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Economics of Forestry
Timber is the major product currently harvested from forests. Timber is used in a variety of products ranging from houses to paper and paperboard products. Long ago it seemed as if the supply of wood from forests was abundant and as if there would always be enough to provide everything that we could possibly need. However, recently we have realized that this is not the case. Timber is a major source of income and has become necessary to sustain out life-style as we know it. There has been a clash of ideology between ecologists and economists. Ecologists point out that forests have many other benefits besides just providing timber and are quick to point out that we need them to reduce the level of green house gases and carbon dioxide in the atmosphere. Economists are equally as quick to point out that we need timber to sustain our economy and cannot just simply quit cutting the trees. Herein lies the dilemma, how do we continue to use forests to sustain a viable income and still ensure that this can continue into the future? The two sides of this issue have often met on violent terms..
Environmental Economics is a policy-oriented perspective that addresses the interdependence and co-evolution between human economies and their natural ecosystems. We depend on the forests and the forests depend on us. Tools, housing, our insatiable wants and the potential danger of ignorance place humans in a unique position of being able to alter their ecosystems in ways that jeopardize their own social and economic structures and processes. Any species could exceed its own natural ecosystem's carrying capacity or diminish that capacity to the point of self-extinction, human are the only species that have both the will and capacity to jeopardize itself, as well as the will and capacity to avoid it (Farber, 1996). This paper will demonstrate that current policies and practices are insufficient to sustain the forestry industry and will propose several solutions to the problem.
Scope of the Problem
The forests not only provide us with the things that we need in the way of wood products, they also help to clean the atmosphere of Carbon Dioxide, produced by our very existence and the burning of fossil fuels. Carbon dioxide comprises 0.03% of the Earth's atmosphere and is the most abundant greenhouse gas (Detwiler, 1988). The build up of carbon dioxide causes the temperature of the global climate to rise. We need a large number of trees to off-set these effects. In addition to helping rid the atmosphere of deadly gases, the forests also provide habitat for wildlife and certain medicinal plants, which can only grow in the forest.
As the human population grows, so does its need for space and forest products. The logical solution would be to simply plant more trees as they are harvested. The problem with this theory is that trees, especially hardwoods, grow extremely slow. We, thus far, have been unable to replace them at a rate fast enough to offset the rate of deforestation. As the human population grows, so will the need for trees. We must find a way to balance these factors, if we are to keep forestry sustainable.
The following graph illustrates the rate of population growth against the rate of deforestation. (SOURCE: Insights 2002)
This graph illustrates that wood production has increased at a greater rate than the population growth since the 1960s and has continued to climb at an even more advanced rate since the Late 1970s. The slow down in the use of forest products may be due to the slow down in the housing industry and other industries due to the recession at the time. This further illustrates how ecology and economics are closely tied.
Th next graph shows the rise in Carbon Dioxide levels over the same time period. (SOURCE: Detwiler, 1988)
As you can see, the Carbon Dioxide rates in the atmosphere correspond to the rise in timber consumption and the rise in population. [Although some variation in atmospheric carbon dioxide levels is natural, and studies of carbon dioxide concentrations in arctic ice cores have revealed that large fluctuations have occurred in the past. These prehistoric fluctuations have occurred over thousand year periods (Detwiler, 1988).]
Since the dawn of the Industrial Revolution in the mid-1800s, atmospheric carbon dioxide levels have been increasing, which by itself is not an alarming fact. But when both the magnitude and rate of increase are considered, these statistics quickly gain significance. [The atmospheric concentration of carbon dioxide in the mid-1800s was approximately 290 ppm; by 1960, it had risen to 310 ppm, and by 1984, it was approximately 340 ppm (Detwiler, 1988).] Currently, atmospheric carbon dioxide levels are 25%, or 200Gt, above where they stood before the Industrial Revolution. According to Detwiler, human activities have fueled this rate of increase, especially the burning of fossil fuels and deforestation (Detwiler, 1988).
Deforestation in industrialized and Developing countries
The following illustrates the rate of deforestation by country.
SOURCE FOR GRAPHICS: International Bank for Reconstruction and Development/The World Bank 1997
The above illustration shows some unexpected results. One would expect that highly industrialized nation such as the United States, Europe and Russia would have higher rates of deforestation than developing countries such as certain countries in South America and Africa. But that is not the case. Rates of deforestation are higher in developing countries than in industrialized countries.
There are several hypotheses to explain this. The first may be that industrialized nations have a greater educational level than developing nations and therefore understand the importance of maintaining sustainability in the forestry industry. They may have policies in place to prevent over harvesting of forests and an effective forest management program. The second hypothesis is bleak in prognosis. It may be that there are not as many forests to harvest in the developed nations and that there is a lower deforestation rate due to a reduced population of timber. Both of these theories need further examination to determine which holds true.
How do we solve the problem?
According to Farber, there are five tasks that need to be completed in order to address the problem of forest sustainability. The first task is modeling. This must be completed to understand the interdependence between economic and natural systems, particularly between the structures, processes, and fluctuations of material and energy upon which each system depends. The second task is to establish the conditions that must exist for the economic aspects of the ecosystem to be sustainable. With out the ecosystem, the economic aspect does not exist. The third task that must be completed is the establishment of indicators and signals. These indicators will reflect the current status of economies and ecosystems relative to the norm of sustainability, and include measures of ecosystem and economic health. We must then develop the necessary regulatory instruments, laws and associated institutions that assist human economies in attaining sustainable welfare development goals. The fifth action is to examine the various moral systems for the sustainability of human welfare and place on the forefront those instances where there are incompatibilities between moral systems and sustainability norms (Farber, 1996).
Healthy systems, be it a forest or an amoeba, have the ability to withstand disease. They are resilient and recover quickly after being disturbed. According to Bradley, this leads to a definition of health as "the ability to recover from stress" (Bradley, p. 246) One common definition of health is the absence of disease. However, this fails to consider the system's organization or level of activity. A dead system is no doubt resistant (but not resilient) to stress. To better understand what this means the concept of homeostasis is employed to describe mechanisms that return the system to equilibrium in the face of any disturbances.(Bradley, 1995). The key health index component of resiliency is intended to encompass the fact that "systems are healthy if they can absorb stress and use it creatively rather than simply resisting it and maintaining their former configurations." (Bradley, p. 246).
Forest management practices increasingly recognize the irreversibility of many natural processes that characterize ecosystems, a crude distinction between actual and potential forest ecosystem outputs in efforts to maintain biodiversity and other ecosystem features, and the need to consider a multidimensional value system (Bradley et al., 1995). Current valuation systems fail to recognize non-timber benefits derived from forests. This oversight places other ecosystems in jeopardy, as a result of their dependency on the forests.
From early exploitation through the recent conservation movement, awareness of the central and usually irreplaceable role of natural systems in all aspects of human life is taking hold (Interagency SEIS Team 1993, USDA Forest Service 1992, USDA FS Eastern Region, Northeast and North Central Forest Experiment Stations, 1992). But just recognition is not enough. More practical forest resource accounts and measures are required if we are to maintain forest capital (including non-monetary capital, such as recreational space) to the broadest extent possible.
After such a long…[continue]
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