The Economic Impact of Deforestation

Deforestation is the permanent removal of forests. Agriculture usually replaces the woodland.¹ The practice has many negative impacts, such as the loss of biodiversity² and the emission of greenhouse gases.³

But, deforestation also has severe economic impacts. Removing forests can rob a country of potential renewable revenues whilst degrading its land and damaging its climate. This is important to note given that economic incentives are used to vindicate practically all deforestation today.⁴

What is the economic impact of deforestation?

The economic impact of deforestation can be huge. Globally, over one billion people live in or around forests and rely on them for food, shelter, and livelihoods.⁵ However, enough rainforest to fill 30 football pitches is cut down every minute.⁶ Agriculture is behind more than 80 per cent of this deforestation.⁷

Short-term effects

Removing trees quickly degrades the soil. Organisms break down leaves and other debris that falls to the ground. This recycles nutrients back into the soil. Trees’ roots hold the soil in place and absorb the minerals in the ground again. Chopping down the plants shatters this cycle of fertility and growth. Cleared land soon becomes infertile, as torrential rains quickly wash any remaining nutrients from the bare soil. Crops planted on the deforested ground do not prosper for long, and more forest is soon ravaged in search of new land.⁸

Furthermore, tropical countries generate significant income from sustainable sources in their forests. These are at risk because of deforestation. For example, Brazil nuts from the Amazon, durian fruit from Southeast Asia, and resin from Damar trees in Sumatra may be harvested without damaging the forest. Degrading the wider rainforest area often prevents such products from growing. The developing countries and their people who depend on these commodities would suffer economically if deforestation eradicates the environment that they need to grow.⁹

Long-term effects

The economic benefit of conserving the Amazon Rainforest is about USD $8.2 billion per year. This includes the profits gained through sustainable industries that function in the rainforest, such as rubber tree timber. It also takes the economic advantage of Amazon’s environmental influence, such as regulating local weather and sequestering carbon, into account. Indeed, tearing down the rainforest would reduce rainfall to such an extent that agriculture would suffer a USD $422 million annual loss as a result.¹⁰

Deforestation and the economic impact of climate change

All forests are carbon sinks, second only to the oceans at absorbing the greenhouse gas.¹¹ Cutting down trees, burning them, or leaving them to rot all release carbon dioxide (CO2), which contributes to global warming. It also prevents forests from absorbing further CO2.¹² Preserving the woodland we already have and planting additional trees to sequester more carbon is central to combatting climate change.¹³

Climate change is expensive. The global cost of adapting to climate changes is expected to increase to USD $140-$300 billion per year by 2030 and USD $280-$500 billion per year by 2050.¹⁴ Moreover, the burden will not be borne equally across the world.¹⁵ Many of the poorest countries in the world will face the worst consequences of climate change, particularly those near the equator.¹⁶

From an environmental, economical, and logical perspective, it simply does not make sense to continue deforestation at the current rate. Tropical countries would benefit over the long term by protecting and enhancing their rainforests.

1. Youmatter (2020). Deforestation – What Is It? What Are Its Causes, Effects And Solutions? [online] Youmatter. Available at: https://youmatter.world/en/definition/definitions-what-is-definition-deforestation-causes-effects/.
2. Round Square. (n.d.). Biodiversity and deforestation. [online] Available at: https://www.roundsquare.org/ideals-challenge/round-square-environmentalism-sessions/task-five/biodiversity-and-deforestation/#:~:text=Deforestation%20can%20directly%20lead%20to.
3. www.ucsusa.org. (n.d.). Tropical Deforestation and Global Warming | Union of Concerned Scientists. [online] Available at: https://www.ucsusa.org/resources/tropical-deforestation-and-global-warming#:~:text=When%20trees.
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10. www.vice.com. (n.d.). The Amazon Is Worth $8.2 Billion if It’s Left Standing, Study Shows. [online] Available at: https://www.vice.com/en/article/bje7wd/the-amazon-is-worth-more-money-left-standing-study-shows.
11. Panda.org. (2017). Deforestation Fronts. [online] Available at: https://wwf.panda.org/discover/our_focus/forests_practice/deforestation_fronts_/.
12. Union of Concerned Scientists (2012). Tropical Deforestation and Global Warming | Union of Concerned Scientists. [online] www.ucsusa.org. Available at: https://www.ucsusa.org/resources/tropical-deforestation-and-global-warming#:~:text=When%20trees%20are%20cut%20down.
13. Trust, W. (n.d.). How Trees Fight Climate Change. [online] Woodland Trust. Available at: https://www.woodlandtrust.org.uk/trees-woods-and-wildlife/british-trees/how-trees-fight-climate-change/.
14. Energy & Climate Intelligence Unit. (n.d.). Climate economics – costs and benefits. [online] Available at: https://eciu.net/analysis/briefings/climate-impacts/climate-economics-costs-and-benefits.
15. Law, T. (2019). The Climate Crisis Is Global, but These 6 Places Face the Most Severe Consequences. [online] Time. Available at: https://time.com/5687470/cities-countries-most-affected-by-climate-change/.
16. Law, T. (2019). The Climate Crisis Is Global, but These 6 Places Face the Most Severe Consequences. [online] Time. Available at: https://time.com/5687470/cities-countries-most-affected-by-climate-change/.