Expansion of cultivated land diminishes the extent of forestlands or reduces the length of fallow periods and, hence, reduces the amount of natural vegetation. The increase in land under cultivation has a direct output-increasing effect at the cost of reducing natural capital and agricultural productivity. The evidence for western Côte d'Ivoire is consistent with, and provides an explanation for, the declining agricultural productivity observed in Sub-Saharan Africa during the past few decades. This article uses a theoretical model to determine the level of land cultivation that maximizes village income, using data from Côte d'Ivoire for 1985–87. An important part of the land is under common property, usually at the village level. The results show that farmers do not internalize even a small fraction of the external cost of bio-mass in their land allocation decisions. The lack of internalization of the social cost of the biomass resource leads to large income losses at the village level—as much as 14 percent of village income. These losses are many times larger than the usual estimates for conventional distortions.