9 May 2016

Putting a price on rainforests

Zach writes:*

How absurd would it be if somebody turns around and says, “I would like to buy some rainforest please?" Strangely, nowadays, in the latest attempt to save the world’s rainforests against the constant, ongoing battle of deforestation, this idea of letting people and companies purchase parts of a rainforest is under serious consideration. Upon acquisition of their share of the rainforest, irrespective of the buyer being a person or a company, the sole intention has to be for preservation. This is in direct contrast to the traditional (sadly current) practice of aggressively cutting trees for slash-and-burn agriculture. At least, on the face of it, this [preservation scheme] sounds like a possible solution to the plague of deforestation.

The notion of putting a price on rainforests carries a strong rationale. On the condition that rainforests have a price, wouldn’t there be less of an inclination for corporations and governments to commit deforestation? The obvious rebuttal to this idea is that having a price on rainforests would simply mean that corporations and governments will eventually be willing to pay the price that permits destruction to the rainforest. This, consequently, will suppress momentum towards finding a long-term solution against deforestation.

The reality, unfortunately, is that over the last century governments, corporations, and industries, alike, never really had a firm understanding why rainforests are far more valuable than their mere aesthetic appearance. This is augmented by the fact that the role rainforests play often remains underappreciated, mainly, because all the benefits rainforests do provide can’t be directly measured or captured. This, subsequently, means that there is limited amount of known benefits causing an undervaluation of rainforests. In saying this, efforts to push for solutions to help combat against the impacts from deforestation still continue. This is because there is still hope that the world will realise that world’s rainforests ensure that the climate is controlled at a level that supports humanity’s very existence.

Bottom Line Pricing rainforests is yet to go through the implementation process. Rainforests are seen as valuable but because deforestation is free, rainforests are rapidly in decline. The goal, therefore, is to price rainforests to the extent that they become more valuable alive than dead.

* Please comment on these posts from my environmental economics students, to help them with unclear analysis, alternative perspectives, better data, etc.