Scarcity and Safe Operating Spaces: The Example of Natural Forests

Abstract

Scientists suggest placing planetary boundaries on human-induced threats to key Earth system sinks and resources. Such boundaries define a “safe operating space” on depletion and pollution. Treating any remaining “space” as a depletable economic asset allows derivation of optimal and actual rules for depletion. We apply this analysis to natural forests, and find that the critical asset is tropical forests. The size of the safe operating space and assumptions about the annual rate of tropical deforestation matter significantly. In the most critical scenario, actual depletion could occur in 11–21 years, whereas optimal depletion is 65 years. The optimal unit rental tax equates the actual price with the optimal price path. The tax rate and its amount vary with the depletion scenario and increases over time. However, if the environmental benefits of tropical forests are sufficiently large, the remaining safe operating space should be preserved indefinitely.