or retention of folk knowledge. The model suggests that people should specialize in extracting fewer forest goods as village economies open up to trade with the outside world. Eighty Tawahka Indians (Honduras) from two villages with different degrees of exposure to the market took tests to measure their knowledge of local rain forest plants and animals. Results of multivariate analysis suggest that markets are associated with different patterns of erosion/retention of indigenous knowledge. Integration into the market through the sale of agricultural crops or labor was associated with less knowledge of plants and animals, but integration into the market through the sale of timber and nontimber forest goods was associated with higher test scores in knowledge of plants and animals. People who specialize in the sale of timber and nontimber forest goods seemed to know more about plants and animals with commercial value.