The continuing destruction of tropical forests

The Financial Times summarises  a recent report by the University of Maryland and the World Resources Institute's Global Forest Watch:

The equivalent of 11 football fields worth of primary tropical forests disappeared per minute last year[.] Tropical forest loss rises 10% despite pledge by 145 nations, Financial Times, 28 June

The article concludes:

'Market forces driving deforestation were "much greater" than those behind protecting woodland' according to Mikaela Weisse director of the Global Forest Watch.

There's nothing inevitable about market forces when there are no markets for negative externalities and markets themselves are undermined or manipulated by large corporations, or subject to legislative and regulatory constraints. Rather this is a tragic case of market failure. It could conceivably be addressed by doing some complicated and divisive calculations as to the likely impacts of lost woodland and attendant atmospheric pollution, and applying a contentious discount rate to some highly aggregated cash-equivalent figures. That's practically and politically impossible to do. However, I do not believe that a perfect market for, say 'woodland services', with all externalities accounted for, even if it were possible to create one, is an end in itself. It would be a means to an end, and we'd do better to focus on what, actually we want to achieve. 

My suggestion is that we stipulate the environmental goals we want to achieve. One such goal could be a limit on the area of primary woodland destroyed over a period of, say, 30 years. Then Social Policy Bonds could be issued that would be redeemable only when that goal had been achieved. Redemption funds could be raised by a consortium comprising some or all of world governments, NGOs, corporations or philanthropists. The funds would be held in escrow until the targeted woodland preservation goal had been achieved. It would be up to bondholders to decide how to limit the destruction of woodland, and they would have a powerful incentive - the increase in value of their bonds - to do so effectively and quickly. They could take steps that current bodies cannot or will not take, such as bribing illegal loggers to undertake some other activity. A bond regime, rather than eschew market forces, would channel them into the preservation of the world's primary tropical forest. 

For more about applying the Social Policy Bond concept to the environment, click here