ISSN 0854-9818

CIFOR
CENTER FOR INTERNATIONAL FORESTRY RESEARCH
OCCASIONAL PAPER NO. 30 June 2000

The Underlying Causes of Forest Decline

Arnoldo Contreras-Hermosilla

CENTER FOR INTERNATIONAL FORESTRY RESEARCH

Office address: Jalan CIFOR, Situ Gede, Sindang Barang, Bogor 16680, Indonesia
Mailing address: P.O. Box 6596 JKPWB, Jakarta 10065, Indonesia
Tel.: +62 (251) 622622; Fax: +62 (251) 622100
E-mail: cifor@cgiar.org
Website: http://www.cifor.cgiar.org
The CGIAR System

The Consultative Group on International Agricultural Research (CGIAR) is an informal

association of 41 public and private sector donors that supports a network of sixteen
international agricultural research institutes, CIFOR being the newest of these. The Group
was established in 1971. The CGIAR Centers are part of a global agricultural research
system which endeavours to apply international scientific capacity to solving of the
problems of the world’s disadvantaged people.

CIFOR

CIFOR was established under the CGIAR system in response to global concerns about
the social, environmental and economic consequences of loss and degradation of forests.
It operates through a series of highly decentralised partnerships with key institutions
and/or individuals throughout the developing and industrialised worlds. The nature and
duration of these partnerships are determined by the specific research problems being
addressed. This research agenda is under constant review and is subject to change as the
partners recognise new opportunities and problems.
Contents

Abstract 1
Introduction 1
Some basic concepts 3
Forest decline: What is it? 3
Agents and direct and underlying causes of forest decline 4
Causation chains 5
Linkages between agents 6
The problems of inadequate definitions and data 7
Underlying causes 7
Market failures 7
Mistaken policy interventions 10
Transportation policies 10
Subsidy policies 11
Policies that led to unmanageable international debt 13
Structural adjustment policies 14
Log export bans 15
Institutional factors 16
Policies that favour concentration of ownership 16
Land tenure policies 16
Illegal activities and corruption 17
Broader socio-economic underlying causes 18
Population growth and density 18
Economic growth 19
Conclusions and policy implications 20
Bibliography 23
List of tables
Table 1. Consequences of continuing forest decline (from the
perspectives of different segments of society). 2

Table 2. Comparing local and global market and non-market

values: some examples (US$ per hectare). 8

Table 3. Examples of policy failures that may lead to forest decline. 10

Table 4. Examples of underpricing forest resources in concession

agreements. 12

List of figures
Figure 1. The causes of forest decline. 5

List of boxes
Box 1. Poverty, time horizons and environmental degradation. 9

Box 2. Why do some concessionaires in Indonesia exploit

forest in unsustainable ways? 12

Box 3. Structural adjustment and the forests of Bolivia. 15

Box 4. A catalogue of illegal acts that promote deforestation

and forest degradation. 17

Box 5. Population and Forest Cover in Indonesia. 19

Box 6. Economic growth and forest decline. 19

Box 7. The Environmental Kuznets Curve in Reverse:

Cameroon. 20
 The Underlying Causes of Forest Decline
Arnoldo Contreras-Hermosilla*

Abstract
Loggers, miners and rural communities all exploit forests in unsustainable ways in search of profits
and means of subsistence. These are the primary actors in forest decline and their immediate
motivations are the direct causes of deforestation and degradation. However, these motivations are
determined, through complex causation chains, by deeper and much more fundamental forces: the
underlying causes of deforestation. Effective action against forest decline requires an understanding
of these underlying causes and their distant impacts on forests.

Underlying causes originate in some of the most basic features of society, such as the distribution of
economic and political power, attitudes towards corruption, population growth, flaws in the market
system and also in seemingly unrelated government policies. They may originate in other countries
and transmit their effects through trade and the operation of transnational corporations. Underlying
causes are many and operate in numerous and variable combinations.

Forest decline is a complex socio-economic, cultural and political event. Thus, it is mistaken to
attribute forest decline to a simple cause-effect relationship or assume that a relationship will remain
unaltered over time. A single force, such as agricultural intensification, may operate in diametrically
opposite ways, depending of the context of other variables and circumstances prevailing in a particular
situation. Accordingly, remedial measures need to be tailored to the very specific milieu in which they
will be introduced. There are no simple solutions to this complex phenomenon.

Introduction negative impacts. A judgement on whether deforestation

and forest degradation are undesirable depends on an
According to the World Resources Institute, the world assessment of their positive and negative impacts on the
has lost about half of its forest cover. Despite a number economy, environment and other dimensions of life, and
of initiatives to stop forest decline, the world continues on the importance that various groups in society attach
to lose some 15 million hectares of forests every year. to those impacts. Thus, for some, deforestation is desirable
Deforestation over the period 1980-1990 reached 8.2% because it results in financial gain. For others, the negative
of total forest area in Asia, 6.1% in Latin America and environmental and social impacts of deforestation may
4.8% in Africa. Most modern deforestation takes place be more important. Perspectives and values can be very
in developing countries, particularly in tropical areas. The different (see Table 1). An assessment of the positive and
process generates large amounts of carbon dioxide – the negative is not an easy task because it is necessarily
equivalent to 20% of global emissions from fossil fuels, loaded with value judgements.
making deforestation the second most important
contributor to global warming – and results in annual However, much of the human-induced deforestation and
degradation of some 12 million hectares of fertile land forest degradation is, in varying degrees, economically
and loss of thousands of species (estimates range between wasteful and environmentally negative, as well as socially
8,000 and 28,000 per year). Deforestation and forest undesirable. Often, just a few individuals benefit. The
degradation directly threaten as many as 400 million process usually induces adverse effects on the social
people – including 50 million forest indigenous people – condition of weaker sectors of society and leads to the
who depend on forests for subsistence. Forest decline, progressive impoverishment of ecosystems. Some types
resulting from the enormous human ability to alter large of deforestation and forest degradation result in costs to
forest ecosystems is the source of intense conflicts society that amply exceed benefits (no matter how these
between rural populations, governments, commercial are measured), and are simply “inappropriate”.
interests and, increasingly, sections of the public at large.

Forest decline is often an undesirable phenomenon. * The author is a Senior Natural Resources Economist of the World
Bank in Washington and the former Principal Economist of the
Nevertheless, it is not always harmful. As with most World Commission on Forests and Sustainable Development in
human interventions, forest decline yields positive and Geneva. E-mail: mitcon1720@aol.com
2 The Underlying Causes of Forest Decline

Table 1. Consequences of continuing forest decline (from the perspectives of different segments of society).

Societal Group Implications of Continuing Forest Loss and Degradation

Forest-dwelling l Loss of spiritual values.

indigenous l Social disruption of traditional structures and communities. Breakdown of family values. Distress
communities and social hardship.
l Loss of traditional knowledge of how to use and protect forests in sustainable ways.
l Reduced prospects for preservation of forest environmental and aesthetic functions of interest and
potential benefit to society as a whole.

Forest farmers and l For shifted cultivators, an immediate opportunity to survive.

shifted cultivators l Forest degradation and declining soil fertility.
l Loss of access to forest land and the possibility of food crop production and reduced possibilities
for harvesting forest products, both for subsistence and income generation.
l Prospects of malnutrition or starvation.
l Disruption of family structures and considerable social hardship.

Local communities, l Decreased availability of essential fruits, fuelwood, fodder and other forest products.
the poor and landless l Reduced agricultural productivity. (Through loss of the soil and water protection potential of
living outside forests remnant woodlands and on-farm trees: loss of shelterbelt influence leading to reduced crop yield.)
l Reduced income generation and possibilities to escape from the poverty trap.

Urban dwellers l In developing-country situations reduced availability (and/or overpriced) essential forest products
such as fuelwood, charcoal, fruits, building materials and medicinal products.
l In developed countries, loss of the amenity and recreational values of urban forests and parks.
l Reduced prospects for assured supplies of clean drinking water and clean air.
l Loss of the recreational opportunities and amenity values afforded by national forest parks and
wilderness areas.

Commercial forest l Immediate large profits.

industrial companies l In the longer term, loss of company business and forced closure of forest operations.
and forest worker l Loss of jobs for forest-dependent communities, social disruption and hardship.
communities l Loss of income and possible negative social implications of reduced income of shareholders with
significant savings invested in forest industrial company stocks.

Mining, oil exploration l Improved access to potentially profitable mineral, oil or other commercially valuable products
and other industrial located under forests.
interests l Increased profitability of company operations and returns to company shareholders.
l Politically negative impact on company operations of criticism by environmentally concerned
groups.

Environmental l Loss of the essential environmental functions of forests including biodiversity, climate regulation,
advocacy groups and preservation of water catchments and fishery values.
conservation agencies l Loss of cultural values and social hardship for the underprivileged communities whose welfare
these groups are committed to protect.
l Increased problems of environmental pollution.
l Loss of those forest values that could be of vital importance and/or interest to the survival and
welfare of future generations.

The global scientific l Prospects that continued forest destruction will accelerate global warming with potentially negative
community consequences for human welfare and survival.
l Continuing biotic impoverishment of the planet, loss of genetic resources, and all that implies for
sustainable food production, and loss of potentially valuable medicinal and other products.
l Increasing pollution and toxification of forest soils, contributing to declining forest health.

National government l Immediate escape from political pressures when impoverished populations migrate to frontier
planners and decision forest areas.
makers l Loss of a potential source of development revenues with consequences of reduced employment and
opportunities, sustainable trade and economic development.
l Loss of the wide range of environmental functions that forests provide in contributing to societal
needs and a habitable earth.
l Loss of political support in situations where forestry loss and degradation adversely affect
the welfare of many citizens.
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 3

If this is so, why do inappropriate deforestation and forest Some analysts consider forest plantations as different
degradation occur? This document explores the from “forests”, reserving the latter label as appropriate
underlying causes of forest decline. First, we examine for natural forests only (we will not go into the many
the concept itself and the distinction between agents and problems created by the introduction of the concept of
direct and underlying causes. We then focus on a selected natural forests, because “natural” is a term that is difficult
set of underlying causes of forest decline. The last section to define unambiguously). Under this interpretation, the
summarises our main findings. The document draws loss of natural forest and its replacement by forest
heavily on research results from the Center for plantations would be defined as deforestation, even if
International Forestry Research (CIFOR). the tree crown cover may be more than 10%. We prefer
to follow the FAO definition that considers as forest any
tree formation, provided that the minimum level of crown
Some basic concepts cover is present.

Forest decline: What is it? In addition to deforestation, forest degradation is an issue.

