0.13 Natural capital: forestry  (Page 2/14)

This defective system of information provides defective signals to policymakers. These signals lead to policies that destroy, or at best, ignore, values of the environment in order to secure illusory and/or unsustainable short-term gains in measured income, that register as additions to GNP. Clearly then, a high premium should be placed upon incorporation of concepts of natural resource accounting in the national income accounting frameworks of all nations, tropical or otherwise. The technology for doing so is known, the data requirements are not all that great, and the costs are not huge. But so far, few countries use resource accounting.

Institutional failure

Institutional failure has been a third fundamental factor in environmental degradation generally, and tropical deforestation in particular. To review: “Institutions” can be viewed in two principal ways. First, institutions can be “ rules of the game ,” or policies governing decision-making by individuals in their capacities as producers, consumers, risk-takers, or voters. Second , institutions can be organizations, especially public organizations or agencies affecting the operation of the economy. Institutions affect individual and social choices in several ways by shaping incentives , by influencing the availability of information and resources, and by establishing the basic rules of economic and social transactions.

Our primary focus in this volume is upon economic institutions.

These include, as we have seen, systems of property rights, inheritance laws contract systems and law enforcement. They include markets such as those for capital goods, and labor markets, which mediate the interaction of supply and demand. They also include public economic organizations such as government departments and SOE ^s . In many instances, environmental degradation can be traced directly to the failure of such institutions.

Armed with this knowledge, we may focus more closely on some critical aspects of tropical deforestation. In the process we may acquire an enhanced basis for thinking about a much wider range of environmental issues such as erosion, water pollution, and wildlife management.

First, consider what deforestation For a synopsis of the evolution of Foreign Trade in Tropical Hardwoods and Deforestation in Southeast Asia, see the Appendix to this chapter. in the tropics means :

Deforestation refers to the destruction of forest cover, whether this destruction is due to land-clearing for cattle ranching, small holder agriculture, plantation agriculture, or parking lots. Deforestation means that the land is converted permanently from forest uses to non-forest purposes. Deforestation is much more serious than forest degradation . Forest degradation may alter the ecology of a forest parcel, but does not destroy all forest cover. Logging is one of the main direct causes of forest degradation in many countries. But only in a very few nations has logging been as destructive as to be a direct cause of deforestation. In other nations, logging has indirectly caused deforestation, by opening up remote areas of the forest for agriculture and making the forest more vulnerable to catastrophic fires, as we shall see.