Burn the forest!: A bargaining theoretic analysis of a seemingly perverse proposal to protect the rainforest

Ernst Mohr

No 447, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Consider a country possessing a specific production factor in fixed quantity, producing in combination with land a stream of services through time. Some of these services are consumed domestically. The bulk of it, however, is consumed world-wide. Despite the services the country provides to the world it does not earn any income from these exports. This is because it lacks a technology turning services produced into the exclusive property of the country. Possessing a sector which produces such a good, how can the country earn income from the services it provides? This is a stylised description of the problem faced by countries which host the world's rainforests. As determinants of the global climate rainforests provide a multitude of environmental services. Some of these services escape the home countries of forests, spill over abroad and are consumed there as a free lunch. In this sense, countries do not possess exclusive property rights over the forests they host. This global commonality of a national production factor creates a series of problems which endangers the environment.

Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:447

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