According to FAO, changes within a forest class, for
Forest decline here is interpreted as deforestation, forest example from closed to open forest, which negatively
degradation or a combination of both. These terms are affect the stand or, in particular, lower its production
not precise. The Food and Agriculture Organization of capacity, constitute forest degradation. Thus, forest
the United Nations defines deforestation as the “sum of degradation implies a major loss of forest productive
all transitions from natural forest classes (continuous and capacity, even where there is little deforestation as such.
fragmented) to all other classes” (FAO 1997). The loss FAO (1998) states:
of forest cover attributed to these transitions must occur
over less than 10% of the crown cover for the Forest degradation takes different forms,
phenomenon to qualify as deforestation. particularly in open forest formations, deriving
mainly from human activities such as over-
It is not clear whether this refers to substantial areas or grazing, over-exploitation (for firewood or
to, say, a particular hectare. What is the area that can be timber), repeated fires, or due to attack by insects,
considered as under “fragmented” transition? Should diseases, plant parasites or other natural causes
such transition involve a minimum of, for example, 10 such as cyclones. In most cases, degradation does
hectares to qualify as deforestation? FAO suggests that not show as a decrease in the area of woody
a minimum of 0.5 hectare is needed to qualify as forest vegetation but rather as a gradual reduction of
and therefore loss of crown cover to less than 10% for biomass, changes in species composition and soil
at least this area would presumably qualify as degradation. Unsustainable logging practices can
deforestation (see, for example, FAO 1994). This, contribute to degradation if extraction of mature
however, is not universally accepted. Operationally, this trees is not accompanied with their regeneration
level of precision (0.5 ha) may be unattainable, or if the use of heavy machinery causes soil
particularly in developing countries. compaction or loss of productive forest area.

Furthermore, such transitions have a time frame. What Productive capacity in what sense? Capacity to produce
if the transition to other uses involves, for example, 20 timber or other goods and services of forests? What if
years and then the area reverts to forest cover? Is that the timber production of the forest suffers in terms of
deforestation? What is the minimum period of time quantity, but quality of future non-timber production
necessary for a certain area to qualify as “deforested”? increases? Or, what if the timber productivity falls but
FAO indicates that areas that are “temporarily” the aesthetic values of the forest increases? Is this still
understocked but which are expected to revert to forests forest degradation?
should be considered as forests. It is, however, difficult
to render this concept operational as its interpretation The following sections should be read with an awareness
depends on the period of time that can be considered of these conceptual limitations. Several studies of
as “temporary” and on the highly speculative nature deforestation may use different definitions.
of the expectation that the area may eventually revert
to forest. Even recognising the importance of exact definitions,
the case for precision should not be exaggerated. Causes
As FAO (1998) recognises, these definitions do not enjoy of major undesirable forest interventions can be analysed
universal acceptance. and practical implications for policy making derived,
4 The Underlying Causes of Forest Decline

even in a world with a relative lack of pure conceptual by governments, are important agents of deforestation.
definitions. Thus, in this article, forest decline would In Ecuador, Peru and Venezuela, mining corporations and
loosely include deforestation, understood as the reduction individual miners clear large areas of forests (MineWatch
of tree crown cover to less than 10% of the total area for 1997; Miranda et al. 1998). Commercial farmers have
rather large areas and for long periods of time. We will cleared forests for soybean exports in Brazil, Bolivia and
not attempt a rigorous definition of “large area” and “long Paraguay. Illegal miners have incurred great damage to
periods of time”, which would be arbitrary anyway. Venezuelan forest resources, as well as causing other
Forest decline would also include degradation, again environmental problems (Miranda et al. 1998). Loggers
loosely understood as a loss of some of the main attributes searching for valuable woods degrade forests and
of forests, be these the capacity to produce timber, wood, facilitate deforestation in the Guyana Shield.
non-wood products, environmental services or a
combination of all these. Here we are more concerned In North America, oil companies have identified for
with the causes of these processes than with the possible exploitation the extensive oil sands in Alberta,
conceptual precision of the terms “deforestation” and which are largely under forests. If oil sand projects were
“forest degradation”. implemented, they would pose a great threat to the boreal
forests of Canada.1 Loggers are claimed to be important
agents of degradation in the forests of the US Pacific
Agents and direct and underlying causes Northwest and Western Canada.
of forest decline
They are also critical actors in deforestation and forest
Forest decline is the result of actions by a number of degradation in Southeast Asia and Siberia. Agricultural
agents. Agents are individuals, groups of individuals or concerns clear large tracts of forest lands in Malaysia
institutions that directly convert forested lands to other and Indonesia to establish agro-industrial plantations
uses or that intervene in forests without necessarily (Kartodiharjo and Supriono 2000). Fuelwood collectors
causing deforestation but substantially reducing their deforest and degrade areas around South Asian cities.
productive capacity. Agents include shifted cultivators,
private and government logging companies, mining and Loggers are again the main agents of forest decline in
oil and farming corporations, forest concessionaires and Central and West Africa. But are peasants as well as
ranchers. These agents clear forest lands or selectively fuelwood collectors are also important in drier areas of
exploit forests for agricultural expansion, to subsist, for the Sahel. Pastoralists are particularly active in the
mining, to obtain forest products and fuelwood, etc. Sudano-Sahelian and Eastern African subregions, where
remaining trees and woodlands are under the most
Loggers are usually blamed for most of the deforestation severe pressure for dry season browse and fodder. Wood
and degradation that takes place in the world. However supplies 70% of total energy use in Sub-Saharan Africa,
their actions in the tropics are often limited to the and fuelwood collectors account for over 85% of the
extraction of a few trees per hectare and therefore they wood removed from the forests and woodlands. Loggers
do not directly deforest large areas. Even so, by building selectively exploit forests in various forest-rich
roads and facilitating access, loggers open vast areas to countries of Africa, setting the stage for deforestation
other agents such as landless migrants. Their by other agents.
interventions also cause forest degradation as they
remove the most valuable species of trees and the logging Agents deforest and degrade forests for complex reasons
operations generally produce substantial damage to the and conditions in their decision-making environments.
remaining stands. Their decisions to expand agricultural operations, cattle
ranching, logging, etc. immediately impinge upon
This is also often the case of miners and oil operators. forests. They are in search of commercial profits, or
Some mining activities, such as open pit mining and means of subsistence. We call these motivational factors
small-scale mining, cause great direct damage to forests. the direct causes of deforestation. They are the most
The construction of access roads and the penetration of apparent causes.
forest areas by other agents compound this effect.

Agents act with different intensities in various regions

and countries. In tropical Latin America, landless 1
The Alberta oil sands occupy a vast area of boreal forests, about
peasants in search of public forest lands to grow crops the size of New Brunswick, and contain about one-third of the
for survival and cattle ranchers, in some cases supported world’s oil resources – even greater than Saudi Arabia’s reserves.
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 5

But these direct causes are in turn influenced, or even Causation chains
determined, by more fundamental forces, some of which
originate in spheres that may be quite distant from, and The literature exploring underlying causes of forest
apparently unrelated to, decisions by the main agents. It decline is plagued by imprecision for several reasons.
is plausible, for example, that population growth and First, the separation between direct and underlying causes
density affect the size of markets and the demand for is not as neat as most would like it to be. In reality, there
forest products as well as decisions made by logging are long causation chains that eventually lead to the act
corporations. Macroeconomic policies contribute to of deforestation. And, depending on the perspective of
changing the structure of economic and political power the analysis, individual causes can also be viewed as the
of society and create changing relationships between effect of still higher causes.
humans and forest resources. These distant origins,
sometimes far removed in the causation chains from the In this sense causes are hierarchical. For example, a
deforestation agents and their immediate actions, are the hypothetical chain of causes and effects may operate in
underlying forces of deforestation. Most of these this way: shifted cultivators deforest because they need
underlying forces originate in the very nature of society, to provide a means of survival for their families. This is
in the ways human societies organise themselves. Some because they are poor and have few alternatives to
originate in other countries and transmit their influence deforestation. They are poor because present power
through trade or the action of international agencies and structures discriminate against a large number of people
transnational corporations. Regardless of their who therefore have little or no access to alternative means
geographical sources, economic and political power of survival. Present power structures originated in
structures, traditions and culture are the origin of historical arrangements such as colonisation. Thus, in
attitudes, values and ultimate behaviour affecting forests this theoretical example, there is a causation chain that
at the local level. starts with colonisation and runs along unequal control
over key resources, to poverty and the need to survive
Interactions exist between agents and direct and and, finally, forest decline. What is the underlying cause
underlying causes of forest decline (Figure 1). There of deforestation? Is it poverty? Or inequity in the control
are natural causes of forest decline such as natural fires over resources? Or colonisation? Or a mix in various
and hurricanes. The recent great fires of Indonesian proportions of these factors?
forests are a dramatic example of this source of forest
loss. We will not deal with these because they cannot It is not surprising that the debate about causes of
be easily influenced by policy interventions. For similar deforestation is often confusing. Those analysts who
reasons we will also omit some broad forces such as travel a short distance back in the causation chain that
war, global warming and the distribution of economic leads to deforestation may argue that poverty is an
and political power. underlying cause. Others, looking further back in the

Figure 1. The causes of forest decline.

Causes of forest decline

Direct Underlying

Resulting from human

activity Market failures
Natural causes Broader socioeconomic
l Agricultural expansion
l Unpriced forest goods and services and political causes
l Hurricanes l Cattle ranching
l Monopolies and monopsonistic forces l Population growth and
l Natural fires l Logging
density
l Pests l Mining and oil extraction Mistaken policy interventions
l Economic growth
l Floods l Construction of dams l Wrong incentives
l Roads… l Distribution of economic
l Regulatory mechanisms
and political power
l Government investment…
l “Excessive” consumption
Agents
Governance weaknesses l Toxification
l Slash and burn l Oil corporations l Concentration of land ownership l Global warming
farmers l Loggers l Weak or non-existent ownership and l War...
l Agribusiness l Non timber commercial land tenure arrangements
l Cattle ranchers corporations l Illegal activities and corruption…
l Miners
6 The Underlying Causes of Forest Decline

