Copyright © The Age Company Ltd 2000
November 18, 2000
MATT RIDLEY

Sir David Attenborough's new television series urges us to care more about the extinction of wildlife through the loss of tropical forest.

The problem is, caring is easy; acting is hard. Many of us wish rainforests were not cut down. But does anyone in the West actually send cash to Brazil to buy a piece of forest for a native tribe? No. When Sting did exactly that, it had the opposite effect: the tribe sold the forest to loggers and bought a plane with the proceeds.

In the rainforest, economic incentives point in the wrong direction. Local people can make more money by cutting down forests, especially communally owned ones, than they ever could by preserving them.

Environmentalists have only one answer: abolish economic incentives, or, as they would put it, bring about a change in global consciousness. Unfortunately, this is about as realistic as the recommendation from their intellectual predecessors, the Puritans, that we all cease sinning.

But now something that would change the economic incentives has appeared. This week in The Hague, the United Nations meeting on climate change will decide whether to allow the planting or protection of forests to "count" as a means of reducing carbon-dioxide emissions. In other words, because growing forests breathe in carbon dioxide and breathe out oxygen, a polluting industry in the rich north may be allowed to invest in tropical trees instead of cutting its carbon-dioxide output.

This "clean development mechanism" was tabled at the insistence of the United States in 1997. It was bitterly opposed by the European Union and - shamefully - will again be this week. The Europeans, in thrall to the richest pressure groups, have a dogmatic objection to anything that smacks of the market. They also cannot imagine environmental actions that are not punishments. Something that allows polluters to go on polluting just does not sound enough like pain.

Yet emissions trading is not just theoretically sensible; it also works in practice. It puts a cost on all emissions, whereas traditional pollution laws grant free rights to pollute for those who stay below the legal limit. And it allows the market to find the cheapest mechanisms for cutting emissions.

When it was first proposed in the late '80s for controlling sulphur-dioxide emissions in the US, it was criticised by almost all environmentalists on the same grounds as the Europeans criticise it today. Yet it brought emissions down more rapidly and cheaply than anybody had predicted. It has since foundered, but only because of attempts by several state governments to outlaw it.

In the case of carbon trading, it is not the effectiveness in reducing carbon-dioxide emissions that matters (I suspect new technologies will do that quicker anyway), but the opportunity it suddenly presents for preserving the rainforests by changing local incentives. National parks are never going to be the answer in land-hungry countries with cash-strapped governments. Handing Brazilian peasants a lucrative livelihood for replanting their local patch would both benefit them and salve our conscience.

So why are Greenpeace, Friends of the Earth and the other usual suspects so adamantly opposed to carbon trading? They give plenty of reasons, none of which stack up. Their real reason is vested interest. They don't like private solutions, between private parties, to environmental problems, because that leaves no role for them. Their stock-in-trade consists of stunts, which are ostensibly to demand a change in government policy, but which are just as much about raising funds through free media publicity.

If the rainforest is saved by a whole web of private deals between polluters and peasants, environment groups have nothing to offer. Nor does government, except to hold the ring and ensure sensible rules are observed.

Markets produce public goods as a side effect of seeking to satisfy self-interest; pressure groups profess to seek the public good while really pursuing self-interest. Error: Unable to read footer file.