Environmental economics: principles, applications, and policy

Environmental Economics

Economics and Nature Conservation

From early childhood, one is taught of the importance of the surrounding environment in all human activities. Forests for instance are crucial sources of fresh air and clean water, as well as raw commodities that support life. Nevertheless, mankind continues to trash the woodlands, and as such jeopardize the future of the next generations. In a context in which next to 5 million hectares of forests are lost on annual basis due to deforestations and fires, causing a multitude of environmental, economic and social effects, the global authorities must intervene to better regulate the sector.

The modern day individual is characterized by a myriad of features, such as the reduced time to cook and the obvious tendency to either eat out, either grab some fast food. Other elements refer to the increased pace of technological development, with which he has to keep up; the incremental pressures on the job, also pegged to the necessity to prove one's compulsory role within the business climate, now when employers engage in downsizing operations.

Aside these features however, an increase in the responsible behavior towards the natural environment is also observable. The civilized populations have understood the necessity to safeguard the planet in order to ensure the well-being of the future generations. Despite this realization however, fact remains that much has yet to be done. Waters are being continually polluted, beaches continue to erode, the levels of carbon dioxide released into the atmosphere continue to increase and the forests are being continually cut down. All these actions have tremendous negative impacts upon the stability of the entire ecosystem. The pollution of waters could lead to the death of animals drinking the water; the erosion of beaches could lead to breaches in the beach houses and the cutting down of forests could materialize in the disappearance of species.

This report aims to identify several issues relating to the state of forests, such as the role they play within the modern day society, or the threats to which they are currently being subjected. A deeper look will be taken at the 1994 Northwest Forest Plan, a program of the Forest Ecosystem Management Assessment Team's efforts to reduce environmental responsibility.

2. The State of Forests

It is without any doubt that the stability of forests is declining. This is a worrying statement due to the tremendous role played by forests. For once, there are the characteristics about which one learned in schools, such as the facts that forests absorb carbon dioxide and release oxygen; they cool the hot temperatures; they constitute sources of springs of clean water; they offer the wood so important in making furniture and paper or they ensure the homes for countless species of animals and plants.

Aside these however, forests play other roles as well. They for instance help reduce the noise pollution. Also, they help reduce the speed and power of the wind, to as such reduce the negative impacts strong winds could generate. Third, forests once again support the well-being of earth and its populations (plant, animal and human) by protecting the ground against the erosion caused by heavy rainfalls.

2.1. The Economic Importance of Forests

The list of examples as to how the forests not only safeguard our well-being, but even improve the quality of our life could go on for pages. Yet, at this stage, it is crucial to reveal some of the economic roles played by forests. The most obvious such role is the one given by timber. The trees cut and transformed into lumber will help societies build houses, furniture and even infrastructure, by contributing to the building of roads and bridges, or even railway sleepers. Then, there is the cellulose from threes, which is used to make paper or even automobile tires.

Forests also serve the economic purpose of representing the home of various plants which are used as spices or as currants. They then offer nuts, mushrooms or other fruit and vegetables that contribute to the food sufficiency of nations, but which are also sold to exporters and as such support the economic development of the country or the region. A final economic role of forests to be hereby presented is given by the fact that they represent tourist attractions, attracting as such numerous foreigners to the country, which get to spend their money on sightseeing, entertainment and other sectors of the hospitality industry, to overall generate increase revenues from touristy operations for the host country.

In order to better understand the economic role of the forests, one could take the example of Indiana. The forests of the region generate a $9 billion annual contribution to the state's economy -- $8 billion come from forest-based manufacturing; $1 billion comes from recreation and tourism; $175 million come from the sale of trees and $25 million come from revenues associated with forest products, such as maple syrup, firewood or Christmas trees. Additionally, the exploitation of the forests in Indiana leads to the payment of annual payrolls exceeding $1.4 billion per annum; the money is destined to the more than 54,000 individuals employed in the sector (Bratkovich, Gallion, Leatherberry, Hoover, Reading and Durham). Within Illinois for instance, 65,000 people are employed in forest related sectors (The Illinois State Museum, 2000). Given this situation, it becomes obvious that, as forests contribute to the economic well-being of the state, their health and well-being is pivotal for the life of the citizens.

As a last statement relative to the economic importance of forests, it must be stated that the initially presented features -- such as air oxygen emissions and temperature reduction -- can also be considered as economic elements. For instance, forests reduce the heath during hot summer days, meaning then that employers have to spend less energy to cool down their factories and offices. As forests cleanse the air, economic agents spent fewer resources on purifying the breathing air within their operational facilities. All these constitute economic factors as they reduce the operational costs of economic agents. Were forests not to accomplish these actions, the operational expenditures would be significantly increased. Virtually, this would translate into higher retail prices, which would imply a reduced purchasing power of the population and the consequently reduced living standards. All in all then, it must be argued that forest play the role of supporting economic growth and stability.

2.2. Forest Losses

Despite the realization of the importance of woodlands however, forests continually decrease in size, mainly due to actions of inadequately regulated or unregulated at all, deforestation. Deforestation is generally understood as the act by which humans either cut down forests to use the timber, either set the forests on fire so as to use the land for other purposes. The annual average of woods lost through deforestations is somewhere between 12 and 15 million hectares. Most of the deforestation activities occur in the tropical forests, which hold over 210 gigatonnes of carbons (WWF).

The second largest threat upon forests is posed by accidental fires which break out due to lit cigarettes, barbeques or other man made activities. The medium number of acres of forest lost each year due to fires is situated between 4 and 5 million -- between 1.6 and 2 million hectares. In recent years however, the number has increased to 9 million acres, exceeding as such 3.6 million hectares. A forest fire advances with a speed of 14 miles per hour and burns everything in its path -- including plants, animals, trees, humans or constructions (The National Geographic Society, 2009).

