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Sunday, October 01, 2006


Brazilian Rainforest

I read, “How Green was my Valley” in the April, 2006 edition of The Economist. It was about how the Amazon Rain forest is diminishing by about 8,000 square miles every year. The large population of poor in Brazil cut the forests down for logging and farming. This is done both legally and illegally. The government has tried to protect the rainforest, and has recently created national reserves (off limit to logging). They have also become stricter in public lands where logging is legal, but is their a role for the government to play?
The government only has a role to play if the rainforest is a public good that will otherwise not be provided, or if there is an externality. I’m sure there are some goods that are provided because of the forest, and I am sure the rainforest will diminish a lot faster without the government’s intervention, but I am not positively sure if there is an externality. There may be a positive externality that comes from rain forest protection. Many people benefit, or live their lives within the rainforest. Many of these people also benefit from cutting down the rainforest because they can make a living from it, so I don’t believe this is a positive externality. But, their may be a positive externality that results from the value of preservation, especially in preserving something like the Amazon. If there is not enough rainforest protection, which would be the case if there is a positive externality, than the government would be reasonable in protecting the forest.

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