Economics Study Questions for Week 9

Consider the promotion of sustainable forestry as a problem in disseminating a clean technology. For the purposes of this set of questions, we will assume that there are only two ways to log: plantation forestry, in which a stand of trees is grown to its economically optimal age, clear cut, and replanted to continue the rotation; and sustainable forestry, characterized by selective cutting, mixed-age stands, and management for biodiversity and forest ecology functionality.

1. Suppose that plantation forestry has been the dominant method of harvesting for 50 years. How might "path dependence" confer an advantage to it and a disadvantage to sustainable forestry? Be as specific as possible: speculate on the channels through which path dependence might operate in this instance.

2. What are some examples of complementary technologies that might have grown up around plantation forestry? (Hint: we heard an example of this on one of our field trips during week 8.)

3. According to Goodstein, a clean technology might remain unused even if it is equally or slightly more profitable, due to transition costs. Being as specific as you can, what might be some of these transition costs created by a shift from plantation to sustainable forestry?

4. Would sustainable forestry constitute an example of pollution prevention as opposed to pollution mitigation? Give examples.

5. Using the methods discussed by Goodstein, devise a multifaceted government plan to promote the adoption of sustainable forestry methods.