Forests Are the Best Case Studies for Economic Excellence

In the eighteenth century the foresters of Prussia and Saxony decided to turn their woodlands into a crop. They cleared the tangled old forests and planted neat rows of Norway spruce, all of one age, which could be counted, measured and harvested on a schedule. The first rotation was a triumph of yield. In the second and third rotations the trees grew poorly, the soil sickened and the German language acquired a new word for forest death. The political scientist James Scott later used the story as a parable. The topic reverses the lesson and asks what the forest itself, in its untidy abundance, can teach about economic excellence.

The first lesson is that a forest wastes nothing. A fallen leaf is not rubbish but a meal for fungi, insects and bacteria, who return its nutrients to the soil, from which the roots draw them up again. The dead tree feeds a thousand species before it disappears. Engineers and economists now talk of a circular economy in which the output of one process is the input of another, and they are in effect proposing to copy what forests have done for hundreds of millions of years. The linear economy that extracts, uses and discards is the odd one in the history of life.

The second lesson concerns diversity. A natural forest contains hundreds of species of trees, thousands of insects and uncounted microbes, and this variety provides insurance. When a pest strikes one species, others fill the gap, and the system keeps working. Ecologists such as David Tilman have shown in long field experiments that plots with more species are more productive and more stable through drought. This is the logic of the investment portfolio. Economies that depend on a single crop, a single export or a single supplier have the weakness of the spruce plantation.

Cooperation is a third theme. Beneath the soil, fungal threads connect the roots of many trees, trading sugars for minerals. Suzanne Simard and others have reported that these networks may carry nutrients between trees, though the extent of the sharing and its benefit to the forest remain debated among scientists. What is clear is that the forest is not simply a war of all against all. Competition is real, but it is embedded in relationships of mutual dependence. The most successful species are often those that make good partners.

Competition is real, but it is embedded in relationships of mutual dependence.

Forests also supply services that markets do not price. In 1997 Robert Costanza and colleagues estimated that the world's ecosystems provide benefits worth many trillions of dollars each year, such as water purification, flood control, pollination and carbon storage, more than the entire global output of the time. The figure is rough, and the idea of putting a price on nature is contested, but the point is hard to dispute. The forest that holds the hillside above a city is a piece of infrastructure, and when it is cut, the city pays for the dams and treatment plants that replace it.

India offers instructive cases. Since 1990 the system of Joint Forest Management has given village committees a share in the produce of the forests they protect, and in states such as West Bengal degraded sal forests were regenerated by communities that had a stake in them. The van panchayats of Uttarakhand, formed in the 1930s, show local governance of a shared resource, of the kind that Elinor Ostrom described in work that won her the Nobel Prize in Economics in 2009. When people who depend on a resource also control it, the forest and the village tend to prosper together.

India's sacred groves, patches of forest protected by local custom around a shrine, number in the tens of thousands and preserve species that the surrounding land has lost. They are a reminder that conservation has often been an economic institution before it was a scientific one.

Costa Rica provides a national example. After deforestation cut its forest cover to roughly a quarter of its territory in the 1980s, the government began paying landowners to keep trees standing, funded in part by a tax on fuel. Forest cover has since recovered to more than half, and the country has built an eco tourism industry on the result. The policy treated the forest as an asset that yields a flow of benefits, which is precisely how an economist would treat a productive factory.

Yet a forest is not an economy, and the analogy has limits. A forest runs on free solar energy, which arrives every day without being mined or purchased. Human economies have relied on stored fossil energy that is finite and that warms the atmosphere, and a circular economy requires energy to recycle. A forest has no poor and no rich, no justice to be done, no wages to be paid. It is also not especially efficient in the sense that economists use, since most seedlings die and most acorns are wasted. Nature's excellence is the excellence of survival over time and not the maximum output in a year.

For this reason the best case may be that the forest is a mentor and not a model. It teaches time horizons, since an oak plants itself for the next century, whereas a quarterly report plans for ninety days. It teaches humility, since systems that look inefficient to the eye often hold hidden functions, and the cost of removing them is learned late. It teaches that stability comes from diversity and not from control. An economy that took these lessons would measure its health by the condition of its capital, including natural capital, and not just by the flow of income.

The difficulty is that the lessons are easier to state than to follow, and the party that gains from ignoring them is rarely the party that pays. The logger who clears the slope is paid today and the town below suffers in a decade. A forest cannot negotiate, vote or invest, and speaks only through the consequences of what is done to it. Whether human institutions can learn to listen before the consequences arrive is the question the forest cannot answer for us, and it has all the time in the world to wait for the reply.