Regardless of the cause, fact remains that the loss of woods materializes in a series of negative consequences. Some of the most important ones are succinctly revealed below:

- The loss of forests translates into the loss of biodiversity, in the meaning that several species of plants and animals no longer find a suitable habitat and become extinct; this feature is extremely important even more so when 80 per cent of the world's species live (also) in the highly threatened tropical forests

- Deforestation generates 15 per cent of the entire global green house emissions

- The loss of forests also implies that the trees are no longer able to recirculate the ground water, feature which will undoubtedly result in drier climates within the respective region

- The loss of forests materializes in the increased rates of soil erosion

- From an economic standpoint, it materializes into the loss of jobs and the loss of a support system for the inhabitants of the region. The activities of hunting, gathering or cultivating the land will be severely impeded. In some regions, these problems culminate in social matters of violent conflict (WWF).

3. Protection of Forests

Given the situation so far presented, it was only natural for the authorities to interfere and strive to reduce the threats of forest loss. One means in which they approached the issue was through the creation of the Forest Ecosystem Management Assessment Team, generically known as FEMAT. What is different between FEMAT and other programs that addressed environmental matters is the complexity of the first. Following this line of thoughts, most of the previous environmental programs focused on a specific environmental problem, such as the threats upon a certain species. FEMAT however strived to offer an integrant approach of all threats characterizing the forestry sector and to offer a solution that leads not only to sustainable revenues from touristy activities for instance, but ensures universal solution that would better manage the entire forest ecosystem.

FEMAT was in fact born as a result of the conflicting views and interests of various categories. A relevant example was offered in 1988, as the Forest Service and the Seattle Audubon Society were unable to reach a compromise that would protect the owl, an endangered species, and ensure sufficient limber for the industry. At that stage, the solution reached could not simultaneously comply with all National Environmental Policy Act, the Endangered Species Act and the National Forest Management Act. The debate would go one for several years, with numerous court trials and dissatisfactions for both parties.

In this context, the necessity for a new environmental plan became impending; it was also recognized by Bill Clinton, in his first year of mandate. At a forestry conference in Oregon, the president recognized the need for the new plan to concomitantly serve the interest of the industry, while in the meantime protecting the well-being of the natural environment. He reflected:

"How can we achieve a balanced and comprehensive policy that recognizes the importance of the forest and timber to the economy and the jobs in the region, and how can we preserve our precious old-growth forests, which are part of our national heritage and that, once destroyed, can never be replaced? […] The most important thing we can do is to admit, all of us to each other, that there are no simple or easy answers. This is not about choosing between jobs and the environment, but about recognizing the importance of both and recognizing that virtually everyone here and everyone in this region cares about both" (President Bill Clinton, quoted by Johnson, Holthausen, Shannon and Sedel)

The vision shared by Clinton at the Oregon conference soon took the form of the Forest Ecosystem Management Assessment Team. The team was extremely preoccupied with thoroughly assessing the regions in the Northwest parts of the United States. The findings they retrieved were extremely complex. The study had been based on the analysis of all political, economic, social and environmental features impacting or being impacted by forests. The results revolved around the beliefs that each region is different, and that diversified solutions of ecosystem and strategic management ought to be implemented.

The team created the Northwest Forest Plan, generically referred to as either NWFP or simply NFP. The program had the ambition of convincing representatives of both economic as well as environmental agencies to collaborate and reach mutual goals. Examples of institutions that intensified their efforts include the regulatory agencies and the land management organizations, the provincial advisory committees or the Regional Ecosystem offices. The first category of institutions collaborated to design projects that generated a minimal impact upon the endangered species. The second category of agencies ensured that decisions were made after insightful communications with the representatives of the federal agencies, the private landowners, the representatives of the citizens or those of the tribal governments. Finally, the third category was in charge of ensuring NFP consistency across interpretative endeavors, monitorization and coordination (Nelson).

Aside agency collaboration, NFP was characterized by the fact that it took into consideration the impact of industry actions onto not just the owl, but a wider number of endangered species. Then, the team handing the operations was constructed on individuals with multiple backgrounds, including both environmentalists as well as sociologists. Third, as previously mentioned, the FEMAT suggested the implementation of differentiated solutions. In the case of the NFP, this materialized in the creation of the notion and practices of adaptive ecosystem management (Burgees and Cheek).

As it can easily be deducted, neither FEMAT nor the NFP have completely succeeded in their efforts, meaning then that the contemporaneous society has still a long way to go to ensure environmental sustainability. Nevertheless, the experience has generated numerous valuable lessons:

The regulators and the communities need to recognize the equal importance of both environment as well as industrial and economic sectors

Successes can only be registered with collaboration between all agencies involved

It is crucial to implement solutions customized to the unique features of each region

FEMAT was different from previous environmental endeavors, and better than them, due to several reasons. First, the team succeeded in ensuring integration across disciplines; for instance, they considered waters and lands integrant parties of the same ecosystem. Then, they simultaneously focused on three directions -- geography, legislative regulations and time frames. Then, the team assessed all terrains, including the federal forests, and the assessment was expanded through several years, all with the ultimate benefit of increasing the relevance of the findings.

The final outcome of the Forest Ecosystem Management Assessment Team is often criticized by the representatives of the timber industry. They argue that the team has placed a greater emphasis on the environmental issues, and has often ruled against the interest of the economic and social communities (Swedlon, 2003). Nevertheless, it remains of the utmost importance to state that, despite its real and perceived shortages, FEMAT remains a crucial attempt at creating a universal regulation of the environmental and the economic backgrounds. It is even more so important as it was a program ahead of its time, and an extremely complex and challenging one (Norris).