Indonesian forest fires

Disincentivising the Indonesian forest fires

Indonesian forest fires
We didn’t light the fire…

Just saw a small BBC investigative piece on Indonesian fires. These fires cover the whole of SE Asia in smog and increase health risks for almost a billion people.

Under pressure from neighbouring countries, and International organisations, Indonesia has announced measures to prosecute those who light these fires. That’s the kind of measure you take when you want to send an impression of action, without disturbing the status quo in any meaningful way. Identifying, and prosecuting, the fire creators 1 is hard. Even more so when the local law enforcement earns more in handouts from the forest burners than from their official salary. But at least the western nations will be quiet for a while, right?

Here’s first of two better, much more effective deterrent policies 2:

Any land (plantation or forest) that is burned is disallowed for plantation of any sort for a period of 20/30/40 years from the time of last fire.

The period may be defined by how long it takes a forest to grow to a sustainable state. But that’s not the main purpose. The main purpose is to disincentivise clearing land by burning – both existing plantations and new forest lands – by taking them out of circulation for a really long time.

Also, thanks to advances in drone and satellite technologies, it is much easier to identify parcels of land that were burnt, when they were burnt, and if they are being planted on. All without having to rely on local personnel who may be bought or bullied.

However, this policy requires the Indonesian government to actually want to do something. Anything. At the moment, they don’t. So, here’s another policy idea:

Punitive tariffs on raw and processed produce exports from Indonesian plantations based formulaically on the amount of area under fire, continuously aggregated over the preceding 20/30/40 years.

The tariff should be a large multiple of the difference in cost between clearing land mechanically versus clearing it by burning. This policy, like the first, removes the incentive of burning land, replacing it with an overwhelming, long-lasting cost. And, again like the first policy, the metric of implementation (area of fires) can be measured remotely using satellites without any need for feet on the ground.

If effectively executed, it should provide a strong enough incentive for the Indonesian government to act on the first policy.

Sadly, here is where it goes belly up. The key consumers of the produce (mostly palm oil, some rubber) of those Indonesian plantations – India, China and Europe – are too far to be impacted by the smoke. And in case of India and China, also too focussed on growth and economy to be bothered about the environment. On all levels – governments, corporates, and individuals.

To make it worse, Malaysia,  one of the countries most impacted by the smog, is itself a palm oil and rubber producer. So, not only can it not take any trade action against Indonesia, the fires that may be killing its citizens, are also reducing the costs for its competitor. Double whammy, if there was one.

That leaves just one forum for forcing Indonesia to take action – the much hated Trans Pacific Partnership trade pact. Malaysia and US are members. Indonesia wants to be. Perhaps, the accession negotiations will be used to curb this annual health hazard in Asia.

Hopes not high, but fingers crossed.

  1.  The proper term should be arsonists or pyromaniacs. However, both of them indicate a sense of randomness, chaos, or purposelessness to the intent behind lighting the fire. In this case, there’s none of that. The fires are carefully lit, their spread managed, and the outcome commercially harnessed. It needed a new term – fire creators it is, for now. 
  2. Yes, both these incentives are the ‘stick’ bits – creating huge disincentives for engaging in unwanted behaviour. There also need to be ‘carrot’ bits. Leaving those out for now. For a later post, or for someone else to post. 

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