Course:ECON372/OK2019WT2/Topic12
Forest Economics
Group #1
Summary:
World Bank’s International Development Association (IDA) is a section of the world bank focused funding grants with low to no interest rates for programs that boost economic growth and reduces poverty. On February 14th the world bank approved 5 million USD in additional funding for Lao’s Participatory Sustainable Forest Management Project. This project has been achieving significant results since 2013 improving the livelihood of over 650 villages as well as making remarkable progress in reducing deforestation. This has created many new economic opportunities in the forestry management sector and created incentives for community and government involvement.
Analysis:
Introducing sustainable forest management to the Laotian forestry industry is a important step in improving the efficient use of natural resources in developing economies. Laotian foresters operating on a small scale must ensure they are effectively implementing selection harvesting to maximize the present value of harvesting the timber. This project will help to reduce clear-cutting therefore improving carbon sequestration as forest management policies take effect over the long run. The key to success for this initiative is reducing the cost of harvesting timber in Laos by improving harvesting practices and introducing new technology to improve the profitability of selective harvesting in the long run. This has the potential to create a positive feedback loop that continual improves the way the industry harvests and manages their forests. In addition the market for Laotian timber must be strong enough for their product to compete in international markets so eventually the program can slowly withdraw from the industry and allow the Laotian people manage their forests on their own.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 2 | Article doesn't say much about program. |
| Summary (20) | 20 | Full points for accurate summary. However, not much content in original article. |
| Course Related Analysis (30-50) | 20 | Your analysis is mostly speculation, as the article doesn't actually talk about what the funds are being spent on, beyond participatory activities that enhance sustainability. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 62 |
Group #2
Summary
Recently, lawmakers in California have introduced a legislation that would force all contractors supplying products to the state to comply with strict rules against tropical deforestation. The California Deforestation-Free Procurement Act would require the contractors to commit to ending deforestation, peatland conversation, and community and worker exploitation in their supply chains. Once the bill is passed, it would cover a wide range of products and materials purchased by the California's government, including food services for public schools, biofuels, and paper used by the state agencies. Every contractor supplying products to California is required to certify that none of the materials they use were “grown, derived, harvested, reared, or produced on land where tropical deforestation occurred on or after January 1, 2021.” Moreover, contractors working with the state will also have to adopt and enforce policies that protect indigenous people who are affected by their supply chains. If the contractors violate the rules, they would be penalized by heavy fines. The legislation also aims to make contractors responsible for ensuring that any subcontractors they work with are in compliance with the law.
Analysis
This article relates to the chapter by demonstrating how legislation and monetary sanction are used to limit the negative impact of tropical deforestation. The key to reducing illegal logging in the tropical forests is to put sanctions in place sufficient to make the practice unprofitable. However, as stated in the textbook, It is costly to monitor and detect illegal activity in remote areas. Moreover, when the salaries of monitors and inspectors are low, this would encourage corruption in the form of bribery. As such, it is crucial for the regulating body to conduct effective monitoring and impose an appropriate penalty to ensure the effectiveness of the law.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 50 | Very concise, but hits the main points well. How policy is meant to work, and risk of corruption. Good job. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 100 |
Group #3
Summary:
Journalist Georgina Gustin pointed out in her article, "Deforestation Is Getting Worse, 5 Years After Countries and Companies Vowed to Stop It", that although nearly 200 enterprises and governments had signed the New York Declaration on Forests in 2014, five years later, a fire in the amazon revealed that participants had not fully implemented the declaration's goal of halving deforestation by 2020. Craig Hansen, a vice president at the World Resources Institute, pessimistically said: "We're losing the battle, so to speak, on stopping deforestation." The paper points out two reasons for the increased rate of deforestation. Firstly, due to the traditional farming mode and backward technology and education, farmers in the amazon basin still use the land by burning the forest to increase the agricultural area and enrich the soil nutrition, and cause irreversible damage to the tropical forest. The second is that some big agriculture-related companies do not care about deforestation in their supply chains, do not fulfill their corporate social responsibility, and even pressure the government to relax relevant regulations. The study shows that to reduce deforestation, in addition to strict government regulation, consumer attitudes are also critical, especially for enterprises and governments that do not implement policies to protect forests. At the same time, subsidies to farmers to reduce burning forest, and diversification of agricultural products also reduce effective means of deforestation.
