Use Them Or Lose Them

By Daniel K. Benjamin

There is a widespread view that economic growth, with its suburban sprawl and paper-hungry copying machines, dooms us to shrinking forests. Yet recent research yields persuasive evidence of the opposite: Just as a higher demand to consume bread and beef leads to more land devoted to growing wheat and cattle, so does a higher demand for wood products lead to expanding forests.

To reach this conclusion, Andrew Foster and Mark Rosenzweig (2003) have studied the determinants of forest cover in India, where, after decades of deforestation, about 50 years ago the amount of land devoted to forests began rising rapidly. By 1999, forest cover in India was more than double what it had been in 1951, and the amount of biomass in those forests had increased even faster.

India is an excellent locale to study the impact of economic growth on forestation because the markets for wood products there are largely closed off from the rest of the world. The Indian government has imposed high tariffs on wood products such as furniture, and most of the demand for wood in India is for fuel, which is rarely imported. In addition, because wood for fuel has a low value relative to its cost of transport, fuelwood markets in India are limited geographically, typically extending no farther than the local village. Hence changes in demand for forest products should have a direct impact on local forests. By examining the link between economic forces (such as income, population, wages, and agricultural productivity) and afforestation across 250 villages from 1971 to 1999, the authors are able to separate the effects of each of these factors on forest cover.

The key finding of this research is that villages where economic growth prompted the largest increases in the demand for forest products (including fuelwood, paper products, and wood furniture) had the greatest growth in forest cover. In effect, where it was most profitable to use forest products, it was also most profitable to provide the forests that would ultimately supply those products.

The authors also note that secure property rights played a key role in producing this result. For example, the Joint Forest Management Program in India, which provides villagers with a share of sales proceeds from timber extracted from public forests, was implemented in the 1980s. This gave villagers an added incentive to ensure that the forests would be there to meet higher demands for wood products. This conclusion is consistent with other research on forests that I have written about in this column (see "Avoiding the Ax," December 1997) and with Trupti Mehta's PERC Reports article on community forest programs in India and Nepal (June 2002).

Another finding from the study is that the demand for forests as environmental goods does not appear to play any significant role in the extent of forest cover in India or other developing countries. The basis for this perhaps surprising conclusion comes from examining patterns of income growth and forest growth in dozens of developing nations. The authors find that faster economic growth is associated with faster forest growth only in those nations that are "closed" economies-that is, where the added demand for wood products has to be met by added local supplies. For "open" economies, where the higher demand for wood products can be supplied by imports as well as local forests, economic growth does not increase forest growth. If the demand for environmental amenities were the key force at work, then faster economic growth should lead to faster forest growth everywhere, regardless of the economic openness of the country.

The authors also examine the potential link between agricultural productivity and forest cover. Rapidly rising agricultural productivity could have led to cutbacks in acres planted (and thus more forest cover), as less land was needed to produce the same amount of food. Alternatively, it could have led to expansion of acres planted, as farmers sought more markets for their products. Foster and Rosenzweig find that in India, higher agricultural productivity during their study period created pressure to expand the amount of cultivated land (reducing forest cover) to sell the added agricultural output on world markets. (For the world as a whole, this effect is not likely to hold true. Higher output on a global scale would lower prices, reducing or even reversing the incentive to convert forests into fields.)

The bottom line reached by Foster and Rosenzweig (2003, 633) is sufficiently striking that I think it is worth quoting at length: "[C]onservationbased-measures that either reduce the demand for forest products (e.g.,recycling of paper or the inhibition of suburban homebuilding) or place local restrictions on forest exploitation do not save trees" (emphasis added). That is, just as the demands for Wheaties and corn flakes have induced farmers to grow more wheat and corn, using virgin pulp for newspapers and two-by-fours in construction appear to yield more forested land, not less. For those readers who wonder how to save the trees, a simple aphorism might help fix the message: Use them or lose them.

REFERENCES

Foster, Andrew D., and Mark R. Rosenzweig. 2003. Economic Growth and the Rise of Forests. Quarterly Journal of Economics 118(2): 601-37.


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

PERC Reports, Volume 21, Number 3, September 2003

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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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