The Economic and Climatic Importance of Trees and Forests

A Green Titan Health Post about The Economic and Climatic Importance of Trees and Forests

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The Economic and Climatic Importance of Trees and Forests

Trees are seen as a valuable economic asset but only once they have been cut down for their timber. Our economic system in fact values dead trees as being assets, not live ones. In its way, the plight of the world’s forests and the attempts to manage and preserve them is indicative of the whole reappraisal of the “meta economics” that is demanded by the need to fight climate change and reclaim a safe climate.

Trees cover about 30% of the Earth’s total land area, but the forests are unevenly distributed around the world, with just 10 countries possessing two thirds of the total, whilst 64 countries have less than 10% of their land area as forest cover. Just over a third of the world’s forests are truly wild places with no clearly visible indications of human activity. Only 4% are forest plantations, growing trees to order mostly for the paper industry. The remainder of the world’s forests are a somewhat haphazard alliance between people and plants, supporting the livelihood of an estimated 1.6 billion people. Some of them mange to do this sustainably, but an awful lot do not.

Generally speaking, the richest biodiversity, measured in terms of the variety of plants, birds and other species in any given place, is to be found in the wild forests that are remote from humans.

Broadly speaking, the world’s forests grow in two great lateral bands, one stretching across northern latitudes and incorporating the forests of North America, Scandinavia and Russia. This band is of the type of forest known as ‘temperate and boreal’. These contain the type of trees that are most familiar to people in Britain, with a mix of broadleaf trees such as oak, ash, sycamore and chestnut along with evergreen and needle leaf varieties such as pine, spruce and larch. The other major band runs across latitudes in the southern hemisphere and incorporates the forests of South America, Central Africa and Asia. These are tropical forests and are not all rainforests, as some of them are at higher altitudes or by the coast where they form mangrove forests. Mangroves are particularly important. They are tidal forests and have important functions as natural sea defences, breeding grounds for fish, and habitats for lots of other species.

The probability of sea-level rises and extreme weather events caused by climate change raises the importance of mangroves as a buffer protecting coastlines in the tropics and subtropics. Despite this, mangroves worldwide have been subjected to an appalling rate of destruction resulting from over-harvesting for timber and fuel wood, clearing for shrimp farms, agriculture, coastal development and tourism. Mangroves have been destroyed much faster than any other forest type.

Forest exploitation, just like fossil fuel exploitation, occurs in line with the same economic system that pays no price for the cost of environmental destruction. Indeed, destroying forests for timber is big business, with the global value of wood imports worth $160 billion in 2006 and the rate of cutting them down outstrips the rate of replanting by about 7m hectares a year (which is the space occupied by around 85 billion trees).

Although forests have lots of different possible uses, policymakers, particularly in the developing world, often do not consider forest to have a value other than timber, and defend their exploitation on the basis that the developed world destroyed their forests years ago as part of the development process. Besides timber, forests can also produce other direct use products such as latex, cork, fruit, nuts, spices, natural oils and resins, and medicines. Many of the medicines we use today have come from forest products and nobody knows what else may be discovered.

Forests can also be used for recreation and even spiritual respite. As these uses are related to the existence of a range of tree, plant, animal and other species, forests have an important role in providing habitat for the preservation of these species, particularly in tropical areas. In fact, tropical rainforests contain a phenomenal range of species, more than twice as many as any other forest type and many more of them are unique to their own forest. Forests also have important benefits for the countries in which they are located in terms of recycling nutrients in the soil and providing watershed protection. Forested watersheds act like a sponge that slowly lets out the water so providing a more constant water flow into the rivers and so reducing floods. Cutting down the forests also leads to the soil being washed away, taking its nutrients with it and leading to build ups of mud in water reservoirs and rivers. What’s more, forests have a big impact on climate both locally and on a wider scale. Local rainfall can be reduced once a forest has been cut down because the sponge dries out and the trees are no longer giving out water vapour.

