Abstract: The forestry literature has sought to describe competitive equilibria by first solving social planning problems. This "indirect" approach may cease to be useful in determining market equilibrium if the government intervenes. The equilibrium price path of timber is characterized directly here under the assumption that once a site is cleared, the site is used for some other purpose of exogenous value. While extreme, this assumption permits us to show that familiar Herfindahl results from the Hotelling literature extend to forestry economics: if differing in age, older trees are harvested first; if different in site value, trees on more valuable land are harvested first. As trees of the same vintage (or site value) are harvested, the timber price may decline during intervals when wood volume grows faster than the rate of interest. As the concluding section suggests, some of these results reappear in special cases of the model with replanting.

Abstract: Tropical forests provide critical global and local ecosystem services and habitat for many of the world’s plants and animals. Their loss threatens the sustainable economic growth and social stability of developing countries, and illegal deforestation abroad places U.S. producers at an unfair disadvantage. For these and other reasons, the United States has long been engaged in programs to reduce forest loss. This engagement has recently increased, with the new Presidential Global Climate Change Initiative including a pillar dedicated to slowing forest loss. While promising, this new funding and coordination is insufficient, with a narrow focus on climate-based development assistance. Engaging the full suite of forest policy levers in the federal government, or taking a “whole-of-government” approach, would provide greater immediate impact in preventing forest loss while building the foundations of a working landscape ethic. In this discussion paper, we explore the opportunities to expand U.S. contributions to reducing tropical deforestation through this approach. A whole-of-government approach to international deforestation consists of coordinating and focusing the programs across the federal government that could reduce the rate of tropical forest loss. It is an integrated strategy that employs existing activities and authorities of the U.S. government and directs them under an overarching goal of reducing deforestation in tropical forest countries, while continuing to support other developing-country goals, such as economic development, health, food security, and biodiversity. We identify three major areas where policy adjustments and actions by relevant authorities can have immediate and tangible impact on reducing deforestation.