Forestry and the Environment

Forests are an important source for many environmental services. Carbon sequestration and biological diversity are well-known global environmental services. At the local level habitat for wildlife and recreational opportunities constitute the main examples. Forestry affects these services in many ways. For example, clear cutting of an area temporarily reduces carbon sequestration, and have ambiguous impacts of biological diversity. Locally, clear cutting increases food availability for some species like moose and deer, while other species may experience a decline in their habitat quality. The welfare economic term for such an unintended side-effect is an externality.

Managing forests solely or mainly for...