Economic incentives for tropical forest preservation: Why and how?

Scholars and environmentalists in the industrialized nations have repeatedly deplored the destruction of tropical forests as a byproduct of economic development. Their position is based upon scientific, economic, and ethical arguments. Proponents of economic development from the tropical nations recognize that its immediate benefits are enjoyed by their own relatively poor populations while the benefits of habitat preservation are enjoyed by the world as a whole. So far, few institutional mechanisms have been developed that can reconcile the competing perspectives. In addition to reviewing the arguments in favor of and against habitat preservation, this paper proposes some innovative institutions that can both satisfy developmental aspirations and account for the global benefits of habitat preservation.