|
Timber Market Liberalization in Sri Lanka:
Implications for Forest Conservation
Jeevika Weerahewa and H.M. Gunatilake *
ABSTRACT
This paper examines the impact of timber trade
liberalisation on economic welfare and forest conservation in Sri
Lanka. A partial equilibrium market simulation model was used to
analyse the welfare impacts. Results show that removal of all border
charges reduce timber price by about 25%. Decline in timber price
reduces the incentives for illegal logging and enhances forest
conservation in Sri Lanka. The price reduction also results in an
increase of consumer surplus by about US $ 40 million per year. Timber
trade liberalisation reduces local supply by about 12% to 31% depending
on the elasticity of supply. The reduction of local supply can prevent
6,985, 13,971 and 17,469 ha of deforestation under the inelastic,
unitary elastic and elastic demand and supply assumptions, respectively.
[ BACK
TO CONTENTS ]
*
The authors are, respectively, Senior Lecturer, Department of
Agricultural Economics and Business Management, Faculty of Agriculture,
University of Peradeniya, Sri Lanka, and Senior Economist, Economics
and Research Department, Asian Development Bank, the Philippines.
-------------------------------------------------------------------------------------------------------------------
Weerahewa
and Gunatilake 2006 Sri Lankan
Journal of
Agricultural Economics. Volume 8 (1). Pp. 1 - 20
|
