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Forest For The Trees? Government Policies and the Misuse of Forest Resources

In many countries, government policies lie behind the wastage of forest resources. This report examines the situation in ten countries on four continents and shows improved government policies can promote economic development and forest conservation.

Executive Summary

Throughout much of the developing world, accelerating deforestation is laying waste to vital economic assets, destroying fragile soils, and driving wild species to extinction. In industrialized countries as well, forests are imperiled by pollution and contested by conflicting uses. Warnings have reached us, both from satellite images that show forests in remote areas now much smaller than reported in official statistics, and from desperate forest dwellers protecting with their lives their diminishing legacy. Scientists have drawn for us the connections between deforestation and genetic impoverishment, economic deprivation, and climate change.

What can be done to protect and use these resources more wisely? Many have attributed the loss of forests in developing countries to relentless pressures from growing populations, land-hungry small farmers, and rural households in search of fuelwood and forage. These pressures are real, but a different and powerful force is often overlooked.

In many countries, government policies lie behind the wastage of forest resources. Tax incentives and credit subsidies guarantee large profits to private investors who convert forests to pastures and farms, whether or not these competing uses are sustainable. Governments allow private concessionaires to log the national forests on terms that induce uneconomic or wasteful uses of the public domain. Massive public expenditures on highways, dams, plantations, and agricultural settlements, too often supported by multilateral development lending, convert or destroy large areas of forest for projects of questionable economic worth.

Robert Repetto, Vice President and Director of WRI's economic research program, and an international group of seven collaborators, including researchers in China, Brazil, and the Philippines, have documented these policies and the ensuing ecological and economic losses. The Forest for the Trees? Government Policies and the Misuse of Forest Resources, the first full report of their findings, examines the situation in ten countries on four continents. It shows that instead of an inexorable conflict between economic development and forest conservation, there are ready opportunities to promote both by improving current government policies.

Consider just a few of the findings:

     

  • Between 1979 and 1982, Indonesia's government sacrificed over $2 billion dollars of potential forest revenues to logging concessionaires and allied interests, fueling a destructive timber boom.
  • In the Philippines, over these same years, forced forest-based industrialization gave rise to inefficient mills that lost $500 million in potential resource rents.
  • Generous tax and credit incentives created over 12 million hectares of large cattle ranches in the Brazilian Amazon, even though the typical ranch could cover less that half its costs without these subsidies.
  • On more than 100 million acres of national forests, the U.S. Forest Service consistently produces and sells timber that isn't worth the direct cost of harvesting and marketing it, sacrificing potential recreational and wildlife benefits.

Painful facts like these and others are found in The Forest for the Trees and the much longer book that presents the full country case studies (Public Policy and the Misuse of Forest Resources, Cambridge University Press, 1988). They have far-reaching policy implications. Indeed, they shift the debate over how to manage forest resources for development. No longer can governments justify forest destruction as the unfortunate but necessary road to economic development. If the policies that have sacrified so much of the world's forest estate are themselves costly and the alternative uses they promote are often uneconomic, then creating a better policy framework is the first step toward sustainable resource management.

The policy recommendations spelled out in The Forest for the Trees complement those implicit in Tropical Forests: A Call for Action (The World Resources Institute, The World Bank, and the United Nations Development Programme, 1985), which identified the need for increased attention to and investment in the forest sector. Policy reform and increased development effort go hand in hand. Unless policies that induce forest destruction are changed, investments in reforestation, watershed management, and wildlife conservation will be overwhelmed.

This report also extends the findings in Robert Repetto's WRI studies on the harmful effects of large government subsidies to pesticide sales and irrigation projects (Paying the Price: Pesticide Subsidies in the Developing Countries and Skimming the Water: Rent-Seeking and the Performance of Public Irrigation Systems). In these and related studies, WRI has committed itself to finding and publicizing practical policies that promote more sustainable use of the global resource base.

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