Unraveling the Economics of Deforestation; Many Government Policies Unintentionally Promote Costly Environmental Damage

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Unraveling the Economics of Deforestation

Throughout the world, loss of forest cover is contributing to myriad environmental problems, including soil erosion, species extinctions, loss of soil productivity -- even the buildup of atmospheric carbon dioxide levels and potential "greenhouse" warming of the climate as woodlands are cleared for agriculture. "If we want to correct this problem, we need to know what's causing it," says James Gustave Speth, president of the Washington, D.C.-based World Resources Institute (WRI).

Many analysts view deforestation as a natural social response to such factors as unsustainable population growth, rural poverty and landlessness. But a new WRI study puts much of the blame elsewhere -- on misguided and unintentionally costly economic policies. The report challenges the long-held notion that the economic benefits of deforestation out-weigh its harmful consequences and argues for greater conservation of woodlands on grounds of a nation's economic self-interests.

Governments largely determine how forests will be used, WRI economist Robert Repetto says. However, his new study finds, even "governments, committed in principle to conservation and wise resource use, are aggravating their stewardship through mistaken policies" -- including subsidies, land tenure rights and the signing of relatively short-term logging-concession licenses.

Ironically, Repetto says, while governments tend to value their forest resources, most have felt that protecting them could be achieved only at the expense of economic …