International Trade and Deforestation: Potential Policy Effects via a Global Economic Model

Increasing global population and demand for food have led to rising agricultural production and demand for land; expanded agricultural land has often come from tropical deforestation. These forests support biodiverse ecosystems and further benefit the environment through carbon storage. This report analyzes patterns of deforestation in select countries to examine which commodities contribute most to “tropical” deforestation. ERS researchers use historical data on production and international trade patterns of four forest-risk commodities: palm oil, soybeans, beef, and forest products. Trade links for these commodities are quantified between the United States and six major exporting countries: Argentina, Brazil, Paraguay, Bolivia, Indonesia, and Malaysia. Deforestation in Argentina and Brazil is linked with production of beef and soybeans, while deforestation in Indonesia and Malaysia is linked with production of palm oil and timber. A global economic model is used to assess two potential policies that could affect tropical forest loss. Results indicate that removing tariffs on these forest-risk products could increase deforestation, while prohibiting exports of illegally logged wood could reduce deforestation.