ABSTRACT
Economic analysis can help to establish principles of forest management. An important variable is the discount rate. Higher discount rates devalue the future and are more likely to motivate clearcutting rather than sustainable management.
Excessive exploitation of forests leads to deforestation. Although global deforestation rates have decreased, the world is still losing nearly 5 million hectares of forests per year. The main drivers of deforestation include conversion to agricultural land, timber harvesting, and wildfires.
Recognizing forests as important carbon sinks is one approach for promoting more sustainable forest management. Other forestry policies include internalizing externalities through taxes and fees, certifying wood products from sustainably managed forests, and providing secure property rights to indigenous peoples.
Economic analysis indicates that forests and other tracts of land should be managed to maximize total economic value, include use and nonuse values. Numerous economic studies indicate that land preservation often provides society with greater total economic value than extractive commercial uses. Incentives for private landowners to manage their land for ecological benefits include conservation easements and zoning restrictions.
Global ecological objectives such as carbon sequestration, biodiversity, and other ecological services require the management of land by governments as a public good. About 15% of the world’s land area is classified as protected, but ecologists call for designating new areas and better management of existing ones. Policies such as conservation corridors and buffer zones can improve the functioning of protected areas.
