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Trade Liberalization and Land Use Changes: Explaining the Expansion of Afforested Land in Chile

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Abstract:

Trade policy reforms are expected to affect land use patterns in developing countries. Most of the research has focused on explaining deforestation or the economic and environmental consequences of plantation subsidies. This article examines the change in economic incentives resulting from trade reforms implemented in Chile since the mid-1970s for land conversion to forest plantations. The removal of the log export ban and the general import duties reduction affected forestry and land-competing agriculture both directly and indirectly through the depreciation of the real exchange rate. Counterfactual roundwood relative prices were obtained by estimating a generalized Leontief demand function for the domestic processing industry, and the “omega” coefficient used in the analysis of agricultural trade reforms. The effects on the economic incentives for land conversion were measured as the land rent changes under forestry and under competing agricultural use that resulted from counterfactual policy scenarios. The results show the critical role of trade liberalization policies in creating the necessary economic incentives for the private participation in the expansion of forest plantations in Chile. The direct effect from the removal of the log export ban was estimated to be larger than the indirect effect of the general import duty reductions.

Keywords: forest plantations; land rents; log export ban; real exchange rate; roundwood relative prices

Document Type: Research Article

Affiliations: Mario E. Niklitschek, Instituto de Manejo Forestal, Universidad Austral de Chile and Centro de Investigaciones, Casilla #567, Valdivia, Chile—(Phone) 56-63-221639;, Fax: 56-63-221489, Email: mniklits@uach.cl.

Publication date: June 1, 2007

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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