linkages will argue that the real underlying cause is in of forest lands by small farmers. After some time, these
fact the unequal political and economic power farmers may be able to successfully lobby politicians not
structures, which in turn are rooted in the foundations only to improve these roads but also to build new roads,
of society and that, instead, poverty is nothing but the thus making it easier for new migrants to obtain access
effect of such power structures. For them, poverty is to forested areas located further away. In this case, roads
the result of another underlying cause operating at a lead to forest land occupation and land occupation leads
higher level. to building more roads and the further occupation of
forested land in a circular self-reinforcing loop of cause
This differentiation may appear as theoretical curiosity and effect relationships.
only and not deserving much attention from those
interested in designing strategies to change the present Thus, it is simplistic to conclude that forest decline is
state of affairs. It is easy to fall into the trap of considering “caused” by a single culprit, such as economic expansion
this hierarchical structure of causes and effects merely or trade. Reality is much more complex. Multicausal
as a banal distinction. However, although apparently chains are more likely and the effect of a single force,
unimportant, the implications of this distinction in terms such as poverty or roads, is very difficult to ascertain.
of policy making are profound. In our example above,
analysts who conclude that the underlying cause of Thirdly, causal factors are likely to vary over time,
deforestation is poverty will tend to issue policy sometimes drastically. At certain stages of development,
prescriptions to accelerate income growth and to combat rapid income growth could promote forest decline by,
poverty. These usually consist of different combinations for example, increasing demand for forest products and
of formulae for “getting prices and government policies by enhancing the human capacity to alter forests. But,
right”. But the group of thinkers who see deforestation as development, economic expansion and affluence take
as the result of unequal power structures will issue place, population rates may decrease, demand for
prescriptions to address changes in social, economic and environmental services expand and government may
political relations required to alter ways by which become more efficient. Depending on the circumstances
different groups gain control of productive assets. These and the nature of these forces and their effects on
may include radical changes such as agrarian reforms demand, income growth may be, at different points in
and expropriation of productive assets. The difference is time, both a cause of forest decline and of more
clearly not inconsequential. The interpretation of the sustainable forest management.
“cause”, and therefore its neutralisation, imply
fundamentally different strategies.
Linkages between agents
The second source of imprecision in the literature, in
contrast to the example above, occurs since cause-effect Agents of forest decline are seldom, if ever, totally
chains are seldom linear or unidirectional. Instead, there independent from each other. This makes it difficult to
are many branches that in turn constitute secondary cause- isolate their individual contributions to deforestation at
effect loops leading to forest decline. There are also some a given point in time or geographical space. Their relative
important feedback effects working in the opposite importance over time may also change. Thus various
direction. For example, the unequal distribution of control agents could operate at the same time or sequentially in
over resources may not only lead to poverty but also to either the same or in a different location. For example,
large families, increased population pressure, lack of cattle ranchers may obtain access to lands by deforesting
technical knowledge, difficult access to credit and so on. but also by inducing landless peasants to do the job for
Each one of these may constitute the origin of a force them. With the possibility of having their land legally
leading to forest decline. When these causal branches acquired through occupation, and subsequent sale of
and loops are included in the analysis of forest decline, property to cattle ranchers, landless peasants can be
the number of “causes” increases substantially. The large effective – and dependent – agents of deforestation. Some
number and range of variables associated with logging companies are known to supply local populations
deforestation are described in an analysis carried out by with power saws and then buy their production of logs,
CIFOR of 150 formal modeling exercises around the often obtained illegally from protected areas, thus
world (Kaimowitz and Angelsen 1998). expanding the area deforested. When agents operate at
the same location, competition may induce more rapid
Feedback loops complicate analyses of the causes of deforestation. In other cases, a powerful agent, for
forest decline. For example, a logging company may example a logging corporation, may be able to keep
construct harvesting roads that facilitate the occupation competitors at bay thus reducing overall rates of
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 7

deforestation. Without knowing the forms of interactions Our discussion will leave out some underlying causes.
between agents, it is risky to derive conclusions about These include armed conflict, “excessive” consumption,
the importance of their individual roles. global warming and toxification. This does not mean that
these factors may not be important. For example, the
effects of war on the forests of Vietnam and Cambodia
The problems of inadequate definitions were very substantial. War in parts of Africa is also known
and data to have affected forests. In addition, many analysts believe
that patterns of consumption in the North (and of the
We have highlighted the conceptual lack of precision rich in the South) are important causes of forest decline
surrounding some of the key elements of forest decline. in the South. With respect to toxification, it is estimated
Empirical studies also face the obstacle of very that the Chernobyl nuclear disaster alone degraded some
inadequate data. This prevents the empirical validation 7 million hectares of forests in Russia, Belarus and
of plausible cause and effect relationships. For example, Ukraine (FAO 1997). A survey of 29 countries has shown
the World Bank (1994a) lists several studies on rates of that more than one-fourth of the trees in Europe suffer
deforestation in Indonesia which, depending on from defoliation; in some cases, atmospheric toxification
methodologies and definitions, produced estimates kills trees and, in others, it substantially reduces valuable
ranging from 263,000 to 1,315,000 hectares per year. attributes such as the capacity to produce wood and protect
Similar situations exist in other countries. Data are often soils. A number of researchers predict that global warming
spotty, unreliable and not comparable. will eventually lead to a very substantial decline of the
world’s forests. However, although some of these causes
We have presented a formidable list of obstacles to the may have an important effect on forests, they are very far
unambiguous identification of the underlying causes of removed from the forestry sector (e.g. war), are based on
forest decline. This should not come as a surprise because concepts that are difficult to address analytically (what is
the process is rooted in the complexities of the political, “excessive” consumption?), or their effects are simply
economic and social features of societies, and the nature quite uncertain because of a lack of incontrovertible
of their evolution over time and over geographical spaces. scientific evidence of long-term impacts (e.g. global
Very complex issues do not lend themselves to simple warming). We will, therefore, omit these causes from the
answers. But complexity does not mean that it is present discussion.
impossible to produce intelligent analyses leading to
practical decisions. What we need to keep in mind is
that the analysis of cause and effect linkages possibly Market failures
will have to be adjusted by considerations of the specific
situation, country or region under analysis, where these Deforestation and forest degradation are ultimately the
numerous and interacting forces may operate in different result of decisions by agents such as private
combinations and with different intensities. entrepreneurs, corporations, shifted cultivators and
communities. Generally, the main agents in the process
of deforestation and forest degradation belong to the
Underlying causes private sector. An underlying cause of deforestation is
the discrepancy between values of these private agents
As underlying causes are so numerous and interrelated, and those of society. Because of this, the satisfaction of
their study necessarily must be selective. First, we will the agent’s objectives may be in conflict with the
discuss some of the weaknesses, or outright deficiencies, satisfaction of society’s objectives.
of the market that produce signals that eventually induce
forest decline. Second, we will examine actions by A distinction must be made between the values accruing
governments – regulations, monetary or other policies, as a consequence of deforestation and forest degradation
direct investments – that influence actors’ motivations, to the agent and those accruing to society generally.
sometimes producing incentives to deforestation and Society may be a region, a nation, or the world in general.
forest degradation. Next, we will consider particular Values of private agents and those of society as a whole
governance factors that contribute to forest decline – are likely to diverge for several reasons. Many of the
weak land ownership rights, illegal activities and services provided by forests (as well as some of the costs
corruption. Finally, a selected group of underlying of mismanaging these resources) have no market price
socioeconomic causes that are hybrids between market and therefore do not enter into the decisions of private
forces, policy and institutional factors will be studied in sector actors. For example, a forest landowner in an upper
some detail. These include population growth and density watershed does not get paid for the services his forest
as well as economic expansion. provides to downstream fishermen and farmers. These
8 The Underlying Causes of Forest Decline

values, including protection of soil against erosion and forests. If they do not have to pay for some of the costs
irrigation and hydropower dams against sedimentation, of depleting forests, they are more likely to convert
can be substantial to downstream operators. forested lands to other uses.

Nor does the landowner obtain commercial profits for A number of questions arise. Are all these non-market
capturing carbon, maintaining scenic beauty or for values important? How significant is this source of
preserving biodiversity resources. The forest landowner forest decline? And, if these benefits that have value
has little incentive to take these benefits into account for society but not for the private agent could somehow
and therefore the production of these environmental be “internalised”, would they help combat undesirable
services will be less than if he could sell them and receive forest decline?
a financial reward.
Various analysts have attempted to estimate the
In all cases where the forest landowner does not obtain magnitude of unpriced forest values. For example, in their
the full value of social benefits provided by forests, there appraisal of project effects, the World Bank routinely
will be less incentive to maintain lands under forest cover. estimates the economic magnitude of external benefits
The market fails to generate the signals that would lead and costs, adjusting the estimates of project impacts for
private operators in the direction of satisfying social imperfect and non-existent market values. These
objectives. In many cases, Adam Smith’s “invisible hand” appraisals also routinely show that the balance of benefits
fails and signals the wrong priorities to private sector and costs of projects, including these “external” non-
decision makers. Frequently, for the reasons already set priced impacts, is more favourable than that resulting
out, these signals lead to forest decline. from the simple comparison of marketable benefits and
costs. This suggests that if it were possible to alter market
Forests provide local and global unmarketable benefits forces to take these values into account, there would be
which may accrue to distant consumers. Any loss of these a higher chance that some forest lands would not be
benefits must be considered costs. For example, a slash deforested or degraded because they would be more
and burn farmer does not pay for the global cost of valuable to the private agent.
increased carbon dioxide released into the atmosphere
or for the increased costs of protecting dams downstream This chance would be higher if these values of forests
that result from his actions. Nor for the loss of biodiversity were considerable. Pearce (1995) and others have
or aesthetic resources associated with the forest he attempted to produce a consolidated picture of the
exploits. Although these costs may be important for value of non-marketable benefits of forest resources
society as a whole, they are far less important for the (see Table 2). Results should be interpreted with
private agent of forest decline. caution. Great differences exist from location to
location and methodologies are not strictly the same.
If private agents are not compensated for the values of Moreover, this comparison contains only one side of
forests that do not have a financial, marketable the picture, that is, the benefits side. Still, some
dimension, they will be less interested in managing interesting conclusions emerge.

