Is there too much or too little natural forest in the Atlantic Zone of Costa Rica?

Deforestation rates in developing countries are often regarded as excessive , despite the lack of a satisfactory economic benchmark to evaluate this cl aim. This paper provides such a benchmark for a particular region in Costa Rica. The monetary value of the various functions performed by tropical rai nforests is estimated and used in a conventional optimal control model to c ompute the globally optimal natural forest stock in the Atlantic Zone of Co sta Rica. The results indicate that the current forest stock is suboptimall y large, suggesting that promoting further forest conversion can increase e conomic welfare. The current stock would be near optimal only when (i) the annual benefits of carbon fixation are extremely high and (ii) the governme nt of Costa Rica would be fully compensated for this positive externality.