The ITTO completed a study, prepared by the London Environmental Economics Center, titled "The Economic Linkages between the International Trade in Tropical Timber and the Sustainable Management of Tropical Forests" (ITTO, 1993). This study was supported by eleven technical annex reports, including an analysis by Perez-Garcia and Lippke "Measuring the Impacts of Tropical Timber Supply Constraints, Tropical Timber Trade Constraints and Global Trade Liberalization".
This study finds that the linkage between tropical timber trade and deforestation is not a major source of deforestation, given that a modest and declining proportion of tropical timber is industrial roundwood and that a declining proportion of that actually enters trade. As reported, 17 percent of non-conifer roundwood is used as industrial roundwood, with less than one-third of this entering trade. Thus, it was stated that only 6 percent of the total tropical non-conifer roundwood actually enters international trade channels. The study examines current linkages with forest exploitation and opening of forests for entry for agricultural encroachment and deforestation. It further considers the role of international trade as an economic incentive for sustainable management, and trade policy distortions
The annex materials for the ITTO analysis include the use of the CINTRAFOR Global Trade Model (CGTM) to develop a base case analysis to the year 2000. This base case is very close to that included in the World Bank review of tropical deforestation discussed above.
Timber harvest projections under the base case outlook for 2000 were adjusted downward slightly for Asian producers from the earlier base case presented in the World Bank outlook:
Projected Harvest, 2000 (million cum)
|
|
ITTO |
WB |
|
Malaysia East |
22.0 |
22.7 |
|
Malaysia West |
8.3 |
8.5 |
|
Indonesia |
36.6 |
38.6 |
|
Philippines |
2.2 |
2.2 |
|
Papua New Guinea |
2.6 |
2.6 |
|
Indochina |
6.1 |
6.5 |
|
Total |
77.8 |
81.1 |
Projected harvest was 77.8 million cubic meters, 3.3 million cubic meters below earlier estimates. The major adjustment was for Indonesia where estimated harvest was reduced by 2 million cubic meters. East Malaysia harvest estimate was also reduced, by 0.7 million cubic meters, to 22 million cubic meters for the year 2000.
Projections for hardwood sawlog exports, imports and consumption closely follow the projections shown in Figure 33, Figure 34, and Figure 35 above. Log price projections were revised upward, however. Figure 39 shows Indonesia prices rising to over US$ 110/cum, well above the level shown in Figure 34.13 West Malaysia log price is forecast at near US$ 240/cum whereas the earlier estimate was about US$ 130/cum. East Malaysia projected price is projected at about US$ 140/cum, compared to just over US$ 100 in the World Bank forecasts.
13 Perez Garcia-Lippke (1993) data discrepancies for Indonesia Hardwood Sawlog Production at 1990, which affects price projections. Adjusted projections were made to exclude this effect. Projected Indonesia price on the adjusted basis rises to about US$ 85 for the year 2000.
Projected production of hardwood plywood has also been revised from earlier estimates for the World Bank and are shown in Figure 40. In comparison to Figure 36, projected plywood output in Indonesia has been adjusted to an output of only about 9 million cubic meters for the year 2000, eliminating much of the projected increase shown in Figure 36. Japan production, however, is predicted at a steady to slightly higher level, reaching about 7 million cubic meters whereas earlier projections anticipated a decline to 5 million cubic meters. Projections for South Korean production of hardwood plywood are essentially the same, with production declining to less than 0.5 million cubic meters by 2000.
Projected production of hardwood sawnwood have likewise been revised as shown in Figure 41 (compare with Figure 36). Indonesian projected hardwood sawnwood rises to almost 14 million cubic meters, up from the earlier estimate of about 9 million cubic meters. East Malaysia production has also been revised upward, shown as growing from about 2 million cubic meters in 1990 to about 4 million cubic meters for 2000, slightly higher than earlier projections. West Malaysia projected hardwood sawnwood is consistent with earlier estimates, declining from about 6 million cubic meters to less than 4 million cubic meters by 2000.
The ITTO assessment concludes that the primary timber shortage is for tropical timber in contrast to conifer timber or temperate hardwoods. The declining harvest for the three major Asia Pacific producers of tropical hardwoods (Malaysia, Indonesia and the Philippines) with insufficient supplies in other tropical countries to offset this decline. Some shift in exports from Europe to Asian importers is anticipated, with increasing substitution of temperate hardwoods in the USA, Europe and other non-Asian consumer countries.
Growing domestic demand in producer countries of Asia Pacific for tropical timbers is also seen as reducing exports, with a declining demand in Japan particularly. Most critical constraints are projected for East Malaysia, where harvest reductions stimulate strong price increases.
Figure 39. Hardwood Sawlog Price Projections
Source: ITTO. 1993j. Measuring the impacts of tropical timber supply constraints, tropical timber trade constrains and global trade liberalization.
Figure 40. Hardwood Plywood Production Projections
Source: ITTO. 1993j. Measuring the impacts of tropical timber supply constraints, tropical timber trade constrains and global trade liberalization.
Figure 41. Hardwood Sawnwood Production Projections
Source: ITTO. 1993j. Measuring the impacts of tropical timber supply constraints, tropical timber trade constrains and global trade liberalization.
The analysis concludes that higher prices can also help sustain investments in sustainable management, in part thereby offsetting a portion of the projected Regional declines in harvest and production of plywood and sawnwood. A sustainable management scenario was presented that closely follows that described above for the World Bank Analysis. Scenarios for timber supply reductions (either to moderate sustainable harvest declines for forest set-asides for conservation) and for log export restrictions were also completed and fully reported by Perez-Garcia and Lippke (1993). Reductions in supply for Malaysia (both East and West), Indonesia, the Philippines and Papua New Guinea were simulated. Reduced supplies limit both exports and production, and increase regional prices for both timber and for consumers/importers Average incremental price increases for swallows of about $US 30 were projected for 2000 under this scenario. Production declines were greatest for East Malaysia where harvest reductions without sustainable management were the greatest. Simulations of tropical import bans and/or import tariffs were made assuming a 10 percent increase in product prices at the destination importing countries. Production and exports decline in the face of lower producer prices as part of the impact of higher tariff costs is passed back to exporters.
Finally, the ITTO analysis examined a scenario of global trade liberalization for forest products. The impacts reverse those for trade barriers. Lower barriers or tariffs stimulate harvest and production through higher producer prices in the short run. Transfer costs for logs and products are assumed to be lowered by 10 percent for the scenario. Indonesia and Malaysia are projected as increasing harvest in the short run due to higher prices, with Indonesia harvest increasing by about 5 million cubic meters annually until 2000 and then declines to just below the base case harvest level due to reduced inventory. East Malaysia harvest also is projected to increase by 5 million cubic meters annually, speeding the depletion of existing inventory. After 1996, the projected harvest would necessarily fall below base case projections (which are declining) due to lack of inventory. Both East Malaysia and Indonesia would increase log exports in this case, with Indonesia exports declining later in response to higher prices for sawnwood exports. Log prices would be higher to timber producers, by about 20 percent, which is seen as an incentive to accelerate sustainable management.
