Would it be better to eliminate illegal timber consumption or production? Which one is better for the whole forest sector? Researchers from China tried to answer these questions in their recently published article. Check what they found!

Illegal logging is one of the main environmental and economic problems worldwide.

Over two months ago, I was describing simple way how to solve a problem of illegal logging. I proposed very simple, but radical (in short-term) solution how to end illegal logging by the use of market mechanism. You can read more about it here:

Problem of illegal logging finally solved

This time, I have found a study, where researchers from China tried to analyze two practical means, which reduce the social welfare of the global forest sector. Researchers evaluated the economic effects of eliminating the consumption and production of illegal timber.

An input-output analysis was conducted, in order to evaluate the consumption and production of illegal timber in different countries. Researchers used the Global Forest Products Model (GFPM*) to analyze the effects of eliminating illegal timber consumption and production on the added value of the forest sector at global and national levels. In the GFPM, added value is the value of all products minus the cost of wood or fiber input.

An input-output analysis indicated that the top 10 countries that consume illegal timber are China, Brazil, Russia, Indonesia, Papua New Guinea, India, Japan, Vietnam, USA and Poland. These countries account for 67% of the global illegal timber consumption. The economic effects on the added value of the forest sector in each country are shown in the figure below.

Shares of illegal wood fiber consumption in the domestic demand of final
products and changes in added value under the consumption scenario in the top 10 consuming countries in 2030. 

In 2030, all of the top 10 consuming countries will face a loss in added value, ranging from 2.0 to 69%. According to researchers, Poland, USA and China will experience relatively smaller losses compared with the other seven developing countries.

This figure shows also that when the share of illegal timber consumption in the domestic demand of final products is large, the loss of added value will be significant (see for instance Papua New Guinea).

Contrary, the top 10 countries that produce illegal timber are China, Brazil, Russia, Indonesia, Papua New Guinea, Vietnam, Malaysia, Thailand, India and Myanmar. These countries account for 70% of the global production of illegal timber.

Figure below shows that all 10 producing countries will experience loss of added value ranging from 4.0 to 60%. Particularly, Papua New Guinea, Russia, Indonesia, Myanmar and Brazil will lose more than one-fourth of added value in their forest sector.

Figure. Shares of illegal timber production in the domestic harvested timber and changes in added value under the production scenario in the top 10 producing countries. 

Overall, the results were quite straightforward. The added value of the global forest sector would generally decrease by 7.31% in 2030 if illegal timber consumption was eliminated, whereas it would slightly decrease (3.37%) if illegal timber production was eliminated. Hence, eliminating illegal timber production is more economical than eliminating illegal timber consumption at the global level.

In other words, the elimination of the consumption of illegal timber may be more disastrous than eliminating production.

Authors mentioned that one possible reason behind this result is that consumers may be demotivated to buy wood products because these products get a bad image as environmentally harmful products (illegal logging damaging forest ecosystems). Instead, consumers may switch to buying non-wood products, which causes disaster in the added value of the forest sector.

* GFPM is a spatial dynamic model that simulates the market equilibrium of 14 forest products in 180 countries. It has been widely applied in studies of the socioeconomic effects of environmental factors on the forest sector.