ABSTRACT
The last two chapters examined the principles of market operation in forestry. Many forest activities, however, do not occur in entirely free, complete, and competitive markets. Some occur entirely outside the market—as some forms of forest recreation are neither bought nor sold. Some marketed activities in the forest have unmarketed effects outside the forest—as timber harvests can cause erosion and sedimentation in downstream watercourses and riparian lands. Furthermore, some marketed activities external to the forest can have effects on the forest—as agricultural development can be a source of deforestation and the loss of non-market ecosystem services such as biodiversity and carbon sequestration that originate in the forest. Finally, market-based activities in the forest (and elsewhere) must carry a burden in addition to the price collected by their sellers in order to provide their share of the financial support for general public services like roads and schools and the police.
