The Fire This Time

The fires burning out of control in Indonesia for the past two weeks have been treated (predictably) by the mainstream media as sudden, unique, shocking events. The drought conditions caused by El Nino have been mentioned ritually, as if by way of excuse. Much footage has been run of residents of Singapore laboring through soot-laden air. The general impression created has been that the massive pollution-pall blanketing Southeast Asia is unprecedented and inexplicable. It makes people start to think in terms of millennial prophecies.

However: it ain't so. One commentator on the PBS News Hour did dare to suggest that a disaster like this has been waiting to happen for some time, and will almost certainly recur. He was quietly shushed. (Nothing of the sort was suggested, of course, on any commercial network.) It just doesn't do to remind the viewing masses of things like systemic problems.

The Indonesian government appears to be just as surprised by this as the nightly news -- but it is nevertheless, heroically, taking measures:

    The Government of Indonesia is committed to standards that prevent environmental calamities such as this. We are also committed to ensuring that the pace of economic development does not overlook the responsibility that we all have to balance that development with the preservation of our natural resources. It is our hope that the measures we are taking, combined with an end to the drought conditions, will bring a rapid end to this terrible tragedy.

Their surprise is evidently a matter of having too much on their minds, because there were signs. In recent years, vast acreages have been burned on the Indonesian province of Kalimentan, on the island of Borneo. Normally, the monsoons come along in time to douse the fires, but this year the weather cycle has been disrupted by El Nino. Perhaps this accounts for the huge sense of surprise; another oft-shown bit of news footage depicts a peasant fighting the raging fires by tossing handfuls of water from a bucket. Yet weather disruptions due to El Nino have been widely predicted; one might have expected greater caution in the setting of this years' fires.

Indonesia has defended its forestry policy on the grounds that it is replanting, and thus practicing "sustainable" forestry. Now, it is bad enough to add to the destruction of global natural diversity by cutting down old-growth rainforest -- but Indonesia's forestry practices have an even unkinder cut: they destroy a longstanding economy based on fully sustainable forest management. According to Charles Zerner of the Rainforest Alliance:

    The clearcutting and burning of the biologically diverse, productive lands is the first step in the policy of state-managed plantation forestry. Next, the land will be planted with commercial species and managed for the sole purpose of timber production. For centuries, the same land has been managed for rattan, rice, timber, fruit, vegetables, honey, medicines, hunting, and countless other purposes that served the Dayak economy - and the ecology of the region. The environment has been so well managed that newcomers to the region think they have encountered wilderness, not cultivated lands.

Ah, but that's small potatoes, right? Indonesia may have produced 95% of the world's rattan, but that pales beside the foreign- exchange dynamo envisaged by timber tycoon Bob Hasan, who has contracted with two Canadian firms to supply tens of millions of dollars worth of pulp-processing equipment. Rattan is well and good, but Indonesia has swung into the global fast lane.

This means that the disaster of the recent fires and smog, far from being a unique or capricious event, is all too commonplace. It is a manifestation of the universal dilemma that pits prosperity and "jobs" against the "luxury" of environmental protection -- and it will happen again. So: this is an economics course that promises to "shed light on today's baffling economic problems" -- what light have we to shed on this one? What are the outlines of a sensible, sustainable forestry policy?

In political-economic terms, there are three basic kinds of forests. They are: A) Virgin forests, or otherwise ecologically and culturally precious areas that should not be disturbed at all; B) Prime forest land: low-lying, easily accessible and capable of swift growth when replanted; C) Marginal forest, steeper, more remote, less fertile.

One difficulty in forestry policy is that we can't can't just take anybody's word for whether a given stand of trees belongs to A, B or C. It's entirely relative. Much of the eastern United States, for example, was denuded of trees (Class C) by the mid- nineteenth century -- but nowadays, widespread conservation efforts have led to a surprisingly successful regeneration of habitat (Class A). And today, as we face the prospect of global warming, many hold that tropical rainforests should inherently belong to Class A. But things are tough all over, and places like Indonesia are desperate for foreign exchange (Class C). Gainful employment is prized in a developing country.

