Deforestation and Ownership: Evidence from Historical Accounts and Contemporary Data.(Statistical Data Included)

I. INTRODUCTION

The factors that cause forests to advance or decline are assessed using a source of information that economists have largely overlooked, historical accounts of forest cover changes in specific regions of the world and the human history that accompanied the changes.(1) This source is potentially attractive because it covers long time spans. Deforestation and afforestation are often gradual processes and may be difficult to observe with data that cover only a few years. A limitation, of course, is that the historical record often is impressionistic, and only rarely quantitative. The historical literature surveyed makes no mention of the writings of economists on deforestation. This independence is potentially advantageous because it forces a degree of objectivity that might otherwise be difficult to attain. The selection of episodes described in this literature may have been influenced by the expectations and preconceptions of historians, but they apparently were not influenced by the theorizing of economists.

There is no guarantee, however, that the specific historical accounts selected for description in the present paper are immune from the same biases. Anyone who has engaged in an exercise of this sort, compiling published historical episodes and anecdotes to assess causes for a specific phenomenon, must wonder whether they are being objective in representing what the historical evidence shows. One way to guard against drawing false inferences on this account is to test the conclusions that emerge from the historical accounts empirically. This approach is taken here, using cross-country observations on forest cover for recent periods, together with other relevant data.

Forest cover is declining globally, at a rate of about 1% per year in the 1980s.(2) Understanding the forces that are shaping this trend is of intrinsic economic interest because it represents a major reallocation of the world's land resources. Loss of forests specifically, whether through conversion to cropland, pasture, or wasteland, is of interest to policymakers due to the important unpriced services forests provide.

Deforestation is an important cause of increases in atmospheric carbon, species extinction due to habitat destruction, and displacement of indigenous forest dwellers. A quick examination of cross-country data reveals that deforestation rates vary widely among countries.(3) Theoretical and empirical studies have examined the role of several factors, including population growth, income, government policies, and insecure ownership. The primary focus here is on the last of these, although the evidence presented also sheds light on the role of other factors.

Economists often claim that insecure ownership hastens the clearing of forests. This prediction stems from a partial equilibrium argument that regards forest biomass as a form of capital, and characterizes ownership risk as equivalent to an increase in the interest rate applied to its future returns. Theory predicts that insecure ownership will induce short harvest rotations on forests cut for timber or biomass for shifting cultivation. Short rotations, in turn, can cause forest land to degenerate into wasteland. Theory also predicts that insecure ownership will deter replanting after forests are cleared. More specifically, insecure ownership weakens incentives to encourage regrowth in cutover forests or to plant and protect village wood lots for timber and fuel. Such investments would tend to reduce pressure on natural forests.

Ownership risk in an economy is likely to be a general condition, however, that discourages incentives to accumulate all forms of capital, natural and produced. If forest biomass and produced capital are complements, the direct effect described in the preceeding paragraph could be offset. Two examples illustrate this: harvesting forest nutrients for slash and burn agriculture is facilitated by roads, and harvests of commercial timber require the availability of saw mills. If ownership risk prevents the accumulation of such complementary produced capital, deforestation might actually be lower when ownership is insecure.(4) Alternatively, if forests and produced capital are substitutes, the direct effect of insecure ownership on deforestation would be augmented. For example, investments in irrigation, terracing, soil enrichment, and farm machinery tend to increase the yield obtained from each acre planted.(5) Ownership risk deters such investments and reduces agricultural yields, causing more forest land to be cleared if food demands are inelastic. Certain historical episodes seem to illustrate this possibility.