ABSTRACT
Export restrictions on forestry (log) exports are in place in most of the major log producing regions of the world, with the most well known example being Indonesia. Export restrictions have also been proposed for New Zealand (usually with the objective of increasing the level of domestic processing). Most of the existing literature on the effect of export restrictions on the environment has focused on the tropical hardwood producing countries, and the impact export restrictions have on the rate of deforestation. In New Zealand the situation is somewhat different in that the vast majority of New Zealand exports of logs come from privatelyowned plantations of exotic species. Moreover, the absorptive capacity of these plantations forms a cornerstone of the New Zealand government policy on reducing net carbon emissions under its FCCC (Framework Convention on Climate Change) obligations. In this chapter we therefore consider the issue of export restrictions from the perspective of their impact on net carbon emissions, and the policies required to meet the FCCC obligations. We develop a CGE model of the New Zealand economy, which explicitly incorporates emissions data from manufacturing and the absorptive capabilities of the forestry sector. We use the model to simulate the effect of log export restrictions on net carbon emissions, and development estimates of the carbon taxes required to fulfil FCCC obligations with and without log export restrictions. We demonstrate that inclusion of environmental costs in this manner strengthens the usual neo classical case against export restrictions for the small economy.
