Issues in the forest products trade: Deforestation, price volatility, and exchange rate uncertainty

The trade in forest products is affected by many factors, and in return, affects our environment. In this dissertation, the results of an attempt to analyze three relevant issues are presented. First, the linkage between deforestation rate and global trade of forest products was assessed using cross-sectional data from 112 countries for the period from 1990 to 1995. Population pressure was identified as one of the main causes of deforestation. Higher per capita income, higher agricultural yields, and more secure ownership have helped to reduce deforestation in most cases, while income growth was shown to have a mixed and weak effect. Exports of forest products per se have increased deforestation, mainly in developing countries. In Africa, the growth in the export of forest products has also accelerated the deforestation process.; Second, whether the softwood lumber disputes and agreements between Canada and the U.S. have increased the volatility of the lumber price in the U.S. has been studied. Using the ANOVA model and regression analysis, it was concluded that the volatility of the lumber price has changed with the passage of time over the past two decades. The results showed that softwood lumber prices were more volatile in the 1990s than in the 1980s, with the period between 1991 to 1996 being the most volatile, the period covered by the 1996 U.S.-Canada Softwood Lumber Trade Agreement (SLA) being the second most volatile, and the period covered by the U.S.-Canada Memorandum of Understanding being the least volatile. Uncertainty and supply constraints under the SLA were the primary causes of price volatility in the 1990s.; Finally, the impact of exchange rate volatility on U.S. exports of five forest products was studied using an export demand model. The exchange rate volatility was measured by the standard deviation of the growth rate of the real effective exchange rate of the U.S. dollar. The time period studied was from the first quarter of 1978 to the first quarter of 1988. In estimating the export demand model, the nonstationarity of individual time series has been taken into explicit account by employing new techniques of multivariate cointegration and error correction models. Overall, the impact of exchange rate volatility was negative and weak in the long term but the short-term dynamics depended on the specific kind of forest product under consideration.