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Preserving the world’s rapidly shrinking tropical forests and improving the economic prospects of millions of poor people requires an urgent strengthening of national forest governance. Globally, this calls for strong financial incentives, says a new World Bank policy research report, “At Loggerheads? Agricultural Expansion, Poverty Reduction and Environment in the Tropical Forests.”

A majority of people in rural tropical areas—about 800 million—live in or around vulnerable forests or woodlands, depending on them heavily for survival. Yet deforestation at five percent a decade is steadily depleting this resource base, contributing to 20 percent of annual global CO2 emissions and seriously threatening biodiversity. 

In Latin America, dense tropical forest is often cleared to create pastures worth as little as $300 a hectare, while releasing large amounts of carbon dioxide. In Africa and Asia, some deforestation is equally unproductive. These forests may be worth five times more if left standing, providing carbon storage services, than if cleared and burned. If developing countries could tap this value, they could also stimulate more productive agriculture in degraded areas, while preserving the environmental services of forests.

But current carbon markets do not tap the potential benefits of forest carbon. The report reviews the obstacles impeding the use of global carbon finance to reduce deforestation, and offers workable solutions.

"Now is the time to reduce pressures on tropical forests  through a comprehensive framework that  integrates sustainable  forest management into the global strategy for mitigating climate change and preserving biodiversity,” said Katherine Sierra, Vice President, Sustainable Development, the World Bank.

Deforestation is driven largely by economic incentives to expand agriculture, with varying returns. In Madagascar, poor people clear forests for tiny, short-term gains. In Brazil, commercial farmers clear cerrado and forests for large profits. In both, the rate and profitability of deforestation are influenced by changes in agricultural prices.

"It is said that people destroy forests because they are poor, and that deforestation causes poverty—but generalizations are a poor foundation for policy,” said Kenneth Chomitz, the report’s lead author. "We find that deforestation is caused by both rich and poor people—and it can either destroy or create assets for poor people.”

The report offers a simple framework for policy analysis by identifying three forest types—frontiers and disputed lands, lands beyond the agricultural frontier, and mosaiclands where forests and agriculture coexist. It collates geographic and economic information for each type that will help formulate poverty-reducing forest policy.

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