Table 2. Comparing local and global market and non-market values: some examples (US$ per hectare).
Mexico Costa Rica Indonesia Malaysia Peninsular
Malaysia

Timber (market value) – 1240 1000-2000 4075 1024

Non-timber products (market and non-market values) 775 – 38-125 325-1238 96-487
Carbon storage (non-market value) 650-3400 3046 1827-3654 1015-2709 2449
Pharmaceutical (non-market value) 1-90 2 – – 1-103
Ecotourism/recreation (market and non-market values) 8 209 – – 13-35

Watershed protection (non-market value) <1 – – – –

Existence or non-use value (non-market value) 15 – – – –

Option value (non-market value) 80 – – – –

Note: Non-timber products refers to resins, nuts, mushrooms, wildlife and other forest products, some of which have market values.
Option values relate to the non-market value of preserving forests for future use. Existence values are those attached to forests by people,
even if they will not use these forest resources.
Source: Adapted from Pearce (1995)
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 9

First, some of the non-market benefits of forests are perspectives are likely to be, causing them to deplete
indeed important, in some cases close to the commercial forests for immediate benefit, no matter how important
value of timber. Second, and against popular belief, the future costs may be. Thus, the World Bank Forestry
potential economic value of some services, such as the Policy (1991) states that high private discount rates,
development of medicinal drugs from tropical forests, particularly among the poor populations that depend on
is low. The value of this potential is normally thought forests, are a cause of deforestation. Pearce and Warford
to be high, but research indicates that this is not the (1993) argue that:
case. The main reason is that the probability of
discovering a drug is very low in per hectare terms. High discount rates are one cause of
The aggregate value of ecotourism and recreation is also environmental degradation because they
limited, although the value of recreation may be very encourage individuals to opt for short term
high in particular locations. If captured, this value could measures that satisfy immediate needs or wants
contribute significantly to arrest forest decline in these and ignore more environmentally appropriate
locations. The same can be said with respect to practices such as planting trees.
watershed protection values.
There is no market to take account of this divergence
Third, the only non-market global value that appears to between private and social preferences.
be of a high importance is that of carbon sequestration.
Even this figure is uncertain, as there is some The hypothesis that the poor have a higher discount rate
disagreement about the actual amounts of carbon and are more inclined to deforest is confirmed by various
sequestered in different latitudes, under various studies and by the commonly observed fact that they are
ecological conditions and the silvicultural treatment willing to borrow in informal markets characterised by
applied. Also, there is no agreement on the price that can very high interest rates. There is empirical evidence that
be attributed to a tonne of carbon. According to different poverty is often associated with higher levels of
authors, this price ranges from US$ 5 to some US$ 30 or deforestation. But this commonly held view is sometimes
even US$ 50 per tonne. Despite this limitation, carbon challenged. A recent World Bank examination (Ekbom
sequestration appears as the most important global non- and Bojö 1999) of the linkages between poverty and
priced service of forests. environment quotes various analysts who contend that
poverty does not necessarily lead to shorter time horizons
In summary, the failure of markets to account for non- and environmental degradation (see Box 1). These
priced benefits and costs may, in various circumstances, researchers show how, in certain circumstances, the rural
be an important underlying source of forest decline, poor used resources in a sustainable manner for long
shaping the actions of private agents in directions that periods of time, even for centuries.
are biased against the conservation and protection of non-
priced benefits. Efforts to reduce deforestation and forest
degradation and to improve forest management to bring Box 1. Poverty, time horizons and environmental
degradation.
it more in line with social priorities – as opposed to
exclusively private preferences – must rely heavily on Ostrom (1990) identifies a number of conditions that would
commercial systems that would be able to capture some lead to long-term sustainable management of common pool
of the external values of forest resources, most notably, resources by the poor, despite their short time horizons:
carbon sequestration values. 1. The geographical boundaries of the common pool resources
must be clearly defined.
Many argue that society will probably “discount” the 2. Appropriation of benefits and local economic, social and
future in a different way to a private agent. It is generally environmental conditions must be compatible.
believed that society discounts the future at a lower rate 3. There must be a consensus about collective choices.
because of its longer “life” and because of its obligations 4. There must be an adequate monitoring system.
to future generations. Private agents may not have these 5. There must be an effective system of sanctions for those
obligations, at least not to the same extent. Forest who violate the rules.
endeavours frequently imply long gestation periods and 6. Inexpensive conflict resolution systems must be in place.
they are less desirable to private investors interested in 7. Government must recognise the right of people to organise
relatively quick results. Such investors would not be as themselves.
interested as society in benefits that will materialise in 8. All the above principles should conform to a package that
the distant future, as private persons are less likely than is coherent at the local, regional and national levels and
society to enjoy them. The poorer the decision makers, implemented at the lowest possible level of decision making.
the more myopic their consumption and production
10 The Underlying Causes of Forest Decline

These studies show once more that assumptions tying Transportation policies
the results of resource management to one or few
“causes” are simplistic, and that in reality there is a host Governments normally are responsible for the
of interacting factors influencing the decisions of people construction of major roads such as the TransAmazon
who have an impact on forests. highway, the TransBorneo road and the Carretera
Marginal de la Selva. Roads are built by governments
for a variety of reasons including the desire to provide
Mistaken policy interventions better access to timber resources, to promote farming
or for national security reasons. Many pass through or
Policy interventions may create obstacles to the near forests. Sometimes private corporations, such as
sustainable management of forests. These actions are not mining and oil companies, also construct major roads,
always purposely biased against forests but often this is but almost invariably with the authorisation of
their unintended result. In many cases they constitute a governments. The road system of a country is largely
failure to address market failures. As expressed by the result of government policies.
Repetto (1993):
Policies to promote or allow the construction of roads
Governments, many of which are committed in near or through forests, lead to deforestation. Mahar and
principle to conservation and wise resource use, Schneider (1994) contend that “road building is the single
are aggravating the loss of the forests under their most powerful element in the deforestation of frontier
stewardship through mistaken policies. Such areas in Latin America”.2 Between 400 and 2000 hectares
policies, by and large, were adopted for worthy may be deforested by each kilometre of new road built
objectives: industrial or agricultural growth, into forests. Apart from facilitating physical access, roads
regional development, job creation, or poverty alter economic values and increase the profitability of
alleviation. But such objectives typically have not converting forest land to agriculture. Also, roads push
been realised or have been attained only at land values up and thus make land more attractive to
excessive cost. illegal occupants.

Policy interventions can contribute to deforestation in Economic models of deforestation show a close
many ways (see Table 3). association between greater access to forests and

Table 3. Examples of policy failures that may lead to forest decline.

Direct government investment in the forest l Road construction

sector or in related sectors l Hydropower investments
Government command and control regulations l Conservation area protection
l Obligation to replant harvested areas
l Prohibition to harvest without a permit
l Obligation to prepare forest management plans as condition for intervening
in forest areas
l Log export bans

Fiscal, price or monetary policies l Subsidies affecting forest raw materials or other inputs
l Subsidies affecting competitive uses of lands, such as cattle ranching
l Plantation subsidies
l Price controls
l Subsidies affecting forest harvesting or manufacturing
l Forest products taxes
l Subsidised credit
l Foreign exchange policies affecting competitive uses of lands

Provision of services l Delimitation, demarcation and land titling

l Actions to promote exports
l Settlement of frontier areas

Various analyses have shown that policies in sectors other

than forestry – roads, mining, agriculture, land tenure –
have a great impact on forest decline; normally a much
2
more substantial impact than that of forest policies. See also Bryant et al. (1997)
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 11

deforestation. CIFOR examination of some 150 models of Bolivia prior the agrarian reform was the desire of
of deforestation (Kaimowitz and Angelsen 1998) highlands interest groups to restrict movement of the
suggests that: labour force from the highlands, where it was needed
for operating mines and estates. These groups largely
Forest fragments are more accessible than forest succeeded in this endeavour by being able to exert enough
compacts and forests in coastal countries and power and shape government policies to serve their own
islands are more accessible than in continental interest (Kaimowitz 1997).
countries. Roads seem to have a stronger impact
in regions dominated by commercial agriculture Reforms of road construction policies in order to reduce
and areas with better soils, than in marginal lands their negative incentives for unsustainable practices do
inhabited mostly by small farmers that practise not necessarily imply a reduction in road building or
slash and burn cultivation. considerable economic costs. Often, simple changes in
the design of road systems would produce a noticeable
Government-sponsored road construction and the onset impact (Kaimowitz et al. no date). Furthermore, the
of deforestation are frequently easily observable political pressure to implement policies that promote the
circumstances in various tropical countries. For example, expansion of roads into forested areas may be less
in the Brazilian state of Pará, deforestation following road significant in the future. Sayer and Byron (1996) argue
construction increased from 0.6% to 17.3% of the state’s that logging in “frontier” tropical areas may become less
area between 1972 and 1985. Although in theory some important because of the erosion of their economic
of the negative impacts of roads policies could be comparative advantage over plantations.
mitigated, in practice governments do not have the
inclination to do so for political reasons or simply because Subsidy policies
they cannot, given the limited administrative resources
at their command. Governments often grant subsidies either directly to forest
sector operators or to entrepreneurs in other sectors
The natural conclusion is that roads policies are underlying related to forests. Not infrequently, these subsidies
causes of deforestation. But, as plausible as this may seem, unintentionally cause forest decline (Repetto 1993):
there is some question whether the underlying cause of
deforestation is not the road policy itself but instead the These subsidies can become so large that they
motivation that created that policy. According to this view, encourage activities that are intrinsically un-
frequently, roads are the result of a pre-existing desire to economic, or push alternative land uses beyond
deforest on the part of some politically powerful group the limits of economic rationality. The effect of
that is able to influence government policy, and not the all such (subsidy) measures is to shift the margin
other way around. In these situations, deforestation is the of relative profitability between forest and the
result of an initial propensity to deforest, with roads being competing land use, encouraging more forest
a means to that end. For example, farmers may perceive conversion than would otherwise take place.
good opportunities to convert inaccessible forested lands
into profitable agricultural production and effectively The most common and important type of subsidy in the
lobby the government to build roads. In this case, roads forestry sector is that implicit in the low forest charges
policies are not the cause of deforestation but rather the paid by timber concessionaires. Large areas of public
effect of a desire to deforest that in turn is caused by a forests in the tropics are under concession contracts.3
perception by influential interests that good commercial Increasingly, various logging companies aggressively
opportunities may exist in the development of currently seek new timber concessions in forest resource rich
inaccessible forested lands (Kaimowitz et al. no date). On countries. By 1997, about 30% of Guyana’s forests were
the other hand, and taking this argument further, it is also reported to be already under timber concessions
possible to imagine that the roads constructed in deforested (Wilkinson 1998). Almost 70 million hectares of the
and settled areas may increase the desire to deforest more closed forests of Indonesia are assigned to about 650
remote areas. The presence of roads is likely to increase timber concession schemes (Kartodiharjo and Supriono
the value of land in areas under the first round of 2000). Practically all of Ghana’s forest reserves are under
deforestation, induce original settlers to sell and the control of some 200 concessionaires (Gray 1997).
subsequently move further into marginal forested lands
to start the process anew (Schneider 1995).
3
Forest concessions are permits issued by governments for
Of course, government policy is not always geared exclusive rights to assess forest production potential, to harvest
towards simply improving access to forested areas. One wood or other forest products and to manage a specified area of
of the reasons for limited forest decline in the lowlands public forests for a certain period of time.
12 The Underlying Causes of Forest Decline

There is nothing intrinsically wrong with granting forest concession) and carelessly. Further, concessionaires have
concessions except that government forest charges often little inclination to prevent illegal occupation of the
bear little relationship to the market value of the concession lands by migrants that may practise slash and
resources and to the forest rents generated4 (see burn agriculture. Because logging rights in concessions
examples in Table 4). Why is the implicit subsidy in usually are not transferable, there is very little motivation
“underpricing” wood important in terms of deforestation for the concessionaire to manage forest resources in a
pressures? The subsidy encourages logging companies sustainable way. Finally, underpricing of wood reduces
to use wood wastefully, because subsidised wood forestry department budgets that could be used to reduce
becomes inexpensive (Vincent and Binkley 1992). There wasteful and undesirable forest decline. Inappropriate
is also the incentive to obtain larger concessions than concession policies are clearly a significant obstacle to
necessary, to log quickly (as it is uncertain for how long sustainable forest practices (Box 2).
the concessionaire can hold onto the profitable

Table 4. Examples of underpricing forest resources in concession agreements.

