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The Tropical Forests as a Global Resource: Impacts of Trade-Related Policy

  • Andersson, Thomas

    (OECD, Directorate for Science, Technology, and Industry)

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    This paper analyses the impacts of trade and trade policy on tropical deforestation. Distinctions are made between the different costs and benefits pertaining to forest use, their distribution and natural vis-à-vis industrial forest features. It is emphasized that forest management is determined by the incentives that confront the relevant actors, and their interdependent behavior. International trade is not a major cause of deforestation, and barriers to log exports worsen the situation. While trade liberalization and consumer action are argued to have a potential for favorable impacts through pressure for institutional reform, a socially optimal management of the tropical forests requires that presently non-commercial values be taken into account. As producer countries face considerable difficulties in exploiting biological diversity, compensation for absorption of CO2, e.g., in a market for tradable carbon rights, stands out as the best opportunity to narrow the gap between private and social benefits. While problems such as those associated with moral hazard would have to be overcome, such a scheme should seek to correct the present policy and market failures spurring deforestation and favoring industrial rather than natural forest features.

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    Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 187.

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    Length: 39 pages
    Date of creation: 26 Aug 1997
    Date of revision: 01 Nov 1997
    Handle: RePEc:hhs:hastef:0187
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    1. Kverndokk, S., 1992. "Global co2 Agreements: A Cost Efficient Approach," Memorandum 04/1992, Oslo University, Department of Economics.
    2. Hyde, W.F. & Newman, D.H. & Sedjo, R.A., 1991. "Forest Economics and Policy Analysis," World Bank - Discussion Papers 134, World Bank.
    3. Jorgenson, D.W. & Wilcoxen, P.J., 1991. "Reducing US Carbon Dioxide Emissions: The Cost of Different Goals," Harvard Institute of Economic Research Working Papers 1575, Harvard - Institute of Economic Research.
    4. Grut, M. & Gray, J.A. & Egli, N., 1991. "Forest pricing and concession policies: managing the high forest of west and central Africa," Papers 139a, World Bank - Technical Papers.
    5. James M. Poterba, 1991. "Tax Policy to Combat Global Warming: On Designing a Carbon Tax," NBER Working Papers 3649, National Bureau of Economic Research, Inc.
    6. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
    7. Grut, M. & Gray, J.A. & Egli, N., 1991. "Forest pricing and concession policies: managing the high forest of west and central Africa," Papers 143, World Bank - Technical Papers.
    8. Foster, Vivien & Hahn, Robert W, 1995. "Designing More Efficient Markets: Lessons from Los Angeles Smog Control," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 19-48, April.
    9. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
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