How do profit incentives and property rights affect the management of a renewable resource such as a forest? Why do some nations have growing or sustainable forests and other nations experience deforestation?

Question

What will be an ideal response?

Answer 1

Profit incentives and property rights can affect the harvesting of renewable resources such as trees in a forest so that they are preserved and provide a steady stream of profits over time. In this case, property rights need to be structured properly and enforced so there is a strong profit incentive to manage the resources on a sustainable basis and there is not too great of a profit incentive to harvest too many of the trees today.
Forests in different countries are managed differently and this explains why forests in some countries are increasing and in other countries there is widespread deforestation. In countries where the forests are increasing, there are clear property rights and they are enforced, so there are good profit incentives to harvest woods on a sustainable basis over time. In countries experiencing deforestation, the property rights are uncertain or not enforced, so there is a strong profit incentive to harvest more trees today because the possibility of future harvesting or profitability is uncertain.