During the Fifth International Faustmann Symposium, I had a pleasure to listen a presentation, and meet personally professor Sun Joseph Chang, from Louisiana State University (USA). Professor Chang agreed for short interview, where we discussed, among others, tropical rainforest conservation, forest valuation using Faustmann formula or forests and their problems in Xishuangbanna region (Yunnan Province, China).
– First, thank you professor Chang for accepting the interview invitation. On behalf of Forest Monitor readers’, thank you for sharing your knowledge and experience.
I remember from your presentation about tropical rainforest conservation, that you mentioned that instead of forest ecologists, forest economist should research tropical ecology. Could you explain why?
– Tropical rainforest conservation is fundamentally a land allocation problem. We, as forest economists, deal with problem of scarcity. In production economics, we are interested in how to use limited resources to get the most output value. In consumption, we are interested in how to spend the limited amount of budget to get the most utility. Tropical rainforest conservation, in this sense, is nothing but a consumption problem of allocating land base and budget. Do we want to allocate tropical rainforests for conservation instead of material consumption? Do we want to allocate limited funds to support tropical rainforests rather than other benefits may it be public health, transportation, education, etc.? Ecologists are fundamentally interested the ecological processes and functions, ecosystem itself and the impact of changes to the ecosystem. Money and resource allocation are the farthest things on their mind. Their role and /or contribution are to remind the people how important or valuable these tropical rainforests are, not how much of them we should conserve. When they dominant the efforts on tropical rainforest conservation, they are ill equipped to do that and only bad results could happen. That is why I said, wrong people, bad results.
– What is your opinion about environmental organizations, which demand often large public areas, which do not belong to them, to exclude from forest management, only for conservation purposes? Shouldn’t they buy or rent such lands from public authorities, if they really want to protect them, instead of demanding something, what does not belong to them?
– This is a two part question. First, it deals with the proper role of the public forests or public land in general. In the United States and Scandinavian countries, most of the forests are privately owned. In the US it is about 67%, most of them dedicated to material production, primarily timber. That is not to say that private landowners are not interested in other benefits, such as fish and wildlife, outdoor recreation, environmental amenities. They take these benefits into consideration in their decision making. Given that private forests are profit driven, then the public forests should not be in the businesses of competing against the private sector. That is to say public forest should not be managed for the same purposes as the private forests. For example, public forest should not be competing against private landowners in timber production, purely to make money. Resource conservation in the broad sense would be the appropriate role for public forests.
The second part deals with the role of market economy and democracy in a modern society. Simply stated, market economy and democracy are the two sides of the same coin. In a market economy, we choose the products and serves we want with money. In a democracy, we choose ideologies and candidates with votes. The common currency in both cases is the freedom to choose. Environmental organizations push their agenda (both ideologies and candidates who support their positions) through the democratic election process. For example, they pushed the idea of Wilderness Area in the public land. We now have extensive areas of wilderness areas in the United States. One of the reasons that we could afford to do that is because we are producing so much timber in the private sector. We don’t need the public land to produce any meaningful amount of timber for the market place. I can think of a situation, if timber becomes very expensive and scarce then there will be a push for the public sector to get into timber production.
I should also mention that some environmental organizations are actively involved in buying forest land from private landowners for conservation purposes. The Nature Conservancy comes to mind. It has protected 20 million acres of land through both outright purchases and easements for conservation purposes.
– Recently, I read your article about forest valuation under the generalized Faustmann formula. You noticed that assumptions under the Faustmann formula, regarding the same stumpage price, stand volume, regeneration cost or interest rate, are far different from reality. You proposed a new approach, in order to determine the exact valuation of the forest anytime between the beginning and end of a rotation when their values are different.
Personally, I think that forest valuation is an important issue, present all over the world. Could you tell us more about how forest valuation looks now in United States, and how your new approach can help timber investment and management organizations to value forests properly?
– Usually, in forestry it takes several years even decades before a new and technically superior method is widely accepted and applied by practitioners. However, the competition in the timberland market is severe enough that I would not be surprised that in a few more years it will be standard practice in forestry in the United States. I get the impression that some timberland investment and management organizations are already using the formula to gain a competitive advantage in the market place. Those organizations which fail to do so would eventually face the reality of unable to acquire the desired timberland because someone else outbid using the new and superior formula.
– At your presentation, you described very well the forestry situation and its main challenges in Xishuangbanna region. Could you characterize it again, and describe main forestry and social problems in this beautiful region in China?
– Xiahuangbanna is located between 21°08′~22°36′ north in latitude, 99°56′~101°50′ east longitude. It is the transition zone between Asia Continent and The South East Asian Peninsular. Occupying an area of 19184 square kilometers, Xishuangbanna thrives with 25% of the animals and 15% of the plants of China. It is truly the “Animal Kingdom” and “Plant Kingdom”.
Although it comprises just 0.2% of China’s land mass, it contains 25% of the nation’s higher plant species, 36% of its birds, and 22% of its mammals, according to biologists at Yunnan’s Kunming Institute of Ecology. Globally, this is the only part of the world between 21°~23° north in latitude that is covered by lush forests. Everywhere else, it is either deserts or arid land.
The rapid expansion of rubber plantations in Xishuangbanna over the last 20 years has caused serious concerns about its impact on the environment, ecology, hydrology, and biodiversity.
Between 1976 and 2003, the forest cover was reduced from 70% to 50% of the land area. The area of tropical seasonal rainforests in Xishuangbanna bore the brunt of the conversion, shrinking 139,576 hectares (67%).
The lush tropical rain forests also are the primary habitat of wild Asian elephants. Currently, there are about 300 of them in the border area between China, Laos, and Thailand.
As a CITES class 1endangered species, the protection accorded them has resulted in a steady, about 1% per year increase in its population. Consequently, they need more tropical rainforests as their preferred habitats.
As a primary tourist destination in China, people flock to Xishuangbanna for nice weather, clean air, exotic culture, distinctive flora and rare fauna. Wild elephants are a top draw. Few, if any, tourists come to see rubber plantations.
Xishuangbanna government faces a dilemma. On the one hand, rubber plantations give rise to the rubber industry in Xishuangbanna, creating along the entire industrial chain, jobs and income for many of its residents. On the other hand, tropical rain forests are the main draw to tourists visiting the area. Can they trade some jobs and income in the rubber industry for jobs and income in the tourism industry? If so, how much do they have to pay to retire some rubber plantations on marginal land? At the same time, how much do they have to pay the landowners to convince them not to convert the remaining tropical rainforest into rubber plantations? The objectives of my study were to address the last few questions.
I grew up in Taiwan and in 1972 graduated from the National Chung Hsing University with a B.S. degree in forestry. After two years of military duty in the Taiwanese army, in 1974 I went to Harvard University for graduate study and received my master’s degree in one year.
I then went to the University of Wisconsin – Madison and in 1979 earned my Ph.D. in forest economics and management. Between 1978 and 1990, I taught at the University of Kentucky and since 1991 I have been a professor of forest economics, management, and policy at the School of Renewable Natural Resources, Louisiana State University.
In addition to my teaching and research on campus, I have been serving as an editor of Forest Policy and Economics, as well as an associate editor of Journal of Forest Economics and Forest Ecosystems.
Most of my research revolves around:
- Forest management, valuation, and taxation,
- Forest economics dealing with timber supply and demand as well as understanding the stumpage price behavior.
- CO2 emissions and its solutions.
- Reforestation management
- Log scanning with X-ray CT scanner and sawing optimization with TOPSAW.
Main Photo: Rubber plantations in the foreground and tropical rainforests in the background.
Photo credit: Sun Joseph Chang