Deforestation and Forest Transition: Theory and Evidence in China

Abstract

A general theoretical framework on deforestation and forest transition is presented followed by empirical evidence from China. Relative scarcities of food, timber and environmental goods resulting from both population and economic growth are believed to be the most fundamental causes of forest change. A relative scarcity of population — a factor of production as well — is considered to drive population change and reallocation. The time required from deforestation to forest transition may be prolonged by the time lag in forest regeneration, and by the transaction costs, i.e. the costs in transferring, defining and protecting property rights of land and forests. The institutional issue is specially addressed throughout this article because the “exclusion cost”, i.e. the ex post cost of transaction in property rights of land and forests, is relatively large compared with other aspects of property protection. Consequently, active forest management is not economically justified on a large part of land which otherwise should be under active management. This article concludes with a preliminary forecast of the future trend in China’s forests and policy implications on future forest development.