Rain Forest for sale: 2 bags of sugar and some hoes.

It is quite clear which side of this deal had the most economists. This is an example of corporate social responsibility gone mad.

But how do you price such assets in such inhospitable places. Perhaps this was the market price although I suspect not.

The full Guardian article makes good reading. I have picked out a select few paragraphs.

Vast forests with trees each worth £4,000 sold for a few bags of sugar

Lamoko, 150 miles down the Maringa river, sits on the edge of a massive stretch of virgin rainforest in central Democratic Republic of Congo (DRC). On February 8 2005, representatives of a major timber firm arrived to negotiate a contract with the traditional landowners.

Few in the village realised that the talks would transform all their lives, but in just a few hours, the chief, who had received no legal advice and did not realise that just one tree might be worth more than £4,000 in Europe, had signed away his community's rights in the forest for 25 years.

In return for his signed permission to log thousands of hectares for exotic woods such as Afromosia (African teak) and sapele, the company promised to build Lamoko and other communities in the area three simple village schools and pharmacies. In addition, the firm said it would give the chief 20 sacks of sugar, 200 bags of salt, some machetes and a few hoes. In all, it was estimated that the gifts would cost the company £10,000.

It was the kind of "social responsibility" agreement that is encouraged by the World Bank, but when the villagers found out that their forest had been "sold" so cheaply, they were furious..

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But according to a Greenpeace report released today, Lamoko did better than many communities. Some contracts seen by the Guardian show only promises of sugar, salt and tools worth about $100 (£55) in return for permission to log. Others have reported that pledges made three years ago have still not been fulfilled. The report, which took two years to compile, claims that industrial logging backed by the World Bank is now out of control. "Younger people feel that elders have failed to look after the long-term interests of the community," it says.

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It is believed that 20 foreign-owned forestry companies are active in the DRC, and that Chinese and other logging groups are also seeking to gain concessions. The companies should be prevented from doing so by a moratorium negotiated by the World Bank in 2002 as part of an initiative to control the forestry industry.

The "China" issue is an important one that will become increasingly prominent. We will post on this again.