Country Period of Estimated economic forest Reference study
analysis rent captured by government,
as proportion of total rent
(percentage)
Nicaragua 1997 6-30 Gray and Hagerby 1997
Venezuela 19995-97 2-3 Centeno 1995
Indonesia 1993 25-35 Collins 1993
Indonesia 1997 25 Myers and Kent 1997
Malaysia: Peninsular Malaysia 1989 9-49 Vincent et al. 1993
Sabah 1991 53-64 Vincent 1991
Sarawak
1991 35-69 Vincent 1991
Ghana 1993-95 7-13 Gronow 1996
Cameroon 1987 2-4 Grut et al.1991
Cameroon 1994-96 22 World Bank 1997
Cambodia 1996-97 9 Global Witness 1997
Colombia 1991 7-24 Motta 1992
Belize 1996 50 Contreras-Hermosilla 1998

Note: Differences within countries may be due to different estimation procedures and/or to variable factors such as economic
accessibility or market prices for wood products. Percentages are estimated on the basis of government revenues for
various charges – such as timber charges, area fees, export taxes, etc., but generally excluding income (personal or
corporate) taxes – divided by stumpage prices.

Box 2. Why do some concessionaires in Indonesia exploit forest in unsustainable ways?

• The method of concession allocation gives too much land taxes depress the domestic price of timber, thus limiting the
to concessionaires. Certain concessionaires thus have low desire to invest in sustainable forest management.
incentives to prevent encroachment by smallholders, or Considerations other than the soundness of forest management
are unable to stop such encroachment. Low forest practices enter into the decision to grant concessions and thus
concession fees induce concessionaires to acquire vast undermine incentives for good performance.
forest areas. In addition the timber royalty fees in Indonesia
are based largely on the volume of extraction rather than
• There is insufficient support for provincial-level protection of
forests. In Indonesia, provincial governments receive a very
on the area of concession. This reinforces the tendency
small share of the already low timber concession fees.
to obtain excessive concession areas. Concessionaires
Provincial governments with extensive forests may prefer to
have little incentive or possibility to control encroachment
replace them with other forms of land use that generate more
and resulting deforestation if they have an excess area.
revenue.
• Certain policies encourage rent-seeking behaviour and thus
Source: Taken from Sunderlin and Resosudarmo (1996)
undermine incentives for long-term management. High
profits resulting from low concession fees open the way for
corruption and the enforcement of the terms of the
concession contract is endangered. Moreover, 4
Forest economic rents are returns from harvesting beyond those
concessionaires rush to exploit forest in a careless manner that could be earned elsewhere in the economy. Governments can
as the favourable conditions that generate high profits may capture part or all of these economic rents through a variety of
not last. In addition in Indonesia, low fees and high export forest charges. If governments do not capture these rents, they
accrue to concessionaires as subsidies and exceptional profits.
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 13

As with other underlying causes of forest decline, the increase forest conversion pressures (Kaimowitz 1996).
cause-effect link between faulty concession contracts and If agricultural land is abundant, agricultural subsidies are
deforestation and forest degradation is not always clear. unlikely to create a very intense pressure on forests.
Some governments establish subsidised timber
concessions to open lands to economic opportunity and From most perspectives agricultural intensification
to provide means of livelihood for impoverished policies contribute to saving forests because they reduce
migrants. Governments occasionally justify subsidies the pressure for more land. But this is not always the
embodied in timber concessions on grounds of case. Even subsidies that lead to the intensification of
employment creation, construction of infrastructure by agriculture may indirectly provoke forest decline. For
logging companies and the push to promote local example, Southgate (1992) notes that, due to generous
development. Generally, however, these are inefficient government incentives, agricultural intensification and
methods of achieving local development and beneficial land prices in southern Brazil rose rapidly during the
impacts are seldom sustainable. Instead “boom and bust” 1970s and 1980s. Incentive policies encouraged land
situations are more common, where excessive and ownership concentration and the adoption of capital-
wasteful deforestation and forest degradation take place intensive methods of production. Unfortunately, all of
creating a momentary bubble of economic expansion that this resulted in increased rural unemployment. Some of
bursts as soon as forest resources are depleted or the workers displaced by mechanisation and the
substantially degraded (Repetto and Gillis 1988). In concentration of land ownership migrated to forested
1995, the World Bank, referring to the dangers of faulty frontier areas in the Amazon. Agricultural intensification
concession policies, issued warnings to the government policies thus led to more forest decline at that location.
of Guyana that “this kind of forest mining entails a boom-
and-bust pattern of development that can be highly Similarly, the introduction of mechanised soybean
disruptive to employment levels and macro-economic production led to major increases in forest clearing not
stability” (quoted in Friends of the Earth 1997). only in the Cerrados of Brazil, but also Santa Cruz in
Bolivia and parts of Paraguay (Angelsen and Kaimowitz
Governments often grant direct or indirect subsidies to 1998). This negative effect on forests is more pronounced
agriculture. This increases the profitability of agriculture when it is easier to substitute machines for labour. The
and, if agricultural lands are scarce, the pressure to same reasoning applies if the subsidies facilitate the use
convert forested lands. Depending on economic of other inputs, not just machinery, that substitute for
conditions, increased agricultural profitability enhanced labour. The introduction of pesticides and new varieties
through subsidies (or other equivalent government on the Pacific Coast of Nicaragua during the 1960s and
policies) can lead to agricultural intensification, but often 70s, facilitated the expansion of large-scale cotton
expansion into forested lands is a more profitable production. As a consequence, scores of small farmers
alternative. In Ghana, for example, government policies who lacked the ability to access these technologies had
fostered extensive rather than intensive agriculture to migrate to forested areas.
(Munasinghe and Cruz 1994).
Policies that led to unmanageable international debt
Whether agricultural subsidies and the associated
possibility to increase agricultural profitability will lead Various governments that unwisely allowed the rapid
to either intensification (and reduced pressure on forests, accumulation of international debt later became saddled
as in the case of the green revolution) or extensification with an unwieldy financial burden. It is easy to imagine
depends on the technologies adopted, the economic that the pressure to earn foreign exchange and repay
conditions facing farmers, the availability of different debts may force governments to quickly exploit forest
types of lands and the nature of subsidies. Not all resources for export. However, research does not
agricultural subsidies lead to extensification and forest support an unequivocal relationship between external
conversion into agriculture. Kaimowitz et al. (no date) indebtedness and forest decline. Kahn and McDonald
argue that subsidies implicit in the development of (1995) examined the debt and deforestation link in 68
irrigation facilities are more likely to lead to agricultural countries over the period 1981-1985 and concluded that
intensification because it is generally not convenient to debt service had a significant role in deforestation. But
supply irrigation facilities to remote areas at the forest research by Capistrano and Kiker (1995), using data
frontier. This is not so if subsidies apply to rural roads, for 45 countries over the 1967-1985 period, reached
as these subsidies make the use of remote lands more the opposite conclusion. Methodological differences
profitable. Since livestock is an extensive activity, between the two studies may partly explain these
subsidies that encourage its development are likely to contradictory results.
14 The Underlying Causes of Forest Decline

It is interesting to note that if large international foreign • stimulating agricultural exports at the expense of
exchange outflows to service debt obligations lead to forested lands; and
deforestation, then it makes intuitive sense that countries • stimulating forest exports based on unsustainable
that experience the opposite situation – a sudden and methods.
substantial increase of foreign exchange – should show
a decrease in deforestation rates. However, studies of the Neither do SAPs address the fundamental issues of
situation in Ecuador covering the period before, during inequitable economic and political power patterns that
and after the petroleum export boom of the 1970s suggest initially may have led to forest decline. These policies
that large inflows of foreign exchange did not diminish tend to be implemented in ways that do not hurt the
forest decline and that, in fact, they may have accelerated powerful. Therefore, if the powerful are part of the
it (Wunder 1997). problem, SAPs will be weak weapons in the solution to
inequalities. On the contrary, they tend to favour the most
Definitive evidence to derive conclusions of general economically adept that can effectively take advantage
validity concerning the links between foreign debt and of the changing conditions introduced by the new
overall forest decline is not available. However, when policies. If SAPs favour wealth concentration, many of
convincing scientific evidence is lacking, the opinion of the dispossessed may be more inclined to pursue survival
top decision makers in forest-rich countries be relevant. strategies based on consumption of public forest
In this respect, the words of the late Mr Cheddi Jagan, resources.
ex-President of Guyana, are significant:
On the other hand, in many cases in tropical countries,
The Guyana Shield countries carry heavy foreign SAPs are a necessary condition of economic growth. And
debt loads. While it is difficult to prove a causal economic growth eventually tends to lead to improved
link between foreign debt and tropical forest management and to less deforestation. The long-
deforestation in all cases, in Guyana, the dynamics term net balance between these forces is far from clear.
of political and development decision-making do This net effect is also clouded by the rather undisciplined
suggest a strong relationship. Similar patterns are way in which SAPs are implemented.
also evident in the neighbouring region (World
Commission 1997). It is interesting to note that one of the main advocates of
SAPs, the World Bank, states that “the expansionary
Structural adjustment policies impacts of currency devaluations, tariff liberalization and
reduction of real interest rates may be most directly and
In their efforts to promote economic growth, many adversely felt in the natural resource use, especially in
countries implement structural adjustment policies the forestry and fishery sectors” (1994b). But the Bank
(SAPs). Encouraged by international financial assistance argues that these negative effects on forest resources are
institutions, the main elements of these policies (World to a great extent due to the fact that governments fail to
Bank 1990) are: implement mutually supporting policies. Timing and
• correction of fiscal imbalances mainly through sequencing generally deviate from the original SAP
reductions in public expenditure; prescriptions. For example, price corrections are not
• reduction of the role of the state in managing the accompanied by necessary policy and institutional
economy; reforms. Some undesirable public expenditure may be
• promotion of privatisation; curtailed but other, equally undesirable, conditions are
• removal of obstacles to international capital flows retained. Some perverse subsidies are eliminated while
and to the formation and expansion of national others continue to exist. This partial implementation of
capital markets; SAPs may turn the whole situation of forest resources
• liberalisation of exchange policies; for the worse.
• removal of restrictive trade policies; and
• deregulation of labour markets. Trade and foreign exchange liberalisation policies
frequently improve the terms of trade for agriculture. If
The environmental effects of these policies is a subject this happens, prices received by farmers increase, and
of much debate, mainly because there is not much so may deforestation when additional forest lands are
definitive evidence. In some cases, these SAPs may diverted to agriculture. However, if there is a subsequent
unintentionally encourage forest decline by: increase of agricultural wages, and particularly if the
• inducing unemployment and greater poverty labour supply does not increase noticeably when higher
leading to substantial migration to forest areas; wages are offered, the initial propensity to dedicate more
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 15

