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

By Raloff, Janet | Science News, June 4, 1988 | Go to article overview

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


Raloff, Janet, Science News


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 development. But in "The Forest for the Trees? Government Policies and the Misuse of Forest Resources," Repetto argues that "there is not a conflict between wise resource economics and environmental protection." In fact, his analyses indicate that misuse of forest resources costs billions of dollars annually. And among those countries hardest hit are developing nations, many already saddled with immense foreign debt.

Governments have "typically sold off timber too cheaply, sacrificing public revenues and the undervalued non-timber benefits of the standing forests," Repetto writes. At the same time, many of these governmental measures have actually encouraged timber booms, profiteering and unsustainable exploitation of forest resources. Even after recognizing that the long-term survival of their forests might be in jeopardy, most countries fail to drop their deforestation-fostering policies. Instead, the study finds, they begin adopting reforestation measures. The result is that net deforestation tends to continue, Repetto says.

"The traditional assumption was that deforestation makes economic sense even if it's environmental nonsense," Speth says. But the new report "punches a big hole in this traditional assumption" by assessing the economic toll such policies can have.

Indeed, says Roger Sedjo, director of the forestry economics and policy program at Resources For the Future in Washington, D.C., "this is a report that needed to be written."

Repetto reports in his study that:

* To create jobs and encourage the development of a domestic wood-processing industry, many countries--including Brazil, Malaysia, Indonesia and the Philippines -- tax or ban raw-wood exports and reduce or forbid export taxes on processed and milled wood. Unfortunately, Repetto says, many of the small mills that spring up in response to these economic incentives are so inefficient they use 50 percent more logs than the industry standard to get a given output of milled products. The unintended result is that an excessive number of trees must be sacrificed to cover those inefficiencies.

Accelerated deforestation is not the only major cost. In the Ivory Coast, for example, Repetto's research shows that "every $1 of additional income from their new forest industries has cost the government $2 in lost export taxes and income taxes. …

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