Lastly, of course, once you have cut down a tree and turned it into timber, it is no longer breathing and removing carbon dioxide from the atmosphere. And that is a big contributor to the global greenhouse gas problem. Not only have we been putting pressure on the atmospheric system by pumping out extraneous gases from industrial, transport and farming activities, we have been cutting down the lungs of the planet at an alarming rate. So much so that around a fifth of the GHG problem is due to deforestation.

International discussions about deforestation and the GHG emissions it creates have been going on for more than a decade under the auspices of the United Nations Framework Convention but it concluded that as emissions from forest loss were impossible to accurately measure or control, they could not be included in the Kyoto Protocol’s carbon accounting and trading scheme. As a result, the Kyoto Protocol provided few incentives for reforestation and none to maintain existing forests. This was always recognised as a major missed opportunity although the delicate political issues between developing and developed nations about how to value trees and who pays for them made for slow progress in negotiations. The entire principal of paying to retain forests is also extremely controversial among civic society groups in the with many arguing that the ownership rights lies with the indigenous people so are not the governments to “sell” the rights to.

The first proposals for how an agreement might look were made by Costa Rica and Papua New Guinea and these were eventually worked up into a proposal called REDD, which stood for Reduced Emissions from Deforestation and Degradation. At the 2010 Cancun meeting of United Nations Conference of Parties there was, finally initial agreement on a scheme called REDD+. This agreement clearly states that REDD+ is not only about reducing emissions but halting and reversing forest loss. This is important as it emphasizes that REDD+ actions must result in maintaining existing forests and carbon stocks. It also encourages all countries to find effective ways to reduce the human pressures on forests that result in greenhouse gas emissions. This element is important as it, correctly, puts part of the responsibility of slowing, stopping and reversing forest cover loss and associated emissions on those countries and actors (e.g., companies and consumers) that create the demands that drive deforestation (e.g. demands for timber, oil palm, soy, and cattle).

The agreement in Cancun, however is only a step forward and leaves important questions left unanswered that makes practical implementation impossible. This is because while the agreement recognizes various activities – i.e., reducing emissions from deforestation and forest degradation, conservation and enhancement of forest carbon stocks, and sustainable management of forests – most of these activities have not been defined. Without definitions it is not possible to measure progress or pay for performance, unless there is a true market for these goods when the buyer want to “consume” the offer and makes her own judgment as to whether the offer being made is providing “value” in return. There is also the “grubby politics” of setting the base level of emissions levels from which the “reduced emissions” will come from. Allied to that is the question of how countries will develop an information system to track how safeguards are addressed and respected for the agreement. Then, lastly there is finance. Once again the world is struggling to try and manage a planned economy in the midst of a notionally free market world when actually it should be looking at the underlying functioning of the economic system.

Economics is supposed to answer the question of how best humans can maximise scarce resource but the way we account for our economic activity makes the ludicrous assumption that the planet’s resources and services are not only unlimited but that there is no cost attached to their use.

Business has long been use to the idea that it is necessary to have a depreciation charge to put aside cash so that when a capital item needs replacing there is money to do it. It is time that business was also made to pay for the depreciation of natural capital. If they were obliged to spend that charge on restoration projects of their choice (e.g. restocking oceans, protecting biodiversity, taking carbon out of the atmosphere through reforestation or protecting existing ones) it would by-pass government administration (but not verification) and so couldn’t be accused of being a tax. Projects could, of course be either in the country of origin of the depreciation charge or overseas. This in keeping with the competitive nature of the way the existing system works. It would also put us onto a rapid course of making thing better and stimulate the needed creativity that has, so far, ensured our species has thrived.

Climate change is a fundamental challenge to the way humans social and economic systems operate. Finding lasting solutions to climate change require that we find a way to make our economic system work with the ecosystem. At present the ecosystem literally “fuels” the economic system with the current generation giving no value to the needs of the next. One of Britain’s most famous Prime Minsters, Margaret Thatcher once said “No generation has a freehold on this Earth, all we have is a life tenancy with a full repairing lease”. REDD+ is a decent attempt to start to get the repairs done but a full blown depreciation charge would a faster route to finding one of the solutions to climate change.

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