Rainforest have been declining rapidly over the last few decades. There are various factors responsible for this decline, resulting in serious impacts on the environment and the economy. Critically discuss the causes of deforestations and solutions to it.

Deforestation appears to be a major problem in the world today. The disruption of natural rainforest causes damage to 13 million hectares of forest per year (Open University, 2014). Rainforest is a natural resource and can become exhausted if continue to be overused, leading to various implications in the environment and economy. This assignment will demonstrate the main factors responsible for degradation of the rainforest. It will also discuss possible solutions to this problem.

The destruction of the forests occurs due to various reasons. Mainly, it appears to be a result of private sectors’ decisions (Open University, 2014). Despite the vital matter of rainforest in ecosystem and obligations to future generations the objectives of private agents differs to one of society. Industrial logging for timber, as example, represent commercial value whereas the services like carbon sequestration, provided by forest, has no financial rewards therefore unlikely to be considered by private sector actors. Consequently, if there is no market cost for the forest recourses or, equally important, cost for their mismanagement it gives the private agents powerful incentives to use the scarce resources of the forest as much as possible without taking to account the impact of his actions on others. This demonstrates the market failure and shows the underlying cause of deforestation. People involved in economy might not know the damage that their action may be doing to other parts of economy. The concept of ‘Invisible hand’, where free market can work without any type of regulations, has failed (Open University, 2014). ‘For example, the producer would not know the impact on others without paying for it, nor the consumer buying the cheaper products would be aware if the product is environmentally friendly (Open University, 2014).

Poverty appears to be another reason for deforestation. Empirical studies confirm that population from poor countries, who depend on forest, have ‘higher discount rate’, therefore tend to deforest more (Open University, 2014). Also, the fact of borrowing in informal market, where interest rates are very high, makes them chase after short-term economic benefits. However, Word Bank examination (1999) challenged these views by showing that deforestation does not necessarily caused by poverty and that rural poor is likely to use forest in appropriate manner over the very long time under certain circumstances. For example, according to Ostrom (1990), identified conditions would be an effective system of sanctions or an inexpensive conflict resolution system (Open University, 2014).

There are several solutions to avoid a ‘tipping point’ of Amazon. To clear the area for cattle grazing and agricultural purposes the irresponsible landowners burn the trees of the rainforest, releasing carbon dioxide into the air. It can be one of the reasons of global warming. Forest recovers rapidly in absence of fires. Therefore, to prevent accidental fire the landowners encouraged to adopt fire prevention techniques and to avoid using fire as a managing tool (Open University, 2014). Furthermore, certification system is currently under development to encourage responsible land stewardship and to enable consumers to shop discriminately. For example, two non-governmental organisations in Brazil launched the Registry of Socioenvironmental Responsibility (Cadastro de Compromisso Socioambiental – CCS) to make production more transparent to buyers via website (Open University, 2014).

Another solution to deforestation would be the reducing the negative impact of logging in the forest (Holmes et al. 2002, Barreto et al.1998).Timber should be managed in sustainable way to prevent