Tuesday, November 2, 2010

UK Government Plans to Sell Off Public Woodlands to Pay Down Debt

In a letter published at the end of last week, the UK Government's Department of Environment, Food and Rural Affairs (DEFRA) announced that it was preparing to sell off significant segments of publicly-owned forests, which currently comprise 18% of wooded areas in Britain, in order to help pay down the public debt. Current plans call for selling off up to 50% of publicly owned woodlands (see here), currently managed by the Forestry Commission, including the famous Sherwood Forest (see here). According to some estimates (see here), the privatization scheme would amount to the largest land ownership change in the UK since World War II.

Is privatization of publicly-owned forests a good idea? It is according to at least a few economists, who call themselves "free market environmentalists." From their point of view (see, e.g., here), public ownership of natural resources is just as bad an idea as public ownership of productive enterprises (which is a very bad idea, indeed). They argue that government bureaucrats tend to manage natural resources as badly as they manage other assets. Private owners, by contrast, have a greater economic incentive to conserve their resources over time.

The reality, however, is far more complicated than the simple story told by free market environmentalists. In fact, private owners tend to maximize the net discounted private value of assets they own, without much regard for social values. In other words, private owners' interests in natural resources do not always coincide with larger societal interests. And a great deal of historical evidence, some of it from the UK forests, confirms that private ownership does not always or necessarily correlate with better resource management.

Parliament created the Forestry Commission in 1919, at a time when the UK had the lowest percentage of forested lands - less than 3% of total national acreage (about 700,000 acres) - of any country in Europe. The once vast primeval forests of Britain had been nearly wiped out by harvesting of forests that were virtually all privately owned. In its first year of operation, the Forestry Commission purchased 19,000 hectares of land and planted trees on 700 hectares. Within 25 years, the Forestry Commission had increased forest cover in Britain by approximately 25 percent. (The information in this paragraph comes from my book, Pollution and Property, CUP, 2002, pp. 97-8).

Parliament would be wise to bear in mind the history of private deforestation and public afforestation in the UK before it begins to privatize the UK's forest reserves.

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