0.13 Natural capital: forestry  (Page 4/14)

Early in the 21 ^st century, Peru has followed suit with measures similar to Columbia. There has also been progress in Brazil on institutional change affecting the tropical rainforest. In 2009 the Brazilian government announced a new program to regularize the titles (property rights) of 80% of formerly insecure private land holdings in the Brazilian Amazon. One of the best things Columbia ever did was to establish in fifties a central registry for land titles. A big problem was that Brazil lacked a central land registry , so widespread forgery of deeds, insecure property rights were common.

The reforms in Brazil included:

1. Transfer title to the land outright to people already farming it, up to 500 acres
2. For larger plots of land (500 to 5,000 acres), sell the land using various pricing mechanisms
3. Finally, the government reclaimed lands over 5,000 acres

It is still too soon to tell whether the reforms will help stop the pillage of the forests in Brazil? Perhaps, but it is a good start.

Market failure reconsidered

For most of the past 25 years, market failure has been the most studied form of institutional failure leading to environmental degradation in tropical forests and elsewhere. We have noted markets for many environmental services – clean air and water, soil conservation, preservation of climate – either do not exist, or function poorly. We have seen how open access; lack of property rights to forest land can promote deforestation. But market failures also arise from other sources:

1. monopoly and oligopoly power,
2. what economists call externalities, and
3. public good effects.

Consider externalities . Deforestation, whether caused by land-clearing for agriculture fuelwood gathering or by logging, involves also sizable external costs in the form of diminished watershed protection, soil erosion and sedimentation, and increased vulnerability of the forest to disastrous fires. These costs can run into the billions of dollars for a particular country, as in disastrous forest fires in Borneo in 1983. This conflagration illustrates both market failure and public failure. It is important to understand that logging activities in Indonesia, and in particular Boneo, involved selective cutting, not clear cutting of trees. Because of this, logging activities left significant ground litter, easily combustible.

Between January and May in the severe drought year 1983, a voracious fire spread over millions of hectares of moist tropical forest in northeastern Kalimantan, the Indonesian part of the huge island of Borneo. This conflagration was not only a cause of very wide-scale deforestation, but a consequence of forest degradation as well. Forest fires on Borneo have frequently occurred during periods of severe drought over the past century, but never before on the scale, duration, and intensity as that of 1983. On the Indonesian side of Borneo, an area the size of Belgium was burned.

The 1983 Borneo fires qualify as one of the greatest peacetime ecological calamities of the century. By itself, the great Borneo fire caused massive destruction.