Leakage Implications for European Timber Markets from Reducing Deforestation in Developing Countries

Ragnar Jonsson,Werner Mbongo,Mattias Boman,Adam Felton

doi:10.3390/f3030736

Abstract

Forest management strategies and policies such as REDD (reduced emissions from deforestation and forest degradation) may have unintentional implications for forest sectors in countries not targeted by such policies. The success of a policy effort like REDD would result in a significant reduction in deforestation and forest degradation and an ensuing reduction in the supply of natural forest timber production within participating countries. This could in turn result in price increases, inducing a supply response outside project boundaries with possible implications for forest management as well as global carbon emissions. This paper reviews the literature to discern potential timber market implications for countries sourcing wood products from developing countries affected by REDD related conservation efforts. The literature reviewed shows varying degrees of market effects leakage—policy actions in one place creating incentives for third parties to increase timber harvesting elsewhere through the price mechanism—ranging from negligible to substantial. However, wood products in the studies reviewed are dealt with on quite an aggregated scale and are assumed to be more or less perfect substitutes for wood products outside conservation effort boundaries. The review suggests that a thorough mapping of the end-uses of tropical timber is needed to comprehensively analyze impacts on wood-product markets in regions such as Europe from conservation efforts in tropical developing countries. The types of tropical timber expected to be affected, in which applications they are used, which are the most likely substitutes and where they would be sourced, are issues that, along with empirical analysis of supply and demand price elasticities and degree of substitutability, should be investigated when assessing the overall effectiveness of REDD.

Highlights

Policies aimed at mitigating climate change can affect forest-product markets in various ways: directly through substituting wood products for other materials that yield more greenhouse gas (GHG), via the development and use of bioenergy and biofuel, or indirectly through policies involving forest-based carbon sequestration [1,2,3]
Since this paper is concerned with leakage from conservation efforts such as Reducing Emissions from Deforestation and forest Degradation (REDD), the studies found in the first literature search were screened for articles dealing with leakage from conservation projects
The literature—though differing as to the magnitude—suggests that conservation efforts in tropical developing countries could result in increased utilization of forest resources in other world regions such as Europe

Summary

Introduction

Policies aimed at mitigating climate change can affect forest-product markets in various ways: directly through substituting wood products for other materials that yield more greenhouse gas (GHG), via the development and use of bioenergy and biofuel, or indirectly through policies involving forest-based carbon sequestration [1,2,3]. REDD is an effort to create a financial value for the carbon stored in forests, and thereby provide an incentive for developing countries to reduce emissions from forest loss [4,5]. The success of a policy effort like REDD would result in a significant reduction in deforestation and forest degradation, and results in a reduction in established timber supplies within participating developing countries, which could in turn result in price increases. This price increase might induce a supply response outside project boundaries [7]. There is an important need for determining what the likely nature of such responses may be, as they have the potential to directly impact on national and international timber trade, with associated implications for the forest sector and forest management in non-target countries as well as global carbon emissions

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