Global impacts of Russian log export restrictions and the Canada–U.S. lumber dispute: Modeling trade in logs and lumber

Forest product trade analysis is complicated by the inter-relationships among forest products. This paper deals with the development and application of an integrated log-lumber trade model that divides the globe into 20 regions. These regions play a significant role as producers and/or consumers of coniferous logs and softwood lumber. The model is calibrated using positive mathematical programming (PMP) so that the baseline scenario precisely duplicates observed 2010 bi-lateral trade flows of both logs and lumber. The calibrated model is then used to examine (1) liberalization of Russian log export taxes and (2) removal of the export restrictions on Canadian lumber exports to the United States. By permitting expanded log exports, Russian welfare increases by $2.3 billion, with losses to lumber consumers and producers more than covered by the gain in rents to timber land. However, the impacts on other regions in the model are surprisingly small. Likewise, removal of the export tax on Canadian lumber to the U.S. also leads to very small changes in welfare; Canada gains $91.8 million, but the U.S. loses only $16 million as it shifts lumber sales from domestic to export markets. Russia loses $485 million because it produces less logs and lumber, while the impact on other regions is imperceptible. Clearly, by modeling logs and lumber together, the overall impacts of forest policies in one region are mitigated at the global scale.