The impact of forest management certification on exports in the wood sector: Evidence from French firm-level data

Forest certification, originally introduced to promote sustainable forest management and protect forests from threats such as deforestation, has become a large-scale market tool. There is no consensus in the literature on the impact of forest certification on exports. Few studies have analyzed the impact of forest management certification on exports, and none have analyzed this effect at the firm level, taking into account firm heterogeneity. The current paper aims to fill this gap by analyzing the impact of the difference in the level of forest management certification between an exporting country and importing or destination countries. In particular, we determine how this impact differs by firm size. Our study focuses on the Programme for the Endorsement of Forest Certification (PEFC). We use a panel of exports of wood and wood products at the level of French firms. We find that when the level of forest management certification in the exporting country increases relative to that of the importing countries, exports increase; but this occurs to a lesser extent as firm size increases. This result is robust to the various additional analyses. For example, an increase in the difference in the share of PEFC-certified forests by 0.15 is associated with a 90% increase in the value of exports. We also find heterogeneity by product category, geographic area, and income level of destination countries. Our study highlights the role played by forest certification on exports and the need to develop forest certification in a market-driven manner.