Why Deforestation? I recently took a weekend trip across the Caribbean Sea to visit a friend in Honduras. On

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1 Tori Wong ECON-305 Final Paper Economic Impacts of Deforestation Why Deforestation? I recently took a weekend trip across the Caribbean Sea to visit a friend in Honduras. On the trip over, I was talking with some backpackers from Canada and Austria about the environmental problems of Central America in comparison to other places around the world. One of my new friends brought up an idea that really made me think about the world and the way we operate when he said, there is no such thing as an environmental problem; there are only environmental issues with economic problems. After this comment and passing field after barren field of deforested land through Honduras (and parts of Belize), I was determined to examine the impacts, history and possible solutions to deforestation as a problem that many people mislabel as simply an environmental problem, without taking the economic impacts into consideration. Introduction Environmental issues effect every life on Earth from the smallest microorganisms to the humans who have become the dominant mammals of the planet. A single disruption in the Earth s delicate balance can mean destruction of the habitat that supports many species and ecosystem services vital to life on Earth. It is this fine line that divides environmental and economic problems, and once crossed, it becomes very important (from an economic standpoint) to either find alternatives to the services and species provided by the balance, or to begin repairing and restoring the habitat as soon as possible. One specific issue that hits very close to home for Belize and Central America, and requires immediate attention is deforestation.

2 According to Dr. Collin Young (2010), deforestation is the conversion of forest to another land use or the long-term reduction of the tree canopy cover below a 10 percent threshold. Deforestation implies the long-term or permanent loss of forest cover and its transformation into another land use. To understand the effects and urgency of deforestation as an economic problem, one must first understand the importance of forests to global ecosystems and the quality of life that all species maintain. As Dr. Jocelyn Stock and Dr. Andy Rochen (2006) of the University of Michigan stated, Mother earth has given much responsibility to trees. Tropical rain forests alone provide a home for 90% of all organisms and biodiversity; many human medicines and foods come from forests; trees improve the quality of the air and determine rainfall and replenish the atmosphere--they cool and regulate the Earth s climate in conjunction with other such valuable services as preventing erosion, landslides, and making the most infertile soil rich with life (Rochen and Stock, 2006). The importance of trees and forests will be further discussed in the Impacts of Deforestation section of this paper. This paper will take a local look at the history of deforestation and the legistaltion and regulations in Belize, environmental and economic impacts of removing tree cover, and possible solutions and alternatives to this environmental economic problem. Deforestation in Belize There is limited and somewhat conflicting information on the status of forests in Belize. Up until recently, the greatest threat to Belize s rain forests came from small agricultural plots. Although timber has traditionally been important to the economy of Belize, the method of selective cutting practiced by local firms had a small impact on the forests. There are numerous reserves which protect almost 30 percent of Belize, but these tend to be understaffed and suffer from illegal cutting activities sometimes by armed gangs (Butler, 2007).

3 In 1993, the Food and Agriculture Organization of the United Nations reported that since Belize was 97% forested and only losing forest at 0.2% annually, Belize had not succumbed to the massive deforestation suffered by most other Central American countries. That optimistic estimate of forest cover and forest loss for Belize, however, was based on a model using only one satellite image from More recent studies based on general land use maps indicate forests in Belize now total only 59% of the total land cover (FAO 2001). While deforestation rates in Central America remained similar between at about -1.2% per year, the same study showed Belize s deforestation increased to -2.3% per year (FAO 2001). A more conservative estimate, based on a study using high-resolution multi-temporal satellite imagery, showed an annual clearing rate of -0.6% per year during the 1990s for Belize and an overall forest cover in 1998 of 78.5% (Sader et al 2001). Although these reports vary in the extent of damage, they both show dramatic increases in the destruction of Belize s forests. A 2002 study by Sonia Lucia Di Fiore found that forest cover along the Belize River corridor was reduced from 40% of the total land area in 1989 to 31% in This is consistent with the FAO finding in 2001, which states that Belize is only 59% forested, since the Belize River corridor is much more developed than the country as a whole. There are two main laws that establish and regulate protected areas in Belize. First, the Crown Land Ordinance (1924) enabled the Minister to create crown reserves on an ad hoc basis (IUCN 1992). The oldest crown reserve thus established is Half Moon Caye, which was designated in 1928 (IUCN 1992). The second major law concerning protected areas was the National Parks System Act No. 5 (1981), which allowed for the establishment of national parks and other protected areas (IUCN 1992). This law has been updated with the completion of the Belize National Protected Areas System Plan (Meerman and Wilson 2005).