Analysis:
It is well known that forest is invaluable in absorbing carbon dioxide, producing clean oxygen, protecting species diversity, and promoting the development of related industries. However, as the article notes, a series of activities to reduce deforestation in recent years have had little effect. Although "in some cases illegal logging has been the cause", the damage to forests from the mistaken conversion of forest, especially tropical ones, to agricultural land and the over-reliance on agricultural products from the destruction of forest in the supply chain cannot be underestimated. In general, it is useless to expect forest owners, users, and related groups to reduce deforestation through voluntary and self-regulated means. The most effective are voluntary consumer resistance, government regulation and regulation by environmental groups.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 18 | |
| Course Related Analysis (30-50) | 10 | Little more than a repeat of summary, with no real use of course concepts. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 58 |
Group #4
Finland Fights to Keep Control of Forests Away From EU
Summary:
Elena Sánches Nicolás reports in the EU Observer the issues pertaining to governing the forests of Europe under the regulations of one united EU body. Nicolás refers to Finland attempting to keep forestry a national competency, and argues that this decision is undermining a key part of the EU’s climate efforts to reduce emissions. As the EU have made commitments such as the Paris Climate Agreement which includes sustainable governance of soils, trees, plants, biomass and timber, the author is making it clear that land use and forestry are two of the most important sectors for the block’s climate policy. Seeing as Finland has now rejected the updated framework, which requires Finland to reduce emissions by at least 39 percent compared to 2005 by 2030, the article is raising concern over EU’s ability to meet their commitment to limit global warming to 1.5 degrees and end deforestation. Finally, Nicolás notes that Finland’s strong opposition to the framework is causing a domino effect on other countries such as Romania and Slovenia, who have also expressed concern over the policy, while France, Sweden, and Austria have also tried to weaken the proposal.
Analysis:
In addition to taking efforts to sustain our natural forests and its biodiversity, this article highlights the issues countries are facing in committing to equal restrictions and regulations as each country is affected differently and face largely disproportionate problems in realizing those target. While Finland is arguing that their natural forest are too important to their local economy for them to allow the EU to control it, the EU on the other hand is concerned over the flexibility granted if Finland is given an exception to the proposal which goes to show that good intention and good policy is often met with reluctance and skepticism in any matter of global governance, which unnecessarily, creates further complications of realizing sustainable resource extraction benefitting both the economy and environment.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 30 | A key issue here is the differential impacts on different countries. As with carbon taxes in Canada, different people and different regions are affected differently. How do we then achieve solutions? As per the Coase theorem, or taxes and subsidies, what do we need to do to ensure that people/nations are not made worse off by making changes, such as reducing deforestation? |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 80 |
Group #5
Summary:
The forestry industry (logging, pulp and paper, and lumber manufacturing) is a driver in British Columbia’s economy as it contributes to 1/3 per year of the provinces exports and provides over 100,000 jobs. “Why isn’t the province doing more to help the forestry sector?” written by J. Finlayson and K. Peacock explains that the industry is at a downfall as two dozen mills have shut down causing thousands of lost jobs. With pine beetle populations continuing to grow, increasing amounts of forest fires, habitat and park protection laws and First Nations land rights and claims, mills have decreased access to the number of trees possible to harvest. As a result, lumber and wood product costs have raised significantly causing “higher government-imposed stumpage levies”. The authors ask the question of why the government is not doing more to help the well-being of the industry and that should take in consideration of investors and other shareholders that want high returns for what they give.
As external companies purchase B.C. raw materials to produce wood products, they are required to pay a certain price that is driven by external and market forces. Industry companies should revaluate total mill capacity with the amount of supplied lumber and governments need to assist to maintain the survival of sustainable, efficient and continuous production. Additionally, pulp and paper manufacturers pay millions in carbon taxes and compete with other suppliers that do not pay any pollution fees as the regulation enforced by the B.C. government is less lenient when compared to other provinces and in the U.S.. For the benefit of the industry, government officials should be examining aspects that would encourage investors to commit more of their capital to the industries in B.C. If this does not occur, the forest industry is predicted to disappear.
