2/11/02

KUFM / KGPR

T. M. Power

 

 

Does Protecting American Forests Harm Forests Worldwide?

 

            The forest products and mining industries often argue that efforts to protect the environment by limiting the damage these industries are allowed to do in the United States is environmentally counter-productive.  Such regulations and limits on logging and mining in the US, they argue, simply shifts that logging and mining to other countries where it takes place anyway. Given that many of these countries are desperately poor and have far weaker or non-existent environmental standards, the net effect, so it is argued, is not to protect the environment but to damage it even more than it would have if the logging and mining had been allowed to proceed unhindered in the US.

            This argument is built around a “material requirements” view of the economy that natural resource industries believe is “intuitively obvious” and beyond question.  For instance, since we all need food to survive and we all need metals for appliances and machinery, if production from one source declines, it has to be made up from another source.  Shutting down one source, just forces another, somewhere, to be developed.

            Although this view of the economy is often accepted uncritically, it is, in fact, a profoundly anti-economic view. If it were true, our economy in 2002 would closely resemble the economy in 1902, which, of course, it does not. This material requirements view of the economy ignores every major economic force that brought us from the 19th to the 21st century: The development of new technologies, dramatically higher labor productivity tied to much higher education levels, the development of superior substitute goods, and improvements in the efficiency with which we use resources.

            Consider the forest products industry and the ongoing debate over the appropriate management of National Forests, especially unroaded, old-growth, public forests. The timber industry argues that protecting these remnant natural forests will cause timber harvest to shift to old growth forests in Siberia and rain forests in the tropics, wreaking environmental havoc in those locations.

            Recently, Resources for the Future, a 50 year-old natural resource research organization, analyzed what the impact would be if ten percent of all currently unprotected forest lands in North American and Europe, about 115 million acres, were set permanently off limits to commercial timber harvest.[1] These forest economists modeled world timber supply and demand, studying how this reduced timber supply from the US, Canada, and the Nordic countries would impact timber prices, timber harvests in various countries around the world, and the use of timber products.

            What it found was that the reduction in production from these protected areas in North America and Europe would cause timber prices worldwide to rise slightly. In reaction to these higher timber prices, greater investment would be made in timber plantations around the world, including in the southern US.  Land that previously had been used marginally for agriculture would be converted to tree growing plantations. In addition, those lands already being managed for timber would be managed more intensively, slightly shortening the periods between harvests. Very little virgin forest that currently was not being commercially harvested would be entered to obtain additional timber simply because that would be an uneconomically costly way of obtaining additional timber. The high costs associated with these lands inaccessibility as well as their low timber productivity are what have kept these lands from being managed for commercial timber in the past and the uneconomic character of these lands continues to make them “economic” wildernesses areas because there is no commercial motivation to enter them for timber harvest.

            As a result of protecting an additional 115 million acres of forest land in North America and Europe, about 5 million acres of virgin forest would be entered elsewhere in the world. Only one out of every 22 of the acres protected would be offset by the commercial development of wildlands elsewhere in the world.

            The additional timber would primarily come from the planting and growing of trees on land previously cleared for agriculture but no longer very profitable in that use.  This should not surprise us. During the 18th and 19th centuries much of the forests of the eastern colonies and then states were cleared for agricultural use. But as better soils were developed in the midwestern states, eastern agricultural lands were abandoned and the forests, over time, marched back out to reclaim the land, reforesting much of the eastern US. The lands in the south that were most productive for timber because of temperature, rainfall, soils, topography, and accessibility were often converted to intensively managed plantations. The same has been happening elsewhere in the world and if timber harvests are reduced in North America and Europe, this plantation development will accelerate and be the primary source of expanded timber production.  Increased world production of timber will not primarily come from harvesting virgin forests elsewhere in the world.

            The driving force in these worldwide adjustments is the higher value of timber that results from reduced harvests from some North American and European forestlands. Those higher costs, of course, hurt consumers. But to the extent that the higher costs are simply more accurately conveying the full costs, including the environmental costs, associated with timber harvest, those higher wood product prices are appropriate and necessary to encourage responsible use of this scarce and valuable resource. Such improved price signals allow all wood fiber producers and users to adjust their behaviors in productive and rational ways. That is not an economic loss but, rather, an efficient economic adjustment.

Imposing rational environmental regulations on economic actors and then allowing them and the rest of the economy to use their entrepreneurial skills to efficiently adjust to these very real environmental costs does not simply shift environmental damage from one location to another. Quite the opposite, it guarantees that scarce and valuable environmental resources that are central to our health and overall well being are not gratuitously damaged and wasted leaving us and future generations significantly poorer.


[1] “Forest Management, conservation, and Global Timber Markets,” Brent Sohngen et al., American J. of Agricultural Economics, 81(1):1-10, February 1999; “Forest Management, Conservation, and Global Timber Markets, Brent Sohngen, Agriculture, Environment, and Developmental Economics, Ohio State University,  presentation to Forest Ecosystem Information Exchange, Wells Conference Center, University of Maine, May 4, 2000.