Governing Illegal Logging and the Comparative Advantage

Abstract

Illegal logging has become a global issue because of its effects on biodiversity and climate change. In order to reduce illegal logging, many countries around the world have introduced regulations of international trade of forest products. This paper examines the effects of efforts aimed at reducing illegal logging on the comparative advantage of seven types of forest products by using the HOV model. The results show that measures against illegal logging have affected the comparative advantage of international trade in different directions. The number of regulations a country enforced to combat illegal logging has negative effects on its net export of charcoal and wood residues, but has positive effects on the net export of other forest products. The effects are statistically significant for all types of forest products except paper and wood pulp.