A Brief Note On The And Its Effects On The Environment

2221 Words Nov 30th, 2014 9 Pages
III. Proximate Causes
Misallocation
Misallocation, by definition, is the process of incorrectly assigning or allotting something. Without context, misallocation could be no big deal, something easily fixable—just re-assign whatever it was that was incorrectly assigned to begin with. However, in economics, misallocation specifically refers to prices being incorrectly assigned, something that is not easily fixable. In Indonesia, what is misallocated is the price of the forest and all of its resources, which occurs because deforestation results in economic growth, which is only possible because the wrong prices are placed on resources extracted from the forest. As stated above, deforestation results in economic growth which comes primarily from the production of palm oil and illegal logging for pulp and paper products. These products are highly valued worldwide, with demand for palm oil specifically expanding by nine percent each year. Without any other knowledge on the subject, many might believe this is a good thing: high value must mean the government will want to protect the resource, sustaining the land to allow for indefinite production. Regrettably, this is not the case. Instead, the government incentivizes the destruction of the forest so that the most amount of palm oil can be produced in the shortest amount of time. Scholar Robert Repetto explains that, “GDP is a short- term measure of economic activity.” With economic activity as the only measurement considered…
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