There are few legal and business practices which have caused as much controversy and public outcry, as privatization of forests. Other than the Ocean, forests are maybe the most important system to sustain life on this planet. Forests regulate weather, neutralize ecosystems and sustain life to the cellular level. So why would anyone privatize forests? In a nutshell, proponents of forest privatization argue that the resources are not being fully exploited. They argue, many neighboring nations and people are living in poverty and could achieve higher level of living with appropriate resources to unlock the full potential of Forests. In the following pages, we will identify the unique legal circumstances that allow this to happen, and look the issue of Forestation more in depth.
If Forests such are to be managed in a way that not only makes the locals better off, but creates growth opportunities for the government and private enterprises, why not go ahead and do it? Critics claim this is all bogus. They claim that by opening up the possibility of private business, this is all about the bottom line of the elite, and getting rich of something that belongs to everyone.
Truth is that the reason privatization of forests is gaining steam across the world, is because there is now enough evidence to sufficiently conclude that productive deforestation is not advancing at a fast enough pace. (Brown C, Valentine J. 1992) Deforestation (defined as “the permanent destruction of indigenous forests and woodlands for either productive or non-productive use”) by staying in most government entities (with a few exceptions such as New Zealand) is actually doing more harm than good by not achieving its potential.
Forests have essential economic and ecological benefits within themselves. They offer opportunities to extract wood, wood products and ecotourism among others. These commercial products and opportunities come side by side with employment prospects and chances for the local population to thrive. Forests also have benefits that go beyond the scope of materials which include creating a wonderful habitat of species, diverse and rich. The issue at hand however is that preservation, management and rehabilitation of forests has its costs. The opportunity costs that go along with development have to be subsidized by real capital from a source. If the capital from these private enterprises backs positive deforestation, in a regulated manner, then the pros certainly outlast the cons.
The Legal Process
Based on precedent, the first part of the privatization process of Forests, as it regards to law is create institutional enterprises. The Establishment of an institutional enterprise, founded by the government; serves the purpose of adequately establishing what the best use is for the forests in question, and for how much it could potentially be sold. Should the forests be sold as individual blocks? Combinations? These are decisions that the Government enterprise has to decide.
Forest privatization since the late 1980’s, when the highly successful New Zealand privatization took place (Brown C, Valentine J. 1992) has concluded that the best revenue stream for governments and private entities are accomplished by selling more than one single forestry estate. Based on precedent, the bidding for forest privatization is unique in that it allows the Government to tailor the forest land as to better suit the needs of potential investors. Why is this good for the Government and the local people? It allows the locals to gain profit that normally would be reserved to restructuring and later parts of the deal. (Ambec, S Hotte, L 2003)
An important issue to keep in mind is the legal importance of the government maintaining a piece of the forestation puzzle. Several nations have implemented a clause in which Government maintains at least 20% ownership of the forests. This has been successful because it...
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