The impacts of rural industry on the native forests of papua new Guinea

135 Pacific Economic Bulletin volume 25 number 3 © 2010 The australian national university As a leading member of the Coalition for Rainforest Nations, Papua New Guinea (PNG) has a vested interest in proving to the international community that it could reduce the volume of greenhouse gas emissions from the process of deforestation and forest degradation if suitable financial incentives were to be provided for such action. An assessment of the baseline or ‘business-as-usual’ scenario for emissions from this process is therefore crucial to current debate about the relationship between national forest policy and measures taken to mitigate the impacts of climate change. This paper shows that the PNG government’s own attempts to construct a baseline scenario for the contribution made to this process by logging and agribusiness companies have ignored a number of significant supply-side constraints on their economic activities, both in the past and in the future. This can be understood as the result of a perverse incentive for the governments of ‘rainforest nations’ to exaggerate the past, present and future rates of deforestation or forest degradation in order to claim a reward for reducing greenhouse gas emissions from a fictitious or exaggerated baseline to a level which approximates the real trajectory. Colin Filer is Convenor of the Resource Management in Asia-Pacific Program in the Crawford School of Economics and Government at The Australian National University. The impacts of rural industry on the native forests of papua new Guinea