Jamaican deforestation and bauxite mining – the role of negotiations for sustainable resource use

Abstract

Bauxite mining is considered to be one of the most significant reasons behind deforestation in Jamaica. During the last decades, large areas of forest have been cleared on the island due to open pit mining for bauxite. Because private landowners own the bauxite land, the operating mining companies are in many cases forced to bargain with the private landowners to obtain access to the desired land. Several economic theories present solutions to the problem of sustainable resource use. The purpose of this paper is to examine if the Coase theorem can be applied to analyze if the deforestation caused by bauxite mining in Jamaica can be amended towards optimal resource management. The paper concludes that there exist no practical obstacles for bargaining to take place. However, since the market for bauxite mining is not characterized by perfect competition, an efficient allocation of the Jamaican forests according to the Coase theorem is not achieved. Yet we find that the antiquated Coase theorem can help us gain knowledge into some fundamental aspects of the prevailing market conditions surrounding Jamaican bauxite mining.

Keywords:

• Deforestation
• Coase theorem
• Bauxite mining

Notes

Christer Berglund is currently visiting researcher at IIASA, Laxenburg, Austria. Corresponding author Tommy Johansson works at the Swedish Energy Agency, 631 04 Eskilstuna, Sweden. Email: tommy.­[email protected]

In this paper, only allocative efficiency is considered, which is achieved when resources are allocated in a way that allows the maximum possible benefits from their use. This is different from productive efficiency, i.e., when output is being produced at the lowest possible unit cost (Boutiga, 2002).

Coase received the Nobel Prize in Economics in 1991 “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy” (The Nobel Prize Internet Archive).

Ecosystem characterized by a dense and extensive tree cover, usually consisting of stands varying in characteristics such as species, composition, structure, age classes, and associated processes. Forests may include meadows, streams, fish, and wildlife (Forestry Department, 2001b).