1Diane Klerks 2/24/08 ECON 4999 Essay 1 Tropical Forest timber and logging practices: Is intergenerational equity possible, and should it be considered? ABSTRACT: For the purpose of this paper, intergenerational equity is defined as the fairness and/or consideration of conservation of natural resources for future generations. Timber, especially from tropical forests, is the main concern as many tropical forests are in poorer countries with more internal turmoil and an assumed increased likelihood for internal conflict. Three general perspectives are considered: economic, philosophical and moral, and conservationist, or sustainable management of the logging industry in tropical forests. Each perspective represents different aspects of market, societal and logging incentives that are necessary to understand the roll of intergenerational equity in logging (if any). After this discussion, the vary schools of thought on intergenerational equity will be brought together via policy recommendations and suggestions to improve the sustainability and productive use of tropical forests. Discounting, mainly used in economics (the rate applied to equalize the costs and benefits for current and future generations (Portney, 1999)) and intergenerational equity (justice across generations from a psychological or sociological perspective, though coined by an economist (Foot, 2005)) are often interchangeable due to their linked nature. The two aforementioned concepts are both capable of analyzing what the future is worth yet for the2analysis of natural resources preservation, intergenerational equity is a more conceptual approach that may be more suggestive as the actual costs and benefits of natural resource sustainablility (another notion to be discussed) is often ambiguous due to imperfect information (Kowal, 2007). “Natural resource” is another ambiguous term that needs to be resolved before intergenerational equity analyses can be properly considered. When future generations were originally considered for this paper logging seemed like an improbable case to examine. However, as research continued, logging and timber practices, techniques and regulation proved to be more intricate and complex than originally thought. More importantly, logging is an international practice that literally all societies rely on whether they are the sellers (loggers, private companies, or the government) or consumers. The outline of this paper is as follows: The problematic aspects of logging (in terms of future costs, benefits, market failures, and incentives of tropical forest management) with respect to the economic school of thought will be discussed first. Next, the philosophical, psychological, and moral concerns of intergenerational equity for logging are discussed; followed by conservationist and sustainable management of the tropical logging industry and forests. The final section of this paper includes recommendations from the various perspectives on how to provide appropriate incentives, government regulation, and moral concern for intergenerational equity of tropical timber. The benefits of tropical forests today are those that have the ability to be carried into future generations of the renewable resource of tropical forests are not subjected to over-use resulting in their inability to re-grow after being logged, or in the most drastic cases, clear-cut. Kahn (1998) notes several benefits of tropical forests including: natural benefits—water protection to decrease erosion, trees add to the natural hydrological cycle (which allows water3absorption), and these tropical forests provide the actual home for numerous species, many of which have not even been discovered in the most dense of forests. The man-made benefits from logging this once less-disrupted resource includes obvious products such as: furniture, home-building materials, paper, etc (Khan, 1998, 356-357). The potential market failure from logging arises due to forests often being a public good. With little to no enforcement of government regulation of logging practices in many poorer Latin American or African nations, clear-cutting and over use of a public good—which is by definition under-supplied, over-use is almost inevitable, from the society’s stand-point (Khan, 1998, 360). Moore importantly, the overuse of this good is not likely to be resolved as the incentives—namely profit, which far exceed the costs to the logger, who clearly does not consider the future of the forest and the need for maintenance in order for future generation to enjoy the same profitability. Another market failure that arises on a nearly regular basis is the lack of property rights often experienced by Latin American countries (Panayotou and Ashton, 1992). For example, in Guatemala’s El Ceibel Park, squatters have over run the area to either torch the trees, or come in at night and “steal” (if property rights were actually enforced) timber for their private sales. This lack of management and enforcement of property rights of this forests is common in Brazil, Ecuador, and other Latin American area where the forests are (or were) thick and government is often in capable of fixing this market failure (Gonzalez, NYT, 2000). If there was no knowledge of the future, there would be no need to discuss intergenerational equity—unfortunately (to some who are concerned0 this is not the case. To many environmental economists, the consideration of the future of society is necessary and appropriate to consider; to other schools of economics (the majority), the future is of no such4concern (Tacconi, Bennet, 1993). However, to ignore intergenerational equity is to ignore the proper allocation of resources—which are scarce. It may be true that we—are not currently part of the future, so why consider it? However, consider for example the “veil of ignorance” (Rawls, 1971, A Theory of Justice). This concept alters one perspective by making the group who is considering how to for society unaware of what generation, species, race, and economic status they will be placed. With this unbiased agenda, decisions will (probably) be naturally more equitable—especially for the future that currently has no say. Yes, this is purely hypothetical and is likely never to really work—especially in Latin America, but it is an idealistic approach to justify the need to consider the future—in some alternate universe, you may be