Subsidizing Green Deserts in Southern Chile: Between Fast Growth and Sustainability of Forest Management

The expansion of the forest industry in Chile has generated a significant impact on the ecological and socio-cultural balance in central and southern Chile since its strong development in the 1980s. Like every human activity, and especially those of industrial character, it is necessary to constantly assess both the positive and negative impacts it generates as a consequence. Forest public policies enacted during the 1980s seem to have been successful in helping to develop a strong forest sector that has been deemed as one of the engines of economic development in Chile for the last 40 years. But from the point of view of ecological economics and the environmental sciences there is a growing awareness that these policy reforms have had a significant impact on the environment and the ecosystem services it provides, which in turn has a direct negative relationship with the welfare of the people living in communities nearby the forest plantations. Therefore, the negative impact of these policies can be considered as a cost to society. However, no prospective evaluation has been made about the welfare enhancing characteristic of the structural reforms in the forests sector developed in Chile. In this chapter a simple static model of two sectors, one for conservation the other for resource extraction, is constructed. Against this background forest policy reforms of the 1980s are contrasted to evaluate their effect on conservation, cash income for consumption, ecosystem services provision and welfare enhancing characteristics. It will be shown that until a certain extent the extractive sector can help to achieve a necessary minimum income (and in so doing minimum standards of consumption) even though these policies had adverse effects in conservation and ecosystem services provision. Conditions under which social benefits of the policies subsidizing the forest sector are rather low while social costs are high are presented.