lands to agriculture through deforestation may recede Box 3. Structural adjustment and the forests of Bolivia.
somewhat. Also, higher agricultural wages could
conceivably increase demand for and scarcity of The SAP made tin miners poorer as the state-owned mining
company laid-off 23,000 of its 30,000 workers and these had
agricultural products, thus reinforcing initial agricultural few alternative employment opportunities, if any. In addition many
price increases. others whose livelihoods depended indirectly on mining activity
were also poorer as result of the SAP. The SAP also apparently
aggravated poverty in rural highlands, although evidence is
If liberalisation policies result in economic recession in inconclusive. In any case, migration from mining areas increased
the short term, as they sometimes do, urban food demand but most migrants went to cities rather than to the agricultural
could well decrease and so could agricultural prices. frontier. The relatively few migrants that did move to agricultural
areas went to coca producing areas as small farmers in these
Furthermore, there is some evidence that not all SAPs areas had higher income and coca was a very labour-intensive
improve agricultural prices in the early stages. For crop. Other factors limited migration to non-coca producing areas.
example, many adjustment programmes in Latin America Public spending on settlement programs dried up. The amount
of land granted to large farmers increased sharply. All this made
resulted in the appreciation of exchange rates rather than it more difficult for potential migrants to get access to land. The
in devaluation. SAP did not appear to have a substantial effect on lowland
farmers. Mechanised rice production increased but this was
probably at the expense of fallow areas rather than forests.
In detailed studies of the effects of SAPs in Bolivia,
Cameroon and Indonesia, CIFOR found that devaluation Large scale mechanised farming for soybean production did
had a variable effect, with the most intense pressures on increase sharply as the removal of price controls on soybeans,
devaluation, fiscal incentives for exporters, road construction
forests taking place when competitive uses of land and low export taxes more than compensated for the loss of
consisted of activities targeted at the export market. Also, credit and foreign exchange subsidies resulting from the
government spending cutbacks generally did not greatly application of the SAP. The net result was increased
deforestation. Yearly forest clearing for large-scale agricultural
affect road construction, thus lending support to claims production, mostly soybeans, expanded from 13,000 hectares
that SAPs are generally implemented in a piecemeal in 1980-1985 to 115,000 hectares in 1994.
fashion rather than as coherently integrated programmes.
The SAP also led to increased timber exports from unmanaged
Similarly, governments generally resisted the removal forests that, as a consequence, where degraded. However
of major economic distortions. The exception was the logging companies built logging roads, which facilitated land
contraction of government support to settlement clearing by small farmers.

programmes in Indonesia and Bolivia. Another was the The economic benefits generated by the expansion of soybean
elimination of agricultural input subsidies in Cameroon, and timber production and exports may have outweighed their
environmental costs but alternative policies could have
but this appears to have led to accelerated forest decline reduced these costs and at the same time improved the
in that country. In Bolivia, increased marginalisation distribution of benefits.
resulting from the SAP did not create great pressure on
Source: Kaimowitz et al. (1997)
the forest at the frontier as it would have been expected.
(see Box 3). In Zambia, the elimination of fertiliser and
transportation subsidies led to an expansion of shifting illegal export of more than 30,000 cubic meters of logs a
cultivation and deforestation (Holden 1997). month - bypassing official export controls by sending
the wood out from a specially constructed harbour”
In the last few years, liberalisation policies as well as the (1996). In the past, overlogging by European companies
globalisation of the world economy raised concern that destroyed the forests of the Côte d’Ivoire. Nigeria and
unscrupulous and powerful transnational corporations the Congo and Cameroon are rapidly following suit.
that have a poor record of environmental or social
management may take advantage of weak and cash- These studies highlight the complexity of the various
strapped forested countries and expand their relationships involved in SAPs. As is the case with other
unsustainable and resource degrading operations in these causes of forest decline, it is difficult to draw conclusions
countries. Thus, in 1995, the World Resources Institute of general validity. Impacts of SAPs are to a great extent
warned that concessions offered to Asian logging country-specific, with a number of economic forces
corporations in Surinam could lead to the country “losing working in different, sometimes opposite, directions.
its forests, and getting shattered biodiversity, ruined
fisheries, eroded soil, displaced populations and perhaps Log export bans
ethnic strife in return”. Claude Martin, Director General
of the World Wide Fund for Nature, indicated that “a Governments frequently impose log export bans or
disturbing new trend has emerged in Africa with an influx prohibitive log export taxes to favour local industry and
of Asian-based logging companies…In Cameroon a increase its competitiveness in world markets. By
Malaysian timber firm is alleged to be involved in the restricting market demand, log export bans or prohibitive
16 The Underlying Causes of Forest Decline

log export taxes reduce domestic log prices and thus spill over national borders. For example, the Cambodian
subsidise the domestic forest processing industry. log export ban resulted in illegal logging and exports to
Countries that have imposed such bans include among regional markets (Thailand, Vietnam).
others, Brazil, Cameroon, Canada, Côte d’Ivoire, Gabon,
Indonesia, Liberia, Malaysia, Papua New Guinea and the Only country-specific studies can help to clarify the
Philippines (Porter 1996). possible final effect of logging bans or other policies that
restrict trade.
Whether export bans and export taxes lead to forest
decline or not is a subject of much debate. Again, the Institutional factors
effects of these policies on forests depend on a number
of complex factors. Under certain circumstances they Policies that favour concentration of ownership
could lead to forest decline. In other cases, conceivably
to more sustainable forest practices. In some countries, the concentration of land ownership
is heightened by government policies that favour
Log export restrictions immediately reduce log demand agricultural intensification, the export of large volumes
and, consequently, the pressure to harvest forests. of agricultural products, capital-intensive methods of
However, long-term impacts are less clear. Reduced production and access to credit.
demand translates into lower prices for logs. Where the
export market previously absorbed a substantial part of In Latin America, the latifundia-minifundia complex has
national production, this price contraction can be its roots in colonial times. While it may be argued that in
important. When the price of logs is substantially some cases concentration of means of production may
depressed, the pressure to harvest forests surely must make economic sense in the short term, it also tends to
decline. However, the profitability of implementing generate less employment and to have extremely negative
sustainable forest practices would also decrease. In these equity implications. Large numbers of farmers may be
circumstances, the relative convenience of converting left without means of sustenance either because they lose
forests to more profitable agriculture is likely to rise. This their jobs or because they are compelled to sell their lands
pressure to deforest will be more intense if agricultural and other assets to larger and more competitive
lands are in short supply. entrepreneurs. Many may move to forest areas. These
effects can be so important that some governments have
Because restricted logs are cheap, there is also less implemented reforms to provide land to displaced
inclination on the part of the forest industry to use them farmers. Since the redistribution of private productive
efficiently. Log export restrictions can lead to industrial agricultural lands is normally economically controversial
overcapacity and more inefficient forest industries. This and certainly extremely difficult from the political point
was the case in Indonesia and Peninsular Malaysia of view, publicly owned lands (frequently under forest
(Constantino 1990; Vincent and Binkley 1992). Logging cover) are distributed by governments to landless farmers.
could become more careless and destructive, as avoiding Thus, voluntary or forced resettlement programmes have
damage to a less valuable forest may not justify the costs resulted in large areas of forest being cleared for
of improved logging technologies. Finally, lower forest subsistence agriculture.
profitability would diminish the propensity to invest in
forest plantations. Inequality of land ownership may also have other
consequences. Dasgupta and Mäler (1994) call attention
If forest plantations were not covered by the ban, to the fact that increasing inequality often leads to the
however, then the incentive to clear cut natural forests breakdown of common property management schemes.
to establish plantations is higher, particularly if land
is scarce. Land tenure policies

Depending on the “elasticity” of these various reactions, In the past a generalised policy failure, that led to
trade restrictions may lead to higher levels of deforestation, was the requirement to demonstrate use
deforestation than liberalised trade. Without knowing the of public lands to obtain legal property rights over those
direction and magnitude of these relationships and chains lands. A good way to demonstrate occupation and
of effects it is not possible to generalise about the “improvements” of forest lands was to deforest.
aggregate impact of trade restrictions. Furthermore, and Furthermore, in many cases, deforested land is also better
quite separate from the effects of log export bans on price sheltered from expropriation by government policy. Land
and incentive systems, export prohibitions often result with forest cover may be declared as protected area and,
in illegal logging and exports. In some cases these policies if this happens, expropriation (or very drastic limitations
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 17

to use forests for productive purposes) generally ensues.

