Key flagship initiatives such as the European Union’s ‘New EU forest strategy for 2030’ attempts to protect Europe’s forests. But what impact do such measures have on forests in countries unable or unwilling to protect them, asks economist Afiq bin Oslan in his study, ‘When Environmental Protections Backfire at Home and Abroad’.
The game theory models developed by economist Afiq bin Oslan demonstrate that an environmental policy that fails to consider economic interests is unlikely to succeed. © Firefly (grüner Wald unter Glasglocke)
Droughts, storms, biotic agent outbreaks – forests are particularly under stress from climate-driven disturbances. At the same time, we urgently need forests for their carbon capture capabilities that store climate-damaging greenhouse gas C02. Developed countries frequently assume a pioneering role in forest and environmental protection, enacting legislation to safeguard and rehabilitate their natural environment. At the same time, they use resources from other countries to have raw materials for the domestic economy. Japan’s forest history illustrates this issue. The Japanese archipelago is one of the most densely forested areas in the world, with 68.5 per cent of its land covered by forest. While the Japanese government has been prominently campaigning to protect its domestic forests since the 1960s, Japanese companies have been simultaneously heavily involved in clearing rainforests in Malaysia, Indonesia and the Philippines to meet domestic demand for timber for the construction, pulp and paper industries.
Our Senior Research Fellow, Afiq bin Oslan, asks whether such dynamics also have domestic environmental consequences. This question has led to the development of a series of simple game-theoretic models, which are useful for understanding the subtler dynamics of environmental protection and its unintended consequences. The model assumes that both governments want to protect their environment because it would be politically popular. However, both governments cannot choose to protect the environment simultaneously because the lack of resources would bring the economy to a standstill. Thus, one government will give in and exploit its resources.
Bin Oslan adds further characters to his model: the on-the-ground environmental stakeholders who are directly in charge of turning government decisions into reality (or otherwise) – i.e. they decide whether the resource is protected or exploited according to government policy. The model shows that the environmental actors, i.e., foresters, forest owners and other local interest groups, may lose their incentive to conserve ecological resources when government policy means they can no longer derive economic benefit from such activities. The local environment may then become neglected and abandoned. This has been the case in Japan: when imported timber displaced domestic timber, forest owners abandoned their charge because they became unprofitable. Thus, domestic forests became overgrown and lost their value as recreational and economic areas. Bin Oslan’s study shows that governments are jeopardising both the forests of their trading partners and their own when forest protection strategies do not align with on-the-ground interests.
Complex and interconnected networks
The study thus cautions against ill-considered, pro-environmental efforts: if local laws strengthen environmental protection without changing the demand for the resource, the negative environmental consequences may not be resolved. Balancing ecological and economic interests on the ground would be more important for sustainable forest management. Bin Oslan suggests that governments in industrialised countries should prioritise establishing direct relationships with stakeholders in ecological resources. This approach, he argues, is crucial for creating a harmonious balance between environmental conservation and economic development to help inform the EU’s new forest strategies.
Go deeper:
When Environmental Protections Backfire at Home and Abroad by Afiq bin Oslan :: SSRN
October 2024