Economic parameters of deforestation
Recent debate about how timber prices
            affect deforestation has focused mainly on how log export
            bans (imposed in many developing countries to protect
            domestic timber processing) affect deforestation.  One side
            argues that the lower domestic timber prices that result
            from banning log exports increase deforestation by making
            forestry less profitable than competing land uses, such as
            agriculture.  The other argues that lower timber prices
            reduce profits from logging, so they slow down deforestation
            caused by logging.  The author argues that the conflicting
            views result from simplistic analysis that ignores
            differences between types of forest.  The two positions are
            reconciled by distinguishing between unmanaged forests (for
            example, biologically mature, previously unlogged primary
            forests) and managed forests (such as forest plantations
            cultivated for periodic harvest).  This distinction allows
            the derivation of unambiguous comparative static results and
            is useful because many nontimber benefits from forests (such
            as biodiversity conservation) are associated mainly with
            unmanaged forests.  The distinction between managed and
            unmanaged forests leads to both unconventional and
            conventional results. All things being equal, a lower timber
            price results in larger areas of unmanaged forests and
            smaller areas of managed forests.  That is, measures that
            reduce the producer price for timber (for example, import
            restrictions in timber-consuming countries and export
            restrictions in timber-producing countries) are suitable as
            a second-best policy to reduce the pressure on unmanaged
            forest frontiers.  Most logging in tropical forests occurs
            in unmanaged forests, so the claim that trade restrictions
            (such as log export bans) increase deforestation is
            inconsistent with profit-maximizing land use.  A fee on land
            used for logging is preferable to a tax on timber output,
            which is far more common but encourages logging waste.
            Technological interventions that increase the intensity of
            forestry or alternative land uses are an ambiguous
            instrument for the conservation of unmanaged forests.  If
            demand elasticity for outputs is high, an intervention that
            increases the intensity of agriculture, logging, or other
            land uses increases incentive for conversion of unmanaged
            forests.  The building of roads is particularly harmful to
            the conservation of unmanaged forests, as it increases
            incentives for logging and subsequent alternative land uses.
            Proper pricing of forest lands would increase land prices
            and lead to market-driven intensification accompanied by
            forest protection.  Such pricing policies would be
            preferable to a technological intervention that increases
            land use intensity with ambiguous outcomes for forest
            protection.  If unmanaged forest is converted to
            agriculture, the effect of lowering the decisionmaker's
            discount rate depends on the size of timber rents from
            logging unmanaged forests.  If the standing timber has high
            commercial value, a lower discount rate would slow
            conversion of unmanaged forests.  If the standing timber has
            no commercial value, logging is an investment for obtaining
            future benefits of alternate land use.  A lower discount
            rate would stimulate this investment and increase the
            conversion of unmanaged forests.  Also, if unmanaged forests
            are converted to managed forests, a lower discount rate can
            increase conversion since profits from managed forestry are
            higher with a lower discount rate.