The timber trade and tropical deforestation in Indonesia

Abstract

This chapter examines the links between the trade in tropical timber products and deforestation in Indonesia. It reviews some of the evidence suggesting that timber production is a factor in tropical deforestation, and the role of timber trade policy in Indonesia in influencing this process by affecting forest-based industrialization. These issues are of particular concern to Indonesia, as the country has recently banned sawnwood exports to encourage further rapid development of plywood processing. The chapter develops a partial equilibrium timber trade model of Indonesia to analyze the effects of various policy interventions on the trade and tropical deforestation. It considers the model to simulate several policy options, including the impacts of sawnwood export taxes/effective bans, import bans imposed by consumer countries, revenue-raising import taxes, and increased harvesting costs associated with "sustainable management". The chapter summarizes the results of the policy analysis, and discusses the policy options open to the Government of Indonesia and importing countries.