Deforestation processes in temperate and tropical forests: an economic perspective.

This chapter addresses deforestation and forest degradation globally. Both economic and social explanations of deforestation are discussed. Deforestation is seen in the context of land allocation to competing uses. Economic externalities may explain why immediate actors do not consider the full range of effects resulting from deforestation activities. It is difficult to value properly the environmental effects of deforestation and forest degradation. The dynamic nature of both forest ecosystems and economic processes complicate the matter further. The irreversible nature of deforestation makes land allocation decisions complex. This chapter discusses the costs associated with intervention designed to regulate deforestation and forest degradation. Both market and intervention failures are quite common, leading to more deforestation and forest degradation in many places than what would be considered socially optimal. The purpose of the chapter is partly to illustrate the magnitude of the problem without dramatising the situation, but primarily to demonstrate how economic theory may contribute to explaining the reasons for deforestation, why deforestation is so difficult to control and reduce, but also to indicate some directions for further actions to contain deforestation and forest degradation where it causes most harm.