Greens are ridiculed for demanding what is merely right, in the face of what is clearly expedient. Sure, they're told, everybody likes forests. But people need jobs! We can't afford to be too "moral".

However, careful consideration of the moral question of ownership will allow us to cut through this paradox.

What rightfully belongs to whom? We can start with one admirably simple principle that enjoys nearly universal agreement: that people have the right to own the wealth that they produce with their own labor. In the case of timber policy, then, individuals (or corporations) have the right to cut and sell timber, without any encumbrance or burden, IF --

Of course there is an "IF". What obligations to the community must timber-cutters satisfy?

1. They must ensure the maintenance of forests for future generations of human users, and for the natural balance itself. This is not negotiable, because their right to the fruits of their labor cannot allow them to deny others the opportunity to labor at all.
2. They must return to the community all value created by the community's actions: the rental value of the land, created in great part by the provision of roads and other infrastructure. Their right to the fruits of their labor cannot entitle them to appropriate what has been created by the entire community.

Now: how can we design a forestry policy that secures these rights? Forests that are ecologically or culturally vital can simply be declared off limits, as preserves. That will satisfy the community's first right. It will also destroy their economic value (except to poachers, but it's not easy to poach timber). So there is no land rent to collect on lands that that have been taken off the market.

Our prime objective in sustainable forestry, then, is to encourage the intensive use and regeneration of what I've called Class B lands: low-lying, accessible, mild-climed areas that are most amenable to growing trees. And there are many such areas left. We still have plenty of forests in the world. We won't have plenty of forests for long if we keep doing what we're doing, it's true -- but at this point we (arguably) have enough forests standing to have a real chance to come to our senses and harvest trees sustainably.

How do we do it? We follow the moral principles of what belongs to whom. We designate as public reserves areas that are too important to be logged (rights of natural diversity and future generations). We remove all taxes on timber and timber products once they are cut (the right of labor to its product). We charge timber land holders the full rental value of lands they hold, including the cost of roads and other infrastructure into timber lands (values created by the community).

Forestry policy in the real world, whether we're talking about the USA or Indonesia or most places in between, is conducted with no apparent knowledge of these principles -- and the results are disastrous. Instead, the most important and valuable (in global terms) forests in the world -- tropical rainforests, Class A for sure -- are being slashed and burned as if there were no tomorrow. Industry is taxed on cutting timber and taxed on processing wood and pulp -- but allowed to hold land unused and untaxed whenever it wants. This creates an ever-greater demand for more and more marginal land, for which politically-connected industrialists (like Indonesia's Bob Hasan) demand more and more subsidized logging roads. These processes create a vicious circle of pesticide use, runoff pollution, clearcutting and -- to effectively block any reforms -- cries of lost jobs, should the system ever be changed.

The facts are that if land rents were publicly collected, and if governments refused to keep providing subsidies to multinational timber barons, it would be profitable to produce timber sustainably on the lands best suited for successful replanting. We would never need to touch another virgin or old-growth forest. Jobs would be created and habitat would be preserved.

What stops us? It could be that societies have lost sight of these admirably simple principles of what belongs to whom. Or perhaps we have been hoodwinked into thinking that such quaint old rules don't apply to our postmodern, globalized, chaotic, intricately enigmatic economy. That's what they'd like you to believe!

Take our course.

Or, for more depth on how these principles apply to environmental problems, read Economics in Support of Environmentalism by Prof. Mason Gaffney, Univ. of California at Riverside.