Box 4. A catalogue of illegal acts that promote
Thus, the simple declaration that government intended deforestation and forest degradation.
to expand the system of protected areas may have
contributed to accelerating deforestation in Costa Rica Illegal logging
(World Bank 1996). The growing realisation that these • Logging timber species protected by national and
international law
policies introduce important incentives to encourage • Contracting with local entrepreneurs to buy logs from
deforestation led to policy reforms in many countries, protected areas outside the concession
particularly in Latin America, where the link between • Logging outside concession boundaries
• Contracting with local forest owners to harvest on their land
deforestation and land ownership is rapidly being erased but then cutting trees from neighbouring public lands instead
by governments.5 • Logging in protected areas.
• Logging in prohibited areas such as steep slopes,
riverbanks and water catchments
If government policies do not recognise property rights,
• Removing oversized or undersized trees
either formally or informally, and if there is little • Extracting more timber than authorised
possibility to enforce recognised rights, then the • Logging in breach of other contractual obligations
propensity to abuse forest resources may increase. Weak • Obtaining timber concessions illegally
property rights reduce the incentive to manage forests Timber smuggling
in sustainable ways. The World Bank 1991 Forest Policy • Exporting tree species banned under international laws,
states that weak property rights are behind deforestation such as the Convention on International Trade in
and degradation in many areas. There is some evidence Endangered Species of Fauna and Flora (CITES)
• Exporting illegal logs in contravention of national bans
that this in fact so. Saxena (1988), in a study of Uttar • Exporting forest products in greater quantities than declared
Pradesh in India, shows that the effective enforcement
of property rights is essential in explaining levels of Undergrading, undermeasuring and undervaluing timber,
and misclassifying species
forest decline. Southgate et al. (1989) have shown that • Avoiding royalties and duties by declaring lower value and
land tenure security and deforestation are inversely volume of timber than is actually extracted from timber
related in a study of 20 cantons in Ecuador. concessions
• Declaring exports of lower-priced species instead of real
higher-priced woods
Illegal activities and corruption • Overvaluing services provided by overseas businesses
(sometimes subsidiaries) to artificially reduce profits in
exporting country and to avoid corporate taxes
Governments often cannot control illegal operations.
This lack of control can be either deliberate (often Source: based on Environmental Investigation Agency (1996)
corrupt) or determined by the limitations of
administrative capacity. One way or the other, illegal
use of forests is rampant in most forested countries. “behaviour on the part of officials in the public sector,
By their very nature, the true extent of illegal whether politicians or civil servants, in which they
operations in the forestry sector cannot be known with improperly and unlawfully enrich themselves, or those
precision, but evidence suggests that such activities close to them, by the misuse of public power entrusted
are important and that they constitute an important to them” (Transparency International 1996).
underlying cause of forest decline. In the 1980s, the
Philippines lost about US$ 1.6 billion per year, a large Illegal and corrupt operations are likely to have an
share of the country’s gross domestic product, to illegal important effect on forest management because they
logging. In 1993 Malaysian log exports to Japan were increase investment risks and thus reduce the propensity
underdeclared by as much as 40%. Up to one-third of of investors to implement sustainable management
the volume harvested in Ghana may be illegal and programmes. Corruption weakens the administrative
observers indicate that money injected into the country apparatus of the state as decisions begin to be biased
as part of a SAP led to illegal practices on a massive against activities that do not attract bribes. The
scale. Until recently, up to 95% of all logging in government is also deprived of income that could
Indonesia was not entirely legal (Dudley et al. 1995). otherwise go to improving public administration.
A wide range of illegal and corrupt acts can contribute Corruption and illegal use of forests generate incentives
to forest decline (see Box 4). for organising “cut and run” logging operations to the
detriment of the quantity and quality of forest resources.
Many illegal operations are the consequence of
corruption. Corruption can be defined as “the sale by 5
It should be noted that the opposite holds in other countries. In
government officials of government property for India, absentee landowners frequently afforest their land to prevent
personal gain” (Schleifer and Vishney (1993), or illegal occupation.
18 The Underlying Causes of Forest Decline

The forestry sectors of tropical countries are particularly vicious circle. For example, forest decline worsens the
susceptible to illegal operations and corruption, for several condition of the poor who depend on forest resources.
reasons. In these circumstances, there may be more inclination
• In most tropical countries, forest activities take place to have large families to secure subsistence at old age.
in remote areas, away from the press, the public More children also provide a source of labour for the
and official scrutiny. poor family. Thus a downward spiral of population
• Wood, particularly in tropical countries, is valuable growth, poverty, environmental deterioration and more
but not inventoried. It is thus difficult to determine population growth leading to more poverty, etc. can
how much wood was illegally extracted. occur (Ekbom and Bojö 1999).
• Frequently, officials have substantial discretionary
power. High timber values and high discretionary In fact, most studies generally indicate a positive
power by poorly paid government officials are relationship between population and deforestation. For
ideal conditions for corruption (Contreras- example, researchers have shown that high rates of
Hermosilla 1997). population growth led to environmental degradation in
Sub-Saharan Africa. But most analysts are also very
The linkages between illegal acts, corruption and forest careful to indicate that there are many other factors that
decline have yet to be studied systematically. Global obscure this linkage. There may be forces that
Witness (1998) described the scale of corrupt forest simultaneously affect both population density and forest
activities in Cambodia, and stated that in 1997 much of cover, thus making it appear like one is the cause of the
the estimated US$ 184 million worth of timber felled in other when in fact it may not be. The present-day extent
the country went into the pockets of corrupt officials. of forest in a country is the result of past deforestation
Illegal logging could mean the complete disappearance and, unless reliable information on the evolution of
of Cambodia’s forests in only five years. Friends of the forest cover is at hand, it is difficult to link forest cover
Earth (1997) carried out intensive analyses of illegal today with population increases. At the local level,
logging and timber trade in four tropical countries (Brazil, population density is the result of factors such as the
Cameroon, Ghana and Paraguay). All these studies availability of infrastructure, economic opportunities
strongly suggest a close link between illegal and corrupt elsewhere in the economy, transportation and
activities on one hand and forest decline on the other. colonisation policies. Accordingly, population levels in
these areas cannot always be considered as the “true”
cause of forest decline. Along the same line of thinking,
Broader socio-economic underlying causes many authors note that loggers first make the forests
accessible and then settlers occupy lands. If this is in
Population growth and density fact the case, then population density is the result of
logging and associated initial deforestation or forest
One of the most frequently cited underlying causes of degradation, not the other way around.
forest decline is population pressure. However the link
remains controversial. Researchers have produced a large Similar inconclusive results exist in relation to other
number of studies using various indicators such as assumed effects of population expansion and density (see
population growth and rural population density but results Box 5). While it is true that a larger population may
are by no means conclusive. increase the number of labourers, it is also true that many
other factors intervene in making forest clearing for
That more population should translate into more agriculture more or less profitable. The same comments
deforestation and thus higher pressures to degrade forests apply to the link between population increases and
makes intuitive sense. With increased population, there expansion in demand for agricultural products and the
would be more families in search of land for agriculture propensity to deforest. Where additional demand can be
or looking for fuelwood or timber. Larger numbers of satisfied using technologies that are labour-intensive and
people would also mean that more labourers would be where abundant and accessible agricultural land may still
available, forcing wages down and making activities that exist, the effect on forests of a larger population is likely
need labour, such as agriculture, more profitable. An to be less important. Other factors such as income level
effect in the same direction may occur if the demand for and distribution, levels of urbanisation and technological
agricultural products expands because of the growing change also influence the effect of population on forest
number of people who need to be fed. It is also interesting cover and quality. If urban areas are able to absorb surplus
to note the hypothesis advanced by some analysts that labour and attract it away from forest zones, then forest
forest degradation, deforestation and environmental decline is less likely to take place. Given the available
deterioration in general, all resulting from increased evidence, there is no fundamental relationship between
population, may in certain cases result in further population growth or density that will necessarily always
population growth. There are several reason for this cause forest decline.
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 19

Thus, income growth rates and their likely effects on

Box 5. Population and Forest Cover in Indonesia.
forests should be related to the existing absolute level of
A study by Sunderlin and Resosudarmo (1999) shows clearly income of the country or region in question. This
the complexity of relationships involving a number of variables relationship is represented by the “environmental Kuznets
leading to forest decline in Indonesia, all of them acting in
conjunction with population.
curve”. There is some evidence that this curve exists in
the forestry sector of developing countries (Vincent et
“Certain studies have claimed that population growth is the single al. 1997 and see Box 6). However, the empirical evidence
most important variable explaining deforestation in Indonesia. for the existence of such a relationship is still too
After all, the population of Indonesia has grown from about 40
million in 1900 to 200 million in 1997. The area of agricultural fragmented and weak to assume that it will hold across
land in Indonesia has grown steadily in relation to this population the tropical world. (There is the danger that some
increase, resulting in substantial loss and degradation of the countries, perhaps many, will reach the income threshold
original natural forest cover. However, the population-centered
too late, i.e. when most of the forest has already gone.)
explanation is distorted and misleading because it rests on a
flawed and incomplete view of the role of population in
deforestation. …..Population is best viewed as an intermediate
variable affected by others, and not simply as an independent
variable that acts alone in influencing the fate of forests. Box 6. Economic growth and forest decline.

We have seen that (a) a sharp decline in the rate of growth of

rural population in certain provinces is not matched by an Deforestation
observable decline in the rate of deforestation and forest Rate
degradation; (b) people have moved to forest margin areas not
only because of population pressure but also because of non
Country B
population push factors such as conversion of agricultural lands
and technological change in Java, and transmigration failures in D
the outer islands; (c) people move to forested areas not only
because of push factors but also because of pull factors such as
road construction, the infrastructural benefits offered through the Country A
formal transmigration program, and certain forms of attractive
rural employment; (d) pressures on forests result not just from
land clearing by rural landholders but also from increasing
international and per capita domestic demand for the land under P Per capita GDP
forests and for forest products; and (e) there are considerable
pressures on forests that result from the indirect and direct effects
of plantation development, mining and the logging sector.” Cropper and Griffiths (1994) examined 64 countries and data
series covering 28 years. They found some evidence of the
environmental Kuznets curve for deforestation in Africa and
Economic growth Latin America. They estimated that the threshold where
increasing per capita GDP no longer induces deforestation
Economic growth and expansion of income per capita would occur in Latin America at about US$ 4,800, while in Africa
it would be around US$ 5,400. In Africa, as compared with
result in growing demands for agricultural and forest- Latin America, increased population density shifts this curve
derived products such as paper. As a result, expanding upwards. If we assume two countries, A and B, with similar
levels of income per capita would tend to accelerate forest resources but with Country B having a higher population density,
Country B needs to reach a higher level of income per capita
decline. However, several authors argue that this
before its rate of deforestation will return to level D. At a given
relationship changes fundamentally as income per capita income per capita level (say P) the rate of deforestation in
reaches certain levels and continues to grow after that. Country B will be higher than in Country A (Griffiths 1994).
According to this hypothesis, at lower levels of income
Panayotou (1995) studied this relationship for a group of
per capita, income growth would be associated with developed and developing countries and found that it was valid,
various forms of forest decline. When economies reach with thresholds occurring at about US$ 1,200.
a certain threshold, the process is reversed. At this point,
Vincent et al. (1997) studied detailed data at the district level
increases in the level of income per capita begin to be
from Peninsular Malaysia and found that the rate of
associated with factors such technological improvements, deforestation was significantly related to the level of income
better functioning of government institutions, per capita and supported the hypothetical inverted U shape
urbanisation and less relative dependence on agricultural above, with deforestation rates peaking at some 1,100
Malaysian Ringgit (1978 prices). This level of income per capita
and forest production. Achieving higher levels of income was exceeded by the time of the 1987 Household Income
per capita leads to a fundamental change in the Survey. Thus the deforestation rate should have been declining
composition of demand for goods and services with in the Peninsula at the end of the 1990s. The authors conclude
greater demand for environmental services of forests and that Peninsular Malaysia should be one of the first regions in
the tropics to reduce its deforestation rate to zero and that
for uses, such as recreation, that do not necessarily lead “economic development appears to be delivering the permanent
to the loss of forest cover. This is the experience in the forest area that forestry policies could not”.
today’s rich economies of the world.
20 The Underlying Causes of Forest Decline

