15 Why Cost Is Important

As I read on the scientific data website: “Forest ecosystem is a critical node in an integrated systems approach to tackling global crises and achieving SDGs, which are the seventeen goals released by the United Nations that will contribute to the future of sustainable development. In particular, the forest ecosystem is responsible for crucial activities such as absorbing 30% of anthropogenic greenhouse gas emissions and producing wood fuel or charcoal to 2.4 billion people.”^[1] In the other hand, forests are recognized as the most important global repository of terrestrial biodiversity that is relevant to human lives, offering important resources including wood and other raw materials on earth. Besides, the forest ecosystem is very effective in regulating climate, conserving soil and water, as well as purifying air and eliminating noise. Specifically, forests play a major role in reducing the greenhouse effect, which is becoming increasingly serious as mankind enters the industrial age and considerable amounts of chemical fuel combustion have contributed to severe climate change. Throughout this process, forests are critical producers of oxygen and absorb carbon dioxide, along with other toxic gases. During the evolution of forest ecosystems, trees gradually absorb harmful gases and carbon dioxide via metabolism and release oxygen. Consequently, the global emissions of carbon dioxide and toxic substances could be controlled, while reducing the greenhouse effect and other associated environmental problems. Through these factual events and data, we could clearly see that people have become aware of protecting the environment. However, there are many shortcomings in the implementation of our programs to conserve the environment and forests.

On June 5, 1972, the United Nations launched the first discussion on the protection of the environment, negotiated the Declaration on the Human Environment, and officially began to implement plans to preserve the environment and forests. Since then, the state began to allocate funds to environmental protection agencies and started to implement forest protection programs on a case-by-case basis. Unfortunately, some of the initiatives were not perfectly matched by practical plans: many conservation agencies were unable to meet deliverable and forest conservation programs ended up failing. An analysis of Mahesh’s data reveals to us that “Conservation restrictions result in very significant costs to forest communities. When annualized, these costs represent 27-84% of total annual income for median-income Although some households have received compensation, we conservatively given the magnitude of compensation (based both on amount spent and valuation by recipients two years after the compensation was distributed) relative to costs, we argue that no one was fully compensated.”^[2] This example shows that there are many organizations that have started to protect forests encountered economic difficulties because of inefficient management of cost structures. In reality, unpredictable events are inevitable, but organizations can take advantage of economic models to compute and maximize Net Present Value (NPV), which refers to the difference between cash outflows and cash inflows over a period of time, based on current and future predictions. Therefore, controlling economic costs is key to achieving the goal of turning the uncontrollable into the controllable.

Only by controlling the economic costs of forest protection and effectively allocating each small amount can entities successfully achieve the goal of protecting forests. Following my reading of the book A Guide to The Valuation of Commercial Forest Plantation, I realized that the economy itself is defined by activities striving to allocate resources and achieve social goals. As such, monitoring economic costs allows organizations to maximize the return on investment and economic efficiency in the conservation of forests from land, labor, and other resources. At the same time, in a peaceful forest conservation movement, controlling economic costs allows the movement to be more convincing. It is also feasible to turn forest conservation into a sustainable activity. In this process, efforts would be invested to analyze the impact of all economic products on forest conservation from the perspective of individuals, companies, and governments. In addition, insurance could be granted to part of the private forest for incidences such as fire and other natural disasters. Any change in the forest crop will exert an impact on the market valuation. Insurance companies are expected to regularly calculate costs by measuring the age of the trees, the number of trees, and the level of risk in the surrounding environment to find the most suitable solution for insurance as well as the most cost-effective manner to protect the forest.^[3]