Ecol-Econ,
It's no newsflash; only a secret, but to stop the clear-cutting of all
the world's forests the interest rate must be kept below the
sustainable yeild on the slowest growing forest. If the interest
rate is too high it will pay more to clearcut and buy bonds than
it would pay to manage the forest for sustainablity. High interest
rates and corresponding high rates of return on investment are
popular with investors, but high rates of return will always
prevent stewardship of natural resources.
....
Barry Brooks
http://home.earthlink.net/~durable/
<Eva
<Wood is one of the few renewable resources,
<so there is no question about the need to
<maintain forests. Most irreversible damage is done
<now in third world countries, I don't think
<interest rates have a big role to play there.
<I hate to sound repetitive, but market/profit
<system and the lack of alternative energy
<will keep the destruction going.
<Eva
If interest rates went down below 1% as required
to stop the destruction we would not have the
market/profit system. With very low rates loans
would have to be limited by policy rather than
profit. The concept of low interest/replacement rates
is not a fix for the system by itself. It is an invitation
to see the need for basic change.
If interest rates don't play the role I suggested
in my posting in 3rd world countries it means that
the owners in those countries are not smart enough
to make the highest profit, or they don't act from
profit motivation. They will learn soon, or be
forced by international forces to play the game.
Barry
<Your assumption here is that the money earned from the cutting is
<invested in bonds. ....
<To create in interest rate that is lower than the rate of forest growth
<would need an effective interest rate of somewhere in the range of .25%
<(real interest - expected rate of inflation). This is not possible in
<an economy based around the issuance of debt.
<Bernard Schulmann,
That is not my assumption. Read it again at the top of this message. I
was just choosing bonds as an investment with safety and the lowest rate
of
return to indicate the alternatives the forest owner faces. Of course,
any investment paying more would be a good place for the clear-cut
capital.
Perhaps it would be required to keep the rate of return on any
investment
below .25%. If this is impossible is just shows the the market/profit
system
can never function properly.
Every economy is based around the issuance of debt. The problem with low
rates is that bankers and policy makers would have to make hard
judgements
about which loans to make based on other factors than just money. That
is
exactly what is lacking in our system which thinks the pursuit of short
term profit is the same as planning. It is really an avoidance of
planning.
Barry Brooks
http://home.earthlink.net/~durable/
