What is the economic impact of global deforestation?

Global deforestation has significant economic impacts, including loss of biodiversity, reduced carbon sequestration, and potential disruption to global trade.

Deforestation, the permanent removal of trees to make room for something other than forest, is a global issue with significant economic implications. One of the most immediate impacts is the loss of biodiversity. Forests are home to approximately 80% of the world's terrestrial biodiversity. This biodiversity is not just important for maintaining the health of the planet, but also has significant economic value. Many pharmaceuticals are derived from plant species found only in forests, and the loss of these species could have significant implications for the pharmaceutical industry. Additionally, many people rely on forests for their livelihoods, either directly through activities like logging and hunting, or indirectly through tourism. The loss of these forests can therefore have significant economic impacts at both a local and global level.

Another major economic impact of deforestation is the reduction in carbon sequestration. Forests play a crucial role in the global carbon cycle by absorbing carbon dioxide from the atmosphere and storing it in their biomass. This process, known as carbon sequestration, helps to mitigate the impacts of climate change. However, when forests are cut down, not only is this important service lost, but the stored carbon is released back into the atmosphere, contributing to further climate change. The economic costs of this are potentially enormous, as climate change can lead to a range of costly impacts, from increased frequency and severity of natural disasters to reduced agricultural productivity.

Finally, deforestation can have significant impacts on global trade. Many countries rely on forest products for a significant portion of their export earnings. For example, in 2019, the value of global exports of wood and wood products was over $300 billion. However, deforestation can lead to a decline in the availability of these resources, potentially disrupting global trade and impacting the economies of both exporting and importing countries.

A-Level Economics Tutor Summary: Global deforestation harms the economy by causing loss of biodiversity, reducing carbon absorption, and affecting global trade. Forests, which house most of the world's land biodiversity and are key to fighting climate change, are being destroyed, impacting everything from medicine to jobs. This not only releases stored carbon, worsening climate change, but also threatens the trade of forest products, affecting economies worldwide.