Economic and environmental impact assessment of proposed bark-free requirements for wood pallets in international trade

In 2004 the European Commission issued Directive 2004/102/EC which, among other things, introduced the concept of requiring wood packaging materials to be “debarked.” While previous research has established that as many as one in five North American wood pallets contain at least one occurrence of bark, the process changes required to eliminate or segregate barky defects from pallets have not been adequately defined or quantified. Simulation-based findings as described in this paper indicate that the proposed EC regulation could add $2.7 billion over 10 years to the cost of U.S. pallets alone as they enter international trade markets, and depending on the degree of universal adoption of bark-free regulation, could result in as much as 16 billion additional board feet of lumber being consumed, again in U.S. pallet production alone. Labor, administration, and environmental costs dwarf the capital costs required to make this process transition. The largest potential cost, however, may come in the form of product substitution, as product manufacturers convert to alternative shipping platforms to avoid potential quarantine and return-of-product risk.