How Best to Save Trees
CONGRATULATIONS to Maurice Strong, Secretary-General of the United Nations Conference on Environment and Development (UNCED), for achieving his goal of placing environmental problems at the top of the world's political agenda.
UNCED will host a world environmental conference in Rio de Janeiro, Brazil, in June 1992. The organizers of this conference have designed it to address a badly worsening global environmental crisis.
The United States, for instance, has lost 95 percent of its virgin forests in the last 150 years. Today, tropical forests throughout the developing world are disappearing at the rate of 17 million hectares a year.
As Mr. Strong argued in a Newsweek interview last Nov. 25, a commitment by governments is needed to solve the environmental problems because "environmental regulation, which is the only real lever that environmental agencies have, is important but inadequate." He hopes for wide-reaching international agreements to protect the environment.
For instance, UNCED proposes an international treaty to ban the trade in tropical timber and so preserve rain forests. It holds that the devastation of forests can only be halted through trade sanctions.
Unfortunately, the United Nations agency is not only targeting a symptom rather than the root of the problem, it's addressing the wrong question altogether.
Wood has a variety of uses, such as for firewood, paper, or furniture. As long as a market exists for wood products, trees will be cut down, either legally or illegally, depending on the political environment.
To satisfy the demand for wood products, manufacturers have two choices: They can either buy the raw logs from privately owned plantations or cut trees from publicly or commonly owned forests.
In the case of privately owned plantations, owners respond to profit incentives. They have good reason to carefully manage their forests to guarantee future revenue. Self-interest drives plantation owners to deforest and reforest on a sustainable basis.
In the case of commonly owned forests, self-interested manufacturers will cut down "free," or at least highly discounted, logs as quickly as possible before someone else does, in order to maximize profits. Since the trees are not owned by anybody, manufacturers do not have incentives to maintain the forests. As a result, this "common property" will be over-exploited.
Thus the cause of forest depletion in many parts of the world is not trade, but a lack of property rights.
Furthermore, trade sanctions on tropical timber will affect only 1 percent of the trees cut down in developing countries, according to a Feb. 12, 1992, report prepared for the UN by the General Agreement on Tariffs and Trade. A trade ban on logs cannot save the world's tropical forests.
By addressing the symptom of trade rather than the root cause of poorly managed state-owned forests, UNCED's proposed policies would make victims of the tropical countries. These countries would bear the entire costs of the trade sanction.
Malaysia, the largest exporter of tropical timber, exports nearly two-thirds of the world's supply, compared with 26.7 percent for Indonesia. This trade provides about 60,000 jobs for Malaysians. With a trade ban, these people would be unemployed. A direct consequence of that unemployment would be recession.
True, the job market would relocate some of these workers to different industries, but the cost of relocation would outweigh any benefits from preserving a small percentage of forest. The revenue generated from the timber industry now amounts to about $1 billion a year. With the loss of this income as a result of trade sanctions, Malaysia, already a relatively poor country, would face even more serious poverty.
Is it fair for Malaysians to bear costs caused by environmental demands made by the developed nations?
In addition to the problems of unemployment, recession, and poverty, illegal deforestation is likely to occur as long as there is a market for wood products. As proven by the case of ivory, a trade ban is not only ineffective but can heighten incentives for poaching.
According to a report by Mr. Law Hieng Ding, Malaysia's Minister of Science, Technology, and the Environment, about 60 percent of the land in the country is covered by forests.
Unless these forest lands generate social and economic benefits, they will not be protected but will be used for agriculture or other income-producing purposes. Malaysians have no choice but to use their resources for economic betterment.
The fundamental solution to the devastation of forests is, therefore, privatization. Privatization allows property rights to be assigned to individuals, who will capture the full costs and benefits of their decisions.
Through private ownership of the forests, both the timber resources and the rich natural diversity needed for biological and medical research will be protected.
Privatization will not only better preserve the forests, but will generate revenue for the tropical countries from the sale of lands, thus easing the problems of unemployment, recession, and poverty.