Wednesday, December 22, 2010

Thatcherism on Steroids in the UK

I previously posted (here) about the Tory/Lib Dem Coalition's plan to privatize some of the UK's national forest reserve in order to help bring down the public debt. Today's The Guardian reports (here) that the privatization might well include all state-owned English trees. Not even Baroness Thatcher ever contemplated such a thing. I don't know whether Terry Anderson and other "free-market environmentalists" are advising the current UK government, but the idea is a bad one for a whole hosts of reasons, only some of which are addressed in the article.

The article's author John Vidal expresses concern that foreign interests might buy up all the state timberlands and clearcut them for use as renewable energy or to exploit subsurface resources, including coal. At first glance, this seems far-fetched. After all, economic theory suggests that private woodland owners should conserve (not preserve) timber resources to maximize their long-rune economic value. However, as the Canadian economist and mathematician Colin Clark demonstrated in a couple of articles he published in 1973, complete exploitation of a scarce resources might be an optimal strategy under some circumstances. And there is a good deal of empirical evidence, from both the UK and the US, of private timber owners doing exactly what most economists say they would never do. Indeed, the UK's Forestry Commission was founded in 1919 precisely because timber harvesting on private lands was close to denuding Britain of trees.

The forests of largest concern, when it comes to privatization, are those with the greatest public values attached to them, which would surely include ancient woodlands and sites of special scientific interest. For those sites in particular, privatization would likely be a disaster because, even if private owners can be expected to engage in conservation, their conservation decisions will seek to maximize their private utility, not public welfare.

One way that at least some of these concerns might be ameliorated is for the government to issue new regulations on harvesting privately owned timber. However, such regulations would reduce the market value of the timberlands at auction by some uncertain amount, which would be contrary to the government's expressed concern with paying down the debt.

Public opposition to the wholesale privatization of forest reserves is growing. And politics rather than economics will, as always, have the final say. I remain cautiously optimistic that this short-sighted plan to privatize - corporatize would probably be a better word - the UK's entire woodland patrimony will be aborted.

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