Promoting Better Logging Practices in Tropical Forests: A Simulation Analysis of Alternative Regulations

Abstract

Standard recommendations for im- proving logging practices in tropical forests in- clude lengthening concession agreements, making concessions renewable, and requiring conces- sionaires to deposit performance bonds. In this paper we investigate the likely effectiveness of these recommendations by using a simulation model of a Malaysian rainforest. We focus on two classes of decisions faced by loggers: which log- ging technology to adopt and whether or not to comply with prescribed diameter cutting limits. We predict the impact of alternative regulations on these decisions and on the resulting economic and environmental outcomes. Renewability condi- tions and performance bonds emerge as potent in- struments for improving logger behavior. (JEL Q23)