4 Another regulation of significance is the Environmental Impact Assessment Regulation of 1995 (ELAW 2002), which was created to manage the environmental impact of logging (Government of Belize 1999). This law has been challenged by the difficulty of enforcement in remote areas (Litterer 1997). Impacts of Deforestation There are many environmental impacts of deforestation including soil erosion and nutrient loss, climate change, and loss of biodiversity. Although the world s tropical forests appear to be thriving and lush, the underlying soil is actually rather poor; almost all the nutrients of tropical forests are bound up in the vegetation, and once the forests have been cut down, essential nutrients are washed out of the the soil all together, leading to intense soil erosion (Rochen and Stock, 2006). Another serious consequence of deforestation is its role as a catalyst in climate change. The most effective way to moderate Carbon Dioxide (the most prominent green house gas) is through plant life; live trees and plants naturally absorb Carbon Dioxide and regulate the Earth s climate. With a decrease in plant life due to deforestation, it becomes much harder to moderate CO2 levels, and therefore climate. In addition, deforestation and landclearing activities emit about 1.7 billion metric tons of carbon per year into the atmosphere (Djoghlaf, 2007). Deforestation and the increase in the speed and intensity of climate change both have a direct influence on the loss of biodiversity of forests. Forests cover a third of the Earth's surface, and are estimated to contain as much as two thirds of all known terrestrial species (Djoghlaf, 2007). Many of these species that are now facing extinction are of enormous potential to humans in many areas; especially medicine. According to the World Health Organization, as much as 80% of the world s population relies at least partially on traditional medicine, which relies on forest plants. So, by contributing to the extinction of multiple species

5 of plants and animals, we might be destroying the cures for many of the diseases that plague the human race today. This is the line that converts environmental issues into economic problems. The local economic value of medicinal forest products of Belize was studied by two scientists who evaluated the sustainable harvest from two forest plots of all the medicinal plants that could be sold to local herb healers and pharmacists (WWF 1994). On a sustainable basis (30 year harvesting rotation), the herb harvest was worth $294 and $1,346 per acre on the two plots. In comparison, clearing rainforest land for agriculture was worth $117 per acre in Guatemala and $137 in Brazil (WWF 1994). Medicine is just one of the many examples of productive resources of the forest. By looking at the productive resources of the forests, one can see the economic impacts of deforestation are quite pressing and spread across several economic sectors including: agricultural, food and beverage, forest product, and other services. Resources of the forest exist as both stock-flow (able to be harvested and saved) and fund-service, making the forest, and its role in the market an interesting economic tool. Though timber has typically been considered the ultimate forest resource, forests are increasingly valued for a wider range of products like food and medicine (stock flow resources) as well as ecosystem services like climate regulation and water filtration (fund service resources). The next international climate change agreement will likely contain incentives for countries to limit deforestation. New regulations in end markets such as the European Union and United States will seek to limit imports of illegally harvested timber. For example, retail customers may be concerned about the reputation risk associated with procuring products that may have come from illegal or unsustainably managed forests. Several certification schemes (like the Forest Stewardship Council) differentiate among sustainable wood products in the marketplace. These certifications however, are often costly and would represent

6 an additional burden on the agricultural sector of Belize. Other economic impacts of deforestation include losses due to pollution and siltation of water used for drinking, agricultural, commercial and industrial purposes; destruction of fisheries and aquatic habitat; flooding; siltation of waterways and dams; loss of top soil and soil fertility; climate change; reduction or loss of non-timber harvests; and loss of recreational resources that attract tourists (WWF 1994). Based off the sharp contrasts of the pre-analytic view of neoclassical and ecological economists, it is expected that they will have very different opinions on the issue of deforestation. Neoclassical economists believe that natural and created capital are substitutes, that the ultimate means is innovation of human knowledge, that consumers inherently want to increase total utility while producers strive to maximize profits, that the market can achieve an equilibrium that can efficiently allocate resources, and that nature is resilient. Ecologicals on the other hand, believe that natural and created capital are complements (one can not exist without the other), that the ultimate means are those natural resources that humans rely on but can not recreate, that natural capital is a limited resource, that the earth is a source (of resources) and a sink (for wastes), and that as natural resources are depleted, human welfare will degrade as well. Neoclassical economists would believe that deforestation (and the accompanying land degradation) occurs because there is a disturbance in the natural equilibrium of the marketplace. In a perfectly competitive economy, markets acting on the instincts of rational individuals (who, as stated above, are self-interested and utility maximizing) determine efficient allocation of resources under certain conditions. When the markets fail, like in the case of deforestation, the government is often inclined to intervene in the marketplace. Neoclassicals, however would believe that there is no need for intervention, because even if the forests resources are depleted, they believe that human innovation is bright enough to get us out of any problem we re faced

