Deforestation - Economic Impact

Economic Impact

Damage to forests and other aspects of nature could halve living standards for the world's poor and reduce global GDP by about 7% by 2050, a report concluded at the Convention on Biological Diversity (CBD) meeting in Bonn. Historically, utilization of forest products, including timber and fuel wood, has played a key role in human societies, comparable to the roles of water and cultivable land. Today, developed countries continue to utilize timber for building houses, and wood pulp for paper. In developing countries almost three billion people rely on wood for heating and cooking.

The forest products industry is a large part of the economy in both developed and developing countries. Short-term economic gains made by conversion of forest to agriculture, or over-exploitation of wood products, typically leads to loss of long-term income and long-term biological productivity. West Africa, Madagascar, Southeast Asia and many other regions have experienced lower revenue because of declining timber harvests. Illegal logging causes billions of dollars of losses to national economies annually.

The new procedures to get amounts of wood are causing more harm to the economy and overpower the amount of money spent by people employed in logging. According to a study, "in most areas studied, the various ventures that prompted deforestation rarely generated more than US$5 for every ton of carbon they released and frequently returned far less than US$1". The price on the European market for an offset tied to a one-ton reduction in carbon is 23 euro (about US$35).

Rapidly growing economies also have an effect on deforestation. Most pressure will come from the world's developing countries, which have the fastest-growing populations and most rapid economic (industrial) growth. In 1995, economic growth in developing countries reached nearly 6%, compared with the 2% growth rate for developed countries.” As our human population grows, new homes, communities, and expansions of cities will occur. Connecting all of the new expansions will be roads, a very important part in our daily life. Rural roads promote economic development but also facilitate deforestation. About 90% of the deforestation has occurred within 100 km of roads in most parts of the Amazon.