An assessment of gains and losses from international trade in the forest sector

• Globally international trade did have a positive effect on the economic welfare of the forest sector.
• This was due mostly to the positive effect on the surplus of consumers, and to a lesser extent on the increase in value added in forest industries.
• But value added profited manufacturers in developed countries much more than in developing.
• Developed countries wood producers profited from trade, but losses in developing countries negated incentives to invest in forests.

The importance of international trade for the welfare of actors in the forest sector was estimated by comparing the current state of the world with a world in pure autarky with zero imports and exports of roundwood and manufactured wood products. The analysis was done with a comparative statics application of the Global Forest Products Model. The model was first calibrated to replicate observations in the base year 2013, and then solved under autarky conditions. The results showed much variation in the effects of international trade on production, consumption, and prices across countries and sub sectors. Globally international trade did have a positive effect on the economic welfare of the sector. This was due mostly to the positive effect on the surplus of consumers, and to a lesser extent on the increase in value added in forest industries. But value added profited manufacturers in developed countries much more than in developing. Furthermore, while wood producers in developed countries increased their profits with trade, those in developing countries incurred heavy losses that negated any incentive to invest in forest conservation, management and new plantations.