Furthermore, it is interesting to note that countries may Impacts of higher incomes will depend on the types of
follow a different path if income per capita contracts as products and services related to forests that are demanded,
compared to when it expands. A low-income country with and the way this demand is fulfilled. If such growing
a growing economy, say country B, may lead to an demand is concentrated on forest products, or on products
expansion of deforestation as shown in Box 6, but if that and services produced in other sectors that require the
economy and income per capita subsequently contract use of more forest land (more roads, food, houses made
this may not necessarily imply a return to former lower of wood, etc.), then the likely impact is more forest
levels of deforestation. Sunderlin and Pokam (1998), decline. If income growth leads to reduced population
studying deforestation in Cameroon and the effects of expansion and to demand for services of forests, such as
the economic crisis in the mid-1980s (the consequence recreation and better environmental quality, then there
of drastic declines in the prices of oil and agricultural will most likely be a positive effect on forests. Similarly,
crops, mainly coffee and cocoa), concluded that the as income rises there may be more imports of goods that,
contraction of income per capita did not reduce if produced domestically (e.g. meat), may damage forests.
deforestation but instead led to an increase (see Box 7). Migration from rural areas to expanding job opportunities
in other non-rural sectors would also reduce pressure on
the forests. It is difficult to establish a priori the possible
Box 7. The Environmental Kuznets Curve in Reverse: effect of economic growth on forests because these effects
Cameroon. will depend on existing levels of income, the “elasticity”
of demand for various products and services as income
At the end of the 1970s and until the mid-1980s, Cameroon
experienced rapid economic growth, which was mainly based grows, the availability of these products and services
on oil exports. The Gross Domestic Product grew 7% per year. domestically, etc., which in turn all depend on other
Migration from villages to the cities to take advantage of new variables such as income and wealth inequality. Again,
employment opportunities was explosive. The population of explanations attributing an overwhelming driving force
Yaoundé grew by 107% between 1976 and 1987. Villages
instead stagnated. Cocoa and coffee were the principal cash
to one variable such as income growth are too simplistic.
earners for farmers in the humid zone. The government provided
input subsidies to farmers.
Conclusions and policy implications
Starting in 1986, the economy collapsed because of a drastic
worldwide decline in the prices of oil and agricultural products.
The government curtailed agricultural subsidies and thus It could be argued that, according to various value
discouraged agricultural intensification, which in turn systems and specific situations, deforestation and forest
encouraged extensive land use. The production and export of degradation is not always undesirable as suggested by
cocoa and coffee declined precipitously beginning in 1989. the abundant literature on the subject. For example, it is
Urban poverty jumped from 1% to 20% between 1983 and 1993
and unemployment quickly grew from 7.3% to 24.6%.
easy to conceive of situations where environmental losses
may be more than compensated by economic gains and
The rate of forest clearing increased over the period 1986-1997, improved well-being of the poor. Or where economic
compared to 1977-1985. What were the main underlying losses are more than offset by the additional welfare
factors? First, the population of the villages increased obtained by conserving some of the global biodiversity
substantially during the economic crisis in response to
immigration, slow rural to urban migration and net return
values of forests and the possibility of securing an
migration. Farmers increasingly turned to the production of food independent means of evolution for traditional indigenous
crops but largely kept their coffee and cocoa plots despite the societies. Here we are more concerned with the
collapse in prices and declining subsidies. This would usually underlying causes of forms of inappropriate or wasteful
be seen as economically irrational behaviour, but Sunderlin and
deforestation and forest degradation. Those forms of
Pokam indicate that farmers were reluctant to dispose of their
cocoa stands because they viewed regeneration and replanting forest decline that, from most perspectives, are
as essential, and local customs established that inherited undesirable.
orchards should not be cut down. Moreover, farmers were willing
to expand the area under cocoa production in order to Generally, it is very a complex combination of market
compensate for the decline in prices. Thus, farmers tended to
establish their food crops at the expense of forests. They also
failures, negative elements introduced by various policy
turned to plantain, which is generally established in cleared and institutional failures, and some fundamental features
forest lands, as a source of cash. of societies, such as the distribution of political and
economic power and cultural factors, that lead to forest
Source: Sunderlin and Pokam (1998)
decline. Despite the inclination of many analysts to
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 21

attribute undesirable forest decline to a “dominant” factor Not only have they have erased previous policies that
such as trade or population growth, it is far more plausible linked deforestation to ownership rights but some have
that forest decline is the result of an elaborate “cocktail” even reversed these policies and now demand that a
incorporating different proportions of various causes. certain proportion of lands received from government
be kept under forest. Some of the new policies also deny
The number and complexity of underlying causes of property rights to those who inappropriately deforested
forest decline calls for caution. It is not possible to find after the approval of the reformed laws.
unambiguous cause-effect linkages that would have a
universal application. Rather, specific situations must be Similarly, policies that favour mining and other extractive
studied in detail and remedies must also be highly activities in forested areas will more than likely spur
specific. forest decline. Some of these activities, such as those of
illegal gold miners in forested areas of Venezuela and
Despite all these cautions, there is enough knowledge to Brazil, are extremely destructive to the environment,
identify certain causes that, in most cases, are likely to affecting not only the very existence of forests but also
have an influence on the quantity and quality of forests. the quality of soil and water resources and the survival
First, we know that even if market failures may not be of indigenous populations. When extractive activities,
the main underlying causes of forest decline in all cases, such as oil exploitation in forested areas, generate large
if it were possible to “internalise externalities” and “get economic gains (e.g. Ecuador and Venezuela), it could
prices right” this would contribute to increased private be argued that a second round of effects may lead to an
inducements to sustainable forest management. These abatement of forest decline. More employment
strategies may not provide the complete solution to the opportunities may be created in increasingly wealthy
problem of undesirable forest decline, but they would urban areas, demand for environmental services
clearly play a part in supporting better forest management increased, and a proportion of the needs satisfied by
and conservation. importing products rather than by using national
resources more intensively. Policies to foster activities
We also know that whatever the original cause – close or such as mining and oil exploitation development in forest
distant – that motivates some government policies, many areas could thus be justified in the long run. However,
of them lead to wasteful forest decline. Much too often evidence on the direction and intensity of these effects is
they exacerbate market failures.6 Road construction less than definitive. In fact, the study of the experience
policies and policies to facilitate the expansion of in Ecuador suggests the opposite. This illustrates the
railways and water transportation, if not properly filtered concept that cause-effect policy relationships are
for their potential impacts on forests, are likely to induce particularly complex and difficult to analyse, particularly
deforestation and forest degradation by increasing if we consider long time spans and various rounds of
accessibility. This effect will be more intense in situations effects over time.
where depressed agricultural conditions predominate and
few other employment or survival options exist for poor In most situations, the elimination of subsidies
populations. Thus, policies that lead to greater land tenure embodied in timber concessions, and those aimed at
inequality and make the poor even poorer would likely the promotion of activities that compete for forest land
compound the overall effect of misguided transportation or that use forest raw materials in wasteful ways, may
policies. Since road construction policies generally are introduce additional incentives to improve forest
greatly influenced by political considerations, increased management. They may restrict excessive forest harvest
public scrutiny and more rigorous consideration of and, at the same time, produce additional government
economic, environmental and social costs would help to income, some of which may be directed to cash-starved
concentrate road investments were they are most forest services and used to promote sustainable forest
economically productive and least harmful to forests and management practices. A better analysis of the probable
forest-dependent populations. impacts of these government subsidy policies and
increased transparency in public decision making are
Governments need to break the officially sanctioned likely to lead to strategies that enhance incentives to
connection between deforestation and the possibility of more sustainable forest management. Because policy
securing land ownership rights. This would go a long reforms in these cases are politically difficult, concerned
way towards reducing incentives for land speculation and advocacy groups and NGOs have an important role to
forest decline. Fortunately, the negative consequences
of this policy failure are now better understood and some
governments, particularly in Latin America, have made 6
For an excellent summary of the state of knowledge, see
substantial progress towards eliminating these policies. Kaimowitz and Angelsen (1999).
22 The Underlying Causes of Forest Decline

play in attracting public attention to the documented dominating the political and economic scene. Without
negative effects of faulty policies. going to this extreme, all initiatives that make illegal and
corrupt activities more visible help to combat
As we have seen, structural adjustment programmes inappropriate deforestation and forest degradation. Some
involve a large number of varied interventions, and thus influential international organisations, such as the World
create a rather large quantity of complex chain reactions Bank Group, have adopted measures to increase
in the economy. Some of these may lead to increasing transparency, monitoring and reporting of procurement
short-term forest decline, while others may produce the contracts. Complementary measures may include the
opposite effect. Long-term net effects are uncertain. For development of open bidding processes in timber
example, if SAPs favour agricultural intensification by concessions, methods to rank bids according to clear and
creating incentives to technological improvement and at pre-established criteria, measures to force the clear and
the same time promoting off-farm employment and unambiguous conditions of government procurement and
sustained income growth, the long-term effects are likely timber concession contracts.
to lead to a reduction in the pressure on forests. If
devaluation results in additional profitability for Depending on the circumstances, population may be
agriculture and land is scarce, the opposite may happen. important in deforestation and forest degradation
However, if devaluation favours export agriculture, some processes but other related factors, such as income
of which requires agricultural intensification rather than distribution and prices, may count more, at least in the
extensification, the pressure on forests may decline. short or medium term. Because population affects many
Experience shows that governments frequently other aspects of a country’s socioeconomic situation, it
implement SAPs in a piecemeal fashion, rather than as is most unlikely that governments would give much
integrated and coherent economic packages. SAPs also weight to their specific impacts on forests. Other political
favour export of tradable goods and often do not include and social considerations are liable to count more heavily
environmental or social safeguards. These policies may in decision making.
exacerbate forces that lead to forest decline. There are
no easy recipes to attenuate the potential negative short- The link between income growth and forest decline is
term effects of SAPs. Mitigating policies to include far from clear except that at the existing levels of per
environmental and social concerns in the programmes capita income in most tropical countries, economic
have not been implemented with the necessary vigour expansion is likely to lead to immediate further
and thus tend to have been rather ineffective. The long- deforestation and forest degradation. In the long term, it
term effects of SAPs on forests remain uncertain. is more probable that the relationship may be the inverse,
as demonstrated by the experience of today’s
Available evidence shows convincingly that illegal and economically advanced countries. Whatever the case, as
corrupt activities constitute a major underlying cause of with the issue of population, it is unlikely that
forest decline. Solutions to this problem are complex and governments will give great consideration to forest sector
in most cases would involve a rearrangement of the forces issues in decisions about economic growth.
Arnoldo Contreras-Hermosilla CIFOR Occasional Paper No. 30 23

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