Collective action and tropical deforestation

Views tropical forests as providing a number of outputs for the host country and the world at large. Activities to curb deforestation yield private goods, local (country‐specific) public goods, and global public goods. Markets can operate with respect to the private goods, while nations are motivated to strike bargains with one another with respect to the country‐specific public goods. Inefficiency or suboptimality stems from the global public goods that preservation activities of one country confer on another. Collective action at the transnational level is needed to address these global public goods. This suboptimality can be attenuated if the developed countries establish property rights to genetic material gathered from the rain forests. Much can be done to promote allocative efficiency and these actions should be accomplished prior to the institution of a supranational linkage. Since the bulk of the global public benefits are derived by the developed countries, they are in a weak bargaining position with respect to the shrinking rain forests. An early agreement is in their interests even if the bargain favours the tropical countries.