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Possible contributions of timber production forestry to economic development

University of British Columbia

Economic growth or development, the process by which a nation gains wealth, is analysed in Part I. So far there is no theory which fully explains the phenomenon of sustained increases in the per capita income of a country. Probably, development is possible only if many economic and non-economic variables have values within certain relative ranges, which should be the subject of further study. In this thesis a dynamic consumption function has been postulated and used to construct a simulation model to help guide an economy's approach to sustained economic growth. Computer analyses with the model show the changes in per capita income as an economy approaches the "take-off" stage. They also suggest that, due to different existing values of the relevant variables, each country may find its optimum method of development to be different from others. It seems that early and large imports of foreign capital (a minimum of about 10 per cent of GNP annually), or a comparable reduction in personal consumption, are needed to initiate economic development. In Part II analyses indicate that a limited role can be played by forests in the poorly understood but urgently sought process of economic growth. Under usual circumstances, forests can help the economy move towards the take-off stage and meet the requirements created as development proceed. Forests, like any other resource, are important for development and human welfare. But, society must forego something when it uses any one resource. Foresters have often looked only at the benefits from forestry. It is essential to consider also the costs involved in using forests. The costs are in the form of missed opportunities to use forests fully or to replace them with a substitute for forest products. This thesis helps evaluate the role that forestry can play in economic development. The widely accepted principle of sustained yield forest management has been criticized. The principle of maximization of the present worth of net benefits from forest land is suggested as a desirable alternative. Forestry is different from other sectors in that (1) wood is its product as well as the major part of capital, (2) the period of production is long and (3) the product is very versatile. Forestry is suitable for being given priority in a national or regional development plan because it can (1) efficiently utilize under-employed rural resources, (2) produce important raw material for making paper which is necessary for human investments, (3) substitute for imports and earn foreign exchange in today's underdeveloped countries, (4) provide fuel and release cow dung for use in agricultural fields in some parts of the world and (5) serve as the basis for regional development where forests are plentiful. Commonly, if plans changes, wood grown for one purpose can be used easily for another. Most of these characteristics have been recognized by forestry economists but their studies have usually been based on historical evidence rather than analysis of possible future development. The future importance of forestry depends on its technological progress in relation to other sectors which are potential rivals of forestry. Forests can facilitate development and also help maintain economic growth. As per capita incomes rise, demands for forest products increase. Forest products needed to initiate and sustain development can be supplied best by managing forests in such a way that the present profits from forest property are maximized without detriment to the present worth of future profits. Profits then should be used for investment in the most economically desirable fields. It is shown that revised user cost concepts can be applied in forestry, These determine the optimum rate of forest harvesting and the amount of investments to be made in the present so that the present worth of the forests is maximized. Further refinements of decision theory are needed to solve the complex problems involved. Because there are many substitutes for them, only the most economical forest products will remain important in the long run. Forestry's role can be enhanced most effectively if foresters improve the technology employed in growing and utilizing forests. Finally, policy implications for underdeveloped countries in general, and India in particular, have been discussed. It is concluded that the policy of rigid sustained yield forest management should be rejected. It should be replaced by maximization of present worth of net benefits from forest land in each management unit. Then, forestry can play its maximum possible role in economic development.

Text

2011-10-26

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http://hdl.handle.net/2429/38322

Forestry

University of British Columbia

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