Avoiding the Ax

By Daniel K. Benjamin

Insecure property rights
induce trespassers and
forest owners to cut
tress on short rotations
and not to replant.

Deforestation has been in the news of late, and for good reason: Recent estimates are that the world's forests are shrinking at a rate of about one percent per year. Most discussions of forest losses depict private parties as trying to harvest trees as quickly as they can; hence, only government action can prevent the loss of the world's forests. These discussions cast the impending deforestation of South and Central America, Southeast Asia, and Africa as a classic example of the need to rely on the government to protect the environment from the ravages of free enterprise.

But recent research suggests that the government's failure to define and enforce secure property rights is a key element of the problem. In a series of papers, Robert Deacon has been evaluating the role of secure property rights in preventing forest loss around the world. Examining both the long-term historical record and contemporary data, Deacon has found new evidence that secure property rights, usually the result of stable, democratic political systems, play a key role in slowing the rate at which forests are harvested.

Insecure property rights cause deforestation both directly and indirectly. Directly, the absence of secure ownership induces both trespassers and forest owners--who cannot defend their own property--to cut timber on short rotations and not to replant after forests are cleared. On both counts, forest lands can quickly degenerate into wasteland. Indirectly, the absence of secure property rights threatens forests by deterring agricultural investments in irrigation, terracing, and soil enrichment. By reducing agricultural yields, the failure to invest forces the clearing of more land to make up for the loss of food output.

In examining the historical record, Deacon finds that in the pre-Christian Roman Empire, ancient Greece, and elsewhere, clearly defined and well-enforced property rights served to protect forests. But as these civilizations declined, the resulting weakening of property rights in forests led to over-harvesting, inadequate reforestation, and thus substantial deforestation.

In more recent times, the forests of France suffered extensively in the chaos that followed the French revolution, as did the forests of Greece after the War of Independence in 1821. In this century, the forests of Europe were devastated during World War II, not merely due to war damage, but also due to destructive cutting by civilians and lack of reforestation. Similar damage occurred to forests in Java during the turmoil that followed the end of Dutch colonial rule after World War II.

In examining more contemporary data, Deacon finds that quantifiable measures of political instability and insecure property rights are associated with more rapid deforestation. For example, nations such as Lebanon, Haiti, and El Salvador, torn by major constitutional changes, guerilla warfare, or frequent regime changes, tend to suffer heavier forest losses. By contrast, countries with democratically elected legislatures and stable, civilian governments, such as Western European and North American nations, tend to have both lower harvesting rates and higher reforestation rates. In addition, the security of property rights stimulates agricultural investment, increasing agricultural yields, which further reduces deforestation. Overall, the existence of stable, democratic governments and rule by law rather than by individuals play a central role in protecting the world's forests.

Two lessons may be drawn from Deacon's evidence. First, his finding that enhanced agricultural productivity reduces deforestation suggests a disturbing environmental tradeoff. Although the use of modern pesticides and fertilizers has well-recognized environmental costs, it also improves agricultural yields substantially, and thus reduces adverse pressure on forests. Hence, the environmental benefits of reducing pesticides and fertilizers may have to be balanced against the loss of forests that is likely to result.

Deacon's work also points to the truly productive role of government in protecting forests. Well-defined, secure private property rights discourage deforestation on two counts: Potential harvesters will allow trees to grow longer, secure that the mature timber will be safe, and they will be more likely to replant, confident that they or their descendants will reap the benefits. A principal cause of shrinking forests is the lack of secure private ownership. Viewed in this light, the way to reduce deforestation is to work toward the establishment of secure, enforceable rights to forests, for this in turn will yield the most productive use of the forests--in the present and the future.

NOTE
This essay is based on the following articles by Robert Deacon: "Deforestation and the Rule of Law in a Cross-Section of Countries," Land Economics, November, 1994, pp. 414-30; "Assessing the Relationship between Government Policy and Deforestation," Journal of Environmental Economics and Management, January, 1995, pp. 1-18; "Deforestation, Investment, and Political Stability," in The Political Economy of Conflict and Appropriation, Garfinkel and Skaperdas (eds.), New York: Cambridge University Press, 1996; and "Deforestation and Ownership: Evidence from Historical Accounts and Contemporary Data," unpub.manu., University of California, Santa Barbara, July, 1997.


Daniel K. Benjamin is a PERC senior associate and professor of economics at Clemson University. His regular column, "Tangents-Where Research and Policy Meet," investigates policy implications of recent academic research. He can be reached at: wahoo@clemson.edu

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The effect of government policy changes on the private sector has been the unifying theme that ties together Daniel K. Benjamin's broad-scale research. He not only examines the outcomes of policy changes, but also the reasons behind the modifications.Taxes, unemployment, risk assessment, and drugs have been the focus of much of Benjamin's...
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