Forest concessions, managing forests for commercial forest products, can be more effective in preventing deforestation than “protected area” forest management systems (i.e; National Parks). This is evident looking at the tropical forests of northern Guatemala. How is this possible? The following four points help explain.
1. Selective Harvesting
In many countries with large tropical forests, laws require that logging within forest concessions be done selectively. While some trees are harvested, the majority remain in the timber stand, maintaining a canopy of different species and ages (Figure 1). In such concessions where selection forestry systems are applied, logging does not result in deforestation (Figure 2).
2. Rights to Harvest Forest Products
Forest concessions grant rights to enterprises, both communal and individual, to harvest forest products. These rights internalize the costs and benefits of forest management, incentivizing stewardship of the forest resource as capital. Forest user rights are especially important in tropical countries where the majority of forests are publicly owned.
3. Forest-Based Income
Through enterprise, forest products generate significant income for rural populations. The community of Carmelita with its forest concession in northern Guatemala earns nearly US$ 200,000 annually selling logs, lumber, furniture, wild plants, and ecotourism packages (El Financiero 2014). In a country with a middle-class annual income of $1,600 (World Bank 2010), this is a large amount of income being generated from the forests for the people of the community.
4. Higher Net Present Value of Forest Land-Use
Net present value (NPV) is the present value of future cash flows. Rights to money generated from forest-based enterprises can make the NPV of a forest more valuable than other competing uses (e.g., cattle ranching, farming, plantations, etc). If a forest has a higher NPV relative to other land uses, then income decreases if the forest is deforested. With a higher NPV, forest right holders are incentivized to maintain the land as a forest resource, rather than to convert the forest to other land uses (deforestation).
Thinking in terms of forest NPV is critical to understanding the decision-making process regarding forest conservation and deforestation. In the next article, we will explore how current forest conservation trends align with this principle of forest economics.
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