Analysis:
The article in question highlights many of the key elements that make up chapter 12 of our textbook. Though one of the main takeaways from this article is that the pine beetle population is harming the logging industry, there is still information that can be used to further understand the economics of forestry. One of the main themes within the textbook is the uses for forestry outside of timber, and why the affect our economy. The main reason being the act of carbon sequestration, trees removing carbon from the atmosphere and using said carbon to carry out photosynthesis. Another reason being the wildlife that uses these forests as a habitat, these natural elements and processes that go on within a forest are being disrupted by humans.
The article argues over the government mandated carbon taxes that the B.C forest industry faces, while they are selling their products outside of the province or country, where their customers do not have to pay a carbon tax. Thus, increasing the price of the timber coming out of the B.C area, which causes a fluctuation in supply as well as demand for B.C products. One can see how these externalities can cause a ripple effect in the provincial and international markets.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 5 | The author is a business proponent, business council of BC. |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 25 | Main topic in chapter is optimal rotation interval and its relation to things like the discount rate, cost of harvest, value of alternative use of land, and growth rate of trees. Externalities enter as a cost or benefit of harvest. You have not substantially included these ideas. Additional to this, but not mentioned in article, is fact that BC has been salvage harvesting pine beetle wood, which is now mostly gone and as such the annual allowable cut is reduce to the sustainable level. No matter what government does to lower the costs for forest companies, that does not create more trees for harvesting. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 70 |
Group #6
https://www.wri.org/blog/2019/07/why-sustainable-forestry-good-investment
Summary:
In Senegalese village, 100,000 volunteers did the most restoration program in the world, which replants around 80 million mangrove trees ten years ago. The investment people made that support a better ecosystem for wildlife in current years. It can bring extra 4,200 tons of fish and sequester 160,000 tons of carbon than before. Now, more than 10 companies invest the money into this sustainable program. At the same time, some companies(such as GIIN) would like to make impact investments by sustainable forestry. Forestry investment is a good way how to increase scale and effectiveness of their practice. GIIN cooperate with other Global Restoration Initiative to develop people need to invest for future. In some poor regions, they still depend on the forests to support their lives, meanwhile the return of sustainable forestry over the traditional timber. Nowadays, lots of investor spend money on new forestry to expand land-use, increase income, and improve ecosystem for local people. New forestry investment is going to force on those 5 points which are : 1. "Reducing carbon emissions from forestry and land use" 2. "Increasing the conservation of forests and forest resources" 3. "Increasing the production of sustainable wood products" 4."Increasing the production of sustainable non-wood forest products" 5."Increasing the sustainability of local economies and communities through forests and land use". However, this investment usually come with some risks which are pests, fires, and illegal wood cuter. In current years, sustainable forestry is still a challenge, but more and more investor would like to work on it and attract others into the program that can be benefit for everyone in the world.
Analysis:
According to the textbook, “forest cover about 30 percent of the land surface of the earth”. Forests play a very important role in our global environment and economics. Sustainable forestry is a good investment since it could bring back all kind of different benefits. For example, forest have use value and bequest value. Wood is a very important renewable source to many different countries on Earth. Reducing carbon is also an indirect use value of the forests.The forest’s value raises up rapidly from the age of 60-90 according to the chart of value of forest as Spotted Owl Habitat in the textbook. We need to decide carefully when we are considering when to cut the trees. One of the trade offs is that “ cutting at 50 years would produce less wood, but it would be available sooner.” However, using forestry resources properly is a big challenge to the world. This including people who are trying to practice illegal logging. Illegal logging takes several forms including excessive harvesting and encroachment, which means “unlawful entry on public or private land to harvest valuable trees”. In order to get rid of risks, unsustainable forestry practices- such as overharvesting, destructive logging, or planting inappropriate tree species should also be avoided.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 7 | Article talks about financial return to investors, but doesn't describe where that return comes from. |
| Summary (20) | 18 | |
| Course Related Analysis (30-50) | 25 | Did not use optimal rotation interval analysis from text. Sustainable forestry is about being able to continue forestry for the long run, and accounting for the costs of the externalities, in choosing the optimal rotation interval. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 70 |
Group #7
Summary: A December 2019 article composed by The Guardian casts doubt regarding whether or not Canada's forests are being managed as sustainably as previously thought. Canada's long-term climate change commitments are brought into question as our country relies substantially on forest lands for carbon sequestration. The article expresses concern about 'logging scars' - dirt roads used by heavy transport machinery that have become too compact for any forest regeneration to occur. Potentially up to 25% of forest area that was once used for logging will become subject to these scars with an inevitable impact on sustainable longevity. It is estimated that 650,000 hectares of Ontario forest land - eight times the area of New York City, will be impacted by logging scars. Although Ontario only represents a small portion of Canada's logging industry, these practices are also common in western provinces where the impact would be more substantial. Canada prides themselves on having a near zero deforestation rate, but if logging scars continue to implicate forest regeneration then the subsequent offset of carbon that could have been removed from the atmosphere will impact the countries overall climate change contribution.
