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Deforestation represents one of the most significant environmental challenges in the contemporary world, and its economic evaluation has increasingly become a focus within the field of ecological economics. Unlike traditional economics, which primarily emphasizes market transactions and private costs, ecological economics considers both the social and environmental consequences of human activities, recognizing the existence of externalities that are often ignored in conventional economic models. One such critical externality is the Marginal External Cost (MEC) of deforestation, which refers to the additional cost imposed on society and the environment due to the incremental loss of forested land. These costs are not borne directly by the parties involved in the deforestation process but are instead shifted to wider society in the form of reduced ecosystem services, biodiversity loss, soil degradation, and contributions to climate change. The concept of Marginal External Cost can be illustrated by examining a case study from the Amazon rainforest, one of the world’s largest and most ecologically significant forests. In recent decades, the Amazon has faced extensive deforestation driven largely by agricultural expansion, logging, and infrastructure development. According to data from Brazil’s National Institute for Space Research (INPE), the region has experienced deforestation rates fluctuating between 4,000 and 10,000 square kilometers per year over the past two decades. While the immediate benefits of deforestation are often quantified in economic terms—such as the profit from timber sales or increased agricultural output—the environmental costs, particularly the MEC, remain largely unaccounted for in traditional economic analyses. The Marginal External Cost of deforestation in the Amazon can be illustrated through several ecological and economic dimensions. Firstly, deforestation results in the loss of carbon sequestration capacity. Forests act as carbon sinks, absorbing large amounts of CO2 from the atmosphere. When a hectare of forest is cleared, not only is this capacity lost, but the stored ______ ______ ___ ____ __________ __________ ____ ____.
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