7 with. To neoclassicals, created substitutes for any forest products (timber, medicines, etc) will come with time and the development of human innovations. Ecological economists take a more pessimistic, though somewhat more realistic, approach to viewing environmental issues. I believe most ecologicals would support regulation protecting the forests and the environmental services that can not be replaced. Possible Solutions to Deforestation Several possible solutions to deforestation exist within the economic context. They can complement each other and can be used to maximize the benefits from forests. Improved planning, policy and regulations, and training and education (along with local participation) are all excellent examples of possible solutions. Planning is used in many countries, from the national to local levels, to minimize the environmental damage resulting from deforestation and forestry activities. Typical plans relating to deforestation include land use planning, natural resource planning, park and recreational planning, and harvest planning. For example, Madagascar is currently undertaking a major national planning effort to preserve the remaining 20% of its forested areas and is studying the potential of nature tourism in these areas (WWF 1994). At a local level, the State of California, United States precludes any person from conducting timber operations unless a timber harvesting plan, prepared by a registered professional forester, has been approved by the Director of Forestry. The plan must be based on site-specific characteristics including vegetation type, topography, and stream characteristics (WWF 1994). A wide variety of policy statements, and legislative and regulatory measures have been established to protect forests and prevent pollution. Two reference volumes allow country-by-

8 country analysis, IUCNs Protected Areas of the World: A Review of National Systems, and FAOs Forest Legislation in Selected African Countries. A review of legislation specifically pertaining to Biodiversity is contained in the World Conservation Monitoring Centre s Global Diversity. Training and education of stakeholders helps people understand how to prevent and reduce adverse environmental effects associated with deforestation and forestry activities, and take appropriate action when possible. It is important to keep in mind the importance of local participation when discussing the prevention of deforestation. Many case studies of local participation show that where populations live in or near forests, local participation has been found to be essential to the successful prevention of deforestation. Conclusion Forests cover almost a third of the earth s land surface (WWF 1994), providing many environmental benefits including a major role in soil conservation, prevention of climate change, and preservation of biodiversity. Forest resources can provide long-term national economic benefits. However, deforestation, particularly in the tropical moist forests, is proceeding at a very rapid rate. The negative economic impacts of deforestation are substantial, but many of these impacts can be avoided or controlled through the use of prevention and control options, and through planning, monitoring, and increased education. The World s Forests (from a conservation perspective)

Source: World Research Institute (http://www.wri.org/map/worlds-forests-restorationperspective) This map shows the world s forests as they used to be and as they are today.

9 Source: World Research Institute ( This map shows the world s forests as they used to be and as they are today. Green areas are the landscapes of today s forests. Intact (large undisturbed) forests appear in dark green, and managed or fragmented forests in lighter shades of green (dense forests in medium green have a canopy cover of at least 30% while sparse, open forests in light green can be as low as 15%). Brown areas represent estimates of historical forest cover. These are areas where climate conditions are believed to have allowed forests to grow at some point after the latest glaciation, but where forests have been replaced by developed land and croplands (dark brown) or pastures and grasslands (light brown). Red areas show recent (2000 to 2005) tropical deforestation.

10 Works Cited Butler, Rhett Deforestation rates in Belize: Statistics for Belize. Accessed April 12, Di Fiore, S.L Remote Sensing and Exploratory Data Analysis as Tools to Rapidly Evaluate Forest Cover Change and Set Conservation Priorities Along the Belize River, Belize. Columbia University. Djoghlaf, A. (2007). Biodiversity and Climate Change. Convention on Biological Diversity. Environmental Law Alliance Worldwide (ELAW) Belize- Environmental impact assessment regulations, Statutory Instrument No. 107 of Accessed Apr FAO. Food and Agriculture Organization of the United Nations The global forests resource assessment 2000 summary report. Committee on Forestry Paper 8b. Rome. Government of Belize Ministry of the Environment press release. Accessed Mar IUCN Belize. In Protected areas of the world: a review of national systems. Volume 4: nearartic and neotropical. IV World Congress on National Parks and Protected Areas. Caracas, Venezuela. p Litterer, J ICE Case Study No. 12: Belize logging conflict. American University, The School of International Service. Washington, DC. Accessed Apr Meerman, J. C. and J. R. Wilson The Belize National Protected Areas Systems Plan. Accessed Apr Rochen, A. Stock, J. (2006) The Choice: Doomsday or Arbor Day. Retrieved on March 17, 2010 from World Wildlife Fund (WWF) & United States Environmental Protection Agency (EPA). (1994). Deforestation Technical Support Package. Young, C.A. (2010). Deforestation: Introduction to Tropical Rainforests [PowerPoint slides]. Retrieved from

Understanding tropical deforestation

Understanding tropical deforestation By NASA, adapted by Newsela staff on 03.13.17 Word Count 1,466 Level 1170L Two logging trucks on the Kalabakan-Sapulot-Road take heavy tropical timber logs to the log