Analysis: The principals of sustainable forest management discussed throughout chapter 12 have relatable implications to this article. In order for Canada to remain as a near zero net deforestation country, sustainable elements must be brought into action. Firstly, it is important to analyze the degree to which logging scars impact the entire Canadian forest ecosystem. Not only do the roads have implications on soil compaction, but they also contribute to habitat alteration and the displacement of different species. In order for Canada to achieve their long-term environmental goals, these considerations must be brought forward. Forest management must also factor in other social costs that may have negative externalities such as flooding associated with logging scars. Although alternative options to harvesting may not be as profitable as clearcutting in the short-term, the environmental impacts from heavy machinery transporting clearcut lots may significantly reduce long-term profits; if proper measures aren't taken now to ensure sustainable forest regeneration periods, the Canadian forestry industry may incur far greater costs in the future in attempts to correct errors made in the past.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 35 | Connection to rotation interval (main chapter concept), and that costs of these scars, and habitat fragmentation, etc., mean that the harvest cost term is larger, and the rotation interval should be longer. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 85 |
Group #8
https://extension.psu.edu/forest-finance-1-sustainable-forest-harvesting-an-economic-perspective
Summary
This article written by Michael Jacobson talks in detail about the different forest harvesting methods and their long-term economic sustainability. One of the two techniques mentioned in the article is diameter limit cutting where only trees above a certain diameter are cut down and harvested this preserves the forest although some of the quality is lost. The other method is crown thinning this method involves removing trees that are close to one another regardless of the tree diameter. The article compares these methods and showed results of how the different methods compare economically. From the analysis of the different methods it is determined that from an economic sustainability perspective, the crown thinning is better financially and better preparing the site for future logging. Diameter limit cutting provides better short-term profits but at the expense of future potential harvests. Overall having a sustainable logging technique will produce better economic and environmental results. This is important in maximizing revenue in the long term giving the best logging results capable for the land.
Analysis
This article relates to chapter 12 and forest economics in a bunch of different ways. This article talks about different harvesting methods and what is better environmentally and economically. In chapter 12 we learn about the interaction of economics and biology. In particular this topic goes into detail talks how the tree grows and how the value of every tree grows. The two different method talked about in the article relate to this because they analyse how the forest replenishes with the two different methods of harvesting. Although this article does not talk or analyze the effects of clear cutting it does talk about the positives and negatives of diameter limit cutting and the crown thinning method. Chapter 12 uses many different formulas to analyze the economic and sustainable effects of rotation. In the article Michael only uses the Net Present Value in determining which method if economically superior. This is something that I think the author should take a look at and possibly add to further prove his findings. Chapter 12 forest economics talks about maximizing the total yield of the forest. This is brought up in the article as the author found that crown thinning had the highest yield and therefore was the best harvesting method to use.
| Category | Mark | Comments |
|---|---|---|
| Article Source (10) | 10 | |
| Article Relevance (10) | 10 | |
| Summary (20) | 20 | |
| Course Related Analysis (30-50) | 30 | Chapter model is focussed on determining the optimal rotation interval, and how that is affected by things like environmental impacts. The two methods here are alternatives to cutting a block of trees. The key idea being that it reduces the external cost without eliminating all harvesting. |
| Extended Analysis (0-20) | ||
| Presentation (10) | 10 | |
| Total | 80 |