Box 5 - Restricting trade in tropical timber

One especially unconvincing case for trade restraints on environmental grounds involves tropical timber. A number of groups have called for export or import restraints on tropical timber because of various concerns, including the effect of commercial logging in alienating the land of aboriginal peoples living in tropical forests, in contributing to the loss of genetic diversity of timber species and to the potential extinction of plants and animals, and in reducing the absorption of CO2 from the atmosphere.

Attention to date has focused on tropical log trade. To what extent would a general ban on trade in tropical logs reduce deforestation? The answer is: hardly at all, for the following reasons:

• only 0.5 per cent of log production in developing countries is exported in log form.[1]:

• a ban on log exports would simply encourage logs to be sawn and perhaps processed into panels before being exported from developing countries (but with more wasting of timber and other resources because of relatively poor sawmill technology and management):.[2]

• even if a ban on trade were extended to include sawn wood and wood panels made from tropical logs, it would have only a minuscule effect on felling, because even the sum of log plus processed timber exports amounts to less than 1 per cent of the trees felled in developing countries:

• through lowering the price of tropical timber, such a ban would reduce the incentive to protect existing forests and to establish new ones in developing countries:

• four-fifths of trees felled in developing countries are used as fuel directly or in the form of charcoal. This is largely because people are too poor to be able to purchase other fuels such as kerosine and need, in any case, to clear land (often slash-and-burn style) to be able to produce food for their growing population in the absence of enough paid employment opportunities: and
• little more than half the world's timber comes from tropical countries, so attention also needs to focus on forest management in industrial countries.

Should a developing country nonetheless take account of the concerns of other (including industrial) countries when determining its policy on forests? A country with a low ratio of carbon emissions per hectare of forest is effectively exporting, free of charge, "carbon absorption services" to the rest of the world. However, since it is not paid for those services (and for maintaining wilderness areas and a diversity of species), it has little or no incentive to take such services into account in deciding on the optimal management of its forest resource. The argument that it should maintain its forests because "they belong to the world at large" is unpersuasive to many people. After all, the argument goes, almost 80 per cent of the greenhouse gas emissions resulting from human activities are generated in industrial countries, so it is those countries which should look to solutions to global warming rather than ask lower-income countries to provide the solution.

Reducing emissions of greenhouse gases is obviously the most direct way to reduce the threat of global warming. But if deforestation is considered undesirable for other reasons, then some form of international agreement and possibly compensation to lower-income countries which are home to large forests need to be considered. Perhaps the most effective way to slow the deforestation of tropical countries, however, is to promote employment and income growth for rural people in those countries, for example through economic policy reform at home and access to markets abroad.

[1] These and other trade data are taken from the Food and Agriculture Organisation's Forest Products 1978-1989, Rome, 1991.

[2] In 1978 more than 95 per cent of Indonesia's wood exports were in the form of logs, whereas now more than 90 per cent are in the form of sawn wood and wood panels.

In its 10 August 1991 edition, The Economist noted that Swedish sawmills use 98 per cent of a tree whereas Malaysian mills use only 40 per cent.