Lindy Davies -- October 4, 1997

Font size=+1>Here's what folks have been saying: One of the main driving forces that is destroying natural forests in Indonesia,Brazil and elsewhere is the desire on the part of the controlling powers is to remove the native populations who are living off the land and "employ" them as laborers on the newly formed cattle ranches, plantations, etc. More wealth and power for the landed aristocracy. Also looks good on the economic statistics--Growth in the GDP. Maybe a bigger loan from the World Bank.
Herb Lubitz <HLubitz @ Aol.com>
Wilm, DE - Tuesday, October 07, 1997 at 20:29:40 (EDT)
Another driving force is the demand for timber! They wouldn't cut the trees down if people weren't willing to pay for them. If you don't want them to cut down so many trees, then tell them to stop publishing so many regulations and instruction manuals. Or print them on rattan.
Max Schmoo <[email protected]>
Brooklyn, NY USA - Thursday, October 09, 1997 at 17:24:08 (EDT)
isn't this what LVT would do
...
- Friday, October 10, 1997 at 16:06:14 (EDT)
The Indonesian government and big corporations have cruelly been moving that society toward some sort of disaster for a long time. In Germany, when your house is on fire they say "the red hen sits on you roof." Aren't the fires in Indonesia just a matter of chickens coming home to roost?
Hanno Beck <[email protected]>
Baltimore, MD USA - Tuesday, October 14, 1997 at 16:37:26 (EDT)
is it just indonesia... isn't it a global problem
the father son and holy ghost
- Wednesday, October 15, 1997 at 16:09:07 (EDT)
As Mason Gaffney said, we need not be forest experts - just go for the rent. Besides your tax and my user fee, two more ways to get rent may be: (1) charging an Ecology Security Deposit (2) and requiring Restoration Insurance. I see both precluding clear-cutting on all grades of forest land better than would the "just say no" approach. Your thoughts?
Jeff Smith <[email protected]>
the great northwest, - Saturday, October 18, 1997 at 09:18:55 (EDT)
I the end how will you convince the average man in the street that his only capital nest egg will have value and no price following the full implimentation of the Georgist system.
john poulter <[email protected]>
Melbourne, 03 Australia - Wednesday, October 22, 1997 at 07:07:34 (EDT)
Good question, John. But please remember that with the full implementation of George's remedy, people's land would not be their only capital nest egg! They would be able to have much more secure savings, not subject to the vicissitudes of the boom/bust cycle.

Not only that: for those who rent land under our current system, what dofference does it make? Land's price is nothing but a terrible hindrance to them. They would benefit greatly be public collection of rent.

And homeowners would benefit too. To start with, they could invest the money they now pay in taxes on their home, their production, and the objects they buy!
Lindy the Stubborn <[email protected]>
the Sticks, - Wednesday, October 22, 1997 at 11:53:58 (EDT)


A key to successful natural resource management by use of market mechanisms (i.e., by allocating access to the highest bidders in terms of annual fees or rents) is enforcement of whatever regulations are imposed. If harvesting of timber is subjected to expensive methods that leave some old trees and protect biodiversity, it stands to reason that the company bidding to harvest other trees and required to do replanting and protect streams and rivers from run-off, will bid much lower than if there were no regulations at all. The public policy choice, then, is one of prevention versus remedy. In most instances where ecosystems are concerned, I am on the side of conservativism, of prevention, even when the scientific data is less than certain. Remedial efforts, after all, are always too late to protect species of plants and animals (and people as well) from destruction.
Ed Dodson <[email protected]>
Cherry Hill, NJ U.S.A. - Sunday, November 16, 1997 at 18:28:29 (EST)
I very much agree, Ed! People talk a lot about ways to "internalize" the costs of polluting. But as you point out, the effective cost of polluting isn't necessarily the regulations on the books but the effectiveness with which they are enforced. In fact, this very forestry policy in Indonesia was part of a vaunted "sustainable forestry" initiative!
Lindy
- Monday, November 17, 1997 at 09:59:39 (EST)
aren't these ways of avoiding LVT
?
- Monday, November 17, 1997 at 16:32:39 (EST)
Well, *, if what you mean by that is when governments offer trumped-up "eco-subterfuge" that really benefits landlords, then of course it is. I think it is generally correct to say that any policy that fills the pockets of a resource owner while spreading costs out to the workers and consumers is a way of avoiding LVT!
Lindy up North
- Tuesday, November 18, 1997 at 10:55:11 (EST)
I WOULD LIKE TO KNOW MORE ON FINANCIAL ECONOMICS
DAKA CHISAKAILA MAXWELL <[email protected]>
LUSAKA, ZAMBIA - Wednesday, November 19, 1997 at 07:24:42 (EST)
how quickly the soviet union changed
fo(h)g
- Wednesday, November 19, 1997 